November 19, 2005 in Business

‘More than a race’

Paul Nowell Associated Press
 
Associated Press photo

A Lowe”s employee walks past a banner featuring NASCAR driver Jimmie Johnson at the home improvement retailer”s store in Mooresville, N.C., on Wednesday. There”s nothing that Jimmie Johnson — and the folks at Lowe”s Cos., the nation”s second largest home-improvement retailer and chief sponsor of Johnson”s NASCAR ride — would rather do than blow past points leader Tony Stewart, sponsored by market-leader The Home Depot, to win the Nextel Cup.
(Full-size photo)

CHARLOTTE, N.C. — As chief executive of Lowe’s Cos., Robert Niblock has plenty of numbers to worry about in his battle with The Home Depot Inc.: sales and inventory, revenue and earnings, how many stores to open and employees to hire.

But this weekend, Niblock is focused on just one: The points difference in NASCAR’s championship chase between second-place Jimmie Johnson, driver of the No. 48 Lowe’s Chevrolet, and leader Tony Stewart, whose No. 20 Chevy is sponsored by Home Depot.

“We’ve got one race to go and we need to make up 52 points, so it looks like we’ve got our work cut out for us,” Niblock said.

The winner not only gets bragging rights at the track, but also in the arena where they’re worth so much more: the multibillion competition between the home-improvement retailers.

Experts in sports marketing said this week there is no better return on the company’s marketing investment in NASCAR than Stewart and Johnson’s likely 1-2 finish.

“They battle every day for every customer and the sport they spend the most money on is NASCAR,” said sports marketer Marc Ganis, head of Chicago’s Sportscorp Ltd. “This tells you this is so much more than just a car race. It tells you how important this is to them.”

Both Lowe’s and Home Depot spend millions to tie themselves to stock-car racing and two of its most successful drivers. Johnson and Stewart are featured on billboards and in television commercials, host promotions and visit sales meetings, all to help pitch the thousands to products available inside the companies’ massive stores.

“The demographics of fans and our employees and customers line up perfectly,” Niblock said. “There’s a tremendous overlap. The guys (Johnson and his crew) come to our national sales meeting every year and it’s typically the highlight of the meeting.”

Neither company reveals how much it spends annually on NASCAR sponsorships. But Bill Chipps, senior editor of the IEG Sponsorship Report, said it costs between $15 million and $20 million per year to sponsor a top Nextel Cup team.

“The smart companies like Lowe’s and Home Depot who want to get the most out of their sponsorships will also spend another one to two times more on top of the primary sponsorship fee,” he said, meaning the companies could be spending as much as $60 million annually on NASCAR-related marketing.

Like all NASCAR drivers, Johnson doesn’t miss any chance to promote his chief sponsor, taking care to mention Lowe’s in his post-race interviews. Johnson’s face is all over the company’s advertising; the “When Jimmie Wins You Win Sweepstakes” — with a top prize of $48,000 in store credit — is among the latest promotions tying his success to customers.

It’s no different at Home Depot, which was Stewart’s sponsor when he won his the NASCAR title in 2002. This year, after Stewart scaled the fence after winning at Daytona and New Hampshire, the retailer offered a discount on ladders and fencing with a campaign named “Hey Tony, we’ve got ladders.”

After his August victory at Indianapolis Motor Speedway — also known as The Brickyard — Home Depot offered customers a 10 percent discount on bricks.

“He continues to be a tremendous brand advocate and representative of the 325,000 orange-blooded Home Depot associates,” said Hugh Miskel, Home Depot’s director of event marketing.

Expect even more tie-ins and advertising featuring Stewart and Johnson should one win the title on Sunday in the final race of the season at Homestead-Miami Speedway.

“Obviously, if one of these drivers wins the championship, it will bring a lot of extra publicity and visibility,” Chipps said. “They already get a lot from the advertisements and promotions with show cars at Home Depot and Lowe’s stores around the country.”

Mooresville, N.C.-based Lowe’s, the nation’s No. 2 home-improvement chain, has grown at a faster pace in the past several years than Atlanta-based Home Depot, but it remains well behind the market leader in both number of stores and sales. Last year, Lowe’s had sales of $36.5 billion and now operates 1,170 stores, trailing the $73 billion in 2004 sales at Home Depot, which now has 1,972 stores.

Both are booming. In earnings announcements posted one day apart this week, both reported strong third-quarter profits. Earnings were up nearly 26 percent at Lowe’s to $649 million, and up 17 percent to $1.54 billion at Home Depot.

The competition between the two is mirrored at the track. Stewart, a past champion, is a heavy favorite to win this year’s Chase, which could leave Johnson, who has never won a title, the runner-up for the third year in a row.

“To come up short, if we do come up short like the last two seasons, that’s going to be tough,” Johnson said. “But at the same time, we’re doing everything that we can and we just haven’t been able to close the gap.”

But no matter the odds, Lowe’s employees are excited about his chances. Not just to win the title, and not just to beat Stewart.

“We’ve always been kind of the second-fiddle so to speak going up against (Home) Depot,” said Cynthia Watson, a commercial sales specialist at a Lowe’s store in Mooresville. “If we could squeak it out, it would put us over the edge. We’ve always been the underdog.”

© Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Get stories like this in a free daily email


Please keep it civil. Don't post comments that are obscene, defamatory, threatening, off-topic, an infringement of copyright or an invasion of privacy. Read our forum standards and community guidelines.

You must be logged in to post comments. Please log in here or click the comment box below for options.

comments powered by Disqus