Our own Grant Farnsworth joined Dan Tratensek of The North American Hardware & Paint Association (NHPA) in early January to discuss key findings from the 2021 Market Measure Report. From these key findings and aggregating insights from publicly available market reports, the pair also shared some predictions for what the home improvement market could see in 2022 and even into 2023.
You can watch the webinar for free here.
%20(1).png)
Webinar Timestamps:
1:02 - What is the Market Measure Report?
4:04 - How the Farnsworth Group serves the Home Improvement Industry
5:28 - How to Interpret Data that Does Not Fit the Cyclical Models of Historical Data
11:54 - Stacked Growth Findings for Home Improvement Retailer Sales and Net Operating Profits from 2020 and 2021
20:04 - Where Recent Sales Growth Came From and Where it Will Come From in 2022 and 2023
22:30 - The Future of Housing: Mobility Rates and Record Homeowner Equity on Home Improvement Project Intent
27:00 - Headwinds for the Industry: The Impact of Interest Rates Hikes and Supply Chain on the Growth Ability of the Home Improvement Industry
36:16 - Impacts on the Manufacturing Side of the Equation
Key Takeaways:
1. 2021 Saw Unexpected Sales and Net Operating Profits
~14:13 - 15:48 in webinar
2021 resulted in never before seen home improvement retail growth of 22% YoY as industry sales hit $497 Billion. These are record sales and net operating profits for the industry. Some specific categories with surprising revenues and profits included:
- Hardware stores (typical/high profit stores): 8.9% / 14.4% in profit
- Home centers (typical/high profit stores): 6.7% / 9.4% in profit
- Lumberyards: $10 million in sales
- Paint stores (typical stores): 8.0% in profit
Much of these profits can be directly correlated to high order volumes paired with staffing shortages, creating a larger profit margin on total sales, even when facing higher distribution costs.
2. DIYers Have Been Driving the Market
~20:04 - 22:12 in webinar
2020 sales growth was so concentrated in existing home DIY activity, even when 80% of contractors reported project cancellations during March, April, and May 2020. While a rebalancing of DIY activity with contractor activity was seen in 2021, the Farnsworth Group is expecting existing home contractor projects to accelerate in 2022 and going into 2023.
3. The Home Improvement Industry is Still Growing
~30:18 - 33:30 and ~41:17-42:47 in webinar
The home improvement industry experienced unexpected growth in 2020 and 2021, which was certainly a pleasant surprise that most were not expecting. Due to rising home equities and the entrance of millennials into the housing market creating further pressure on a tight supply, growth is expected to continue, albeit at a slower growth rate. On top of this, price constraints for new homebuyers is often forcing them into older homes that require upkeep, maintenance, and updating, creating additional room for DIY and Contractor activity.
For a month by month assessment of where buyer confidence and intent stands in the home improvement industry, check out our DIYer, DIFM, and PRO Monthly Tracker. For custom research into how your customers are making building product purchase decisions, start a conversation with us.
