In this episode of The Farnsworth Group's Shop Talks, Grant Farnsworth is joined by Max Rakhlenko, Managing Director at TD Cowen and an equity analyst covering hardlines retail - including home improvement, auto aftermarket, and furniture. In this conversation, we're zeroing in on current contractor trends, shifting consumer behavior, tariff ripple effects, and the strategic scale-ups reshaping the building products space.

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Pro Market: Strong, but Waiting on a Spark

Watch from 02:00–06:00

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Despite broader softness in the home improvement sector, contractor demand remains relatively resilient—especially for smaller, repair-focused pros.

“The bigger the project, the more discretionary it is, the more pressure we’re seeing,” Max explains. “The smaller pros that do break-fix work—those are the ones doing best.”

Grant adds that while contractor optimism is still positive, it’s starting to cool. Recent Farnsworth Group tracking shows Q1 and Q2 pro expectations—around both revenue and project volume—are trending slightly down.

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Tariffs: Inflation Is Ticking Up, and Scale Matters More Than Ever

Watch from 07:18–10:40

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While April data was too early to show impact, by May, inflation had clearly returned to several home improvement categories.

“We’re seeing inflation pick up,” says Max. “And the smaller you are, the less negotiating power you have. That’s who’s taking price first.”

In contrast, larger retailers—those with scale, leverage, and deeper vendor relationships—are likely to weather the storm more efficiently.

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Strategic Acquisitions: Home Depot, QXO, and a Multi-Year M&A Cycle

Watch from 10:30–15:30

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The conversation shifts to the wave of recent acquisitions: Home Depot’s buys of SRS and GMS, Lowe’s acquisition of Artisan Design Group, and QXO’s move on Beacon.

“Depot’s play into Complex Pro started years ago,” Max notes. “They’re turning SRS into a platform—and now it has six verticals.”

Grant highlights how these acquisitions, many with vast showroom and logistics footprints, hint at broader distribution and technology plays that may transform the supply chain itself.

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Logistics & Tech: A New Layer of Disruption

Watch from 16:27–18:55

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Today’s acquisitions aren’t just about market share. With networks of hundreds of distribution centers and locations, these moves are positioning large players for long-term efficiency and potential disruption.

“As supply chains become more complex, scale and flexibility matter,” Max says. “And this may only be the beginning.”

The duo also points out that many of these acquired platforms have been rolling up smaller players themselves, adding yet another layer of growth through M&A.

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Six-Month Outlook: Don’t Bet Against the U.S. Consumer

Watch from 19:17–end

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Max ends on a grounded but hopeful note:

“I’m cautious in the near to medium term, but the U.S. consumer has proven more resilient than expected.”

In periods like this, Max suggests, better-managed, better-capitalized players will emerge stronger—and we may be looking at a very different landscape in just a year or two.

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