2016 WAS A GREAT YEAR FOR DIY RETAIL

The holiday season is upon us, and how DIY retail will fare remains to be seen, but 2016 by most accounts has been a great year for DIY retail. The North American Retail Hardware Association (NRHA) is estimating industry growth for 2016 to end at 5.8%. The Home Improvement Research Institute (HIRI) is estimating a little higher, at 6%. The US Census Bureau reports home improvement industry sales through September at 6.7% growth over 2015.

Building materials and home improvement retail sales are 3 to 1 higher than overall retail sales increases for this year.

What has led to the success, and which areas in the DIY space have seen the best results?

Most economists agree that the renewed housing market seen in 2016 will continue into 2017. Add to that higher consumer confidence rates, multi-family housing construction has led to higher sales at home centers and lumber dealers. Remodeling projects and big-ticket purchases are stronger. Big ticket items, such as appliances, have seen the biggest sales uptick in the segment.

Accelerated Analytics DIY customers, using their retailer POS data to analyze sales and inventory, are experiencing the same trends. Across the Accelerated Analytics customer index, June and July showed poor results, followed by an improving August and strong September. 20% of Accelerated Analytics customers’ sales tickets are big ticket items, over $900 per sale. These items were identified as appliances and other expensive items, along with supporting/supplemental products.

The NHRA is predicting 2017 sales to continue this trend and that home improvement product sales should continue to outpace overall retail sales in 2017, anticipating DIY industry growth in the range of 5%.

For more industry stats and observations, download the Accelerated Analytics Retail Industry Briefing Book, which is a monthly publication of key retail industry trends, published to over 7,000 subscribers per month.

Sources: Accelerated Analytics, Hardwareretailing.com

HOME DEPOT FOCUSES ON THE ONLINE SHOPPER…BY FOCUSING ON THEIR STORES

The Home Depot has been on the great end of the rebounding housing market with a continued 4% increase in sales in the last quarter, while homeowners work on big remodeling projects like installing decks or remodeling kitchens. Without plans to add more new stores, Home Depot focuses on how to use their existing stores in new ways.

About 42% of Home Depot online shoppers order online, but pick up in the store. To accommodate that, Home Depot is allocating capital to build out store storage to hold those products. When the customer is in the store, the retailer is trying new displays that help the customer shop easier. For example, the spray-paint section is set up like a soft drink display, so as one can is selected, the next can pops into place. In the lumber and millwork flooring area, the displays are easier for the customer to shop off of on their own, and the signage has been improved.

For the increasing online sales where customers want the items shipped to their homes, Home Depot has opened 3 new fulfillment centers that can deliver orders to 90% of their customers within 2 business days. They are also looking into leveraging their store locations to use local economical transportation for buy-online, ship-to-store orders.

Source: Wall St. Journal, IHRC

LOWE’S GOES FUTURISTIC WITH VIRTUAL REALITY HOME IMPROVEMENT FOR CUSTOMERS

Lowe’s has successfully tested the Microsoft HoloLens in its stores in Raleigh and Seattle – so successfully that it plans to expand the technology to three more yet-to-be-disclosed locations.

The HoloLens brings high definition hologram images overlaid to real world surroundings. A customer can use the technology to visualize their home improvements. For example, a customer can go into a Lowe’s store and design their kitchen while sorting through Lowe’s assortment of appliances and material samples. To take it even further, a customer can select an item they saw and liked on Pinterest, and a similar item sold by Lowe’s will appear.

Kyle Nel, executive director of Lowe's Innovation Lab, told USA TODAY in a briefing: "Mixed reality takes some getting used to, because we're all used to pinching to zoom to get closer to things instead of just walking forward. The idea of using small samples and swatches to try and imagine what a room looks like seems very antiquated now."

To try out the HoloLens in the store requires an appointment, especially on the weekends. Lowe’s Innovation Lab is looking for ways to stay ahead of technology, and stay ahead of rival Home Depot.

Source: Investopedia

HOME DEPOT TURNS STORES INTO MINI DISTRIBUTION CENTERS

The Home Depot announced a 6.6% increase in revenue and a 9.3% increase in net profit to $2.4 billion.

The retailer stated that customers are taking advantage of their new options for retrieving their ecommerce orders. In the second quarter, about 42% of Home Depot’s online orders and almost 90% of its online returns were handled by its stores.

Ecommerce sales were just 5.6% of Home Depot’s sales in the second quarter, but were up 19% from a year ago, showing significantly higher growth in sales than in-store. Home Depot is choosing now to invest in infrastructure and order management software to address ecommerce fulfillment from their stores. Online purchases can now be delivered from over 700 stores, faster and with shorter scheduled-delivery windows than possible before.

Source: Wall St. Journal

HOME IMPROVEMENT SPENDING EXPECTED TO REACH $321 BILLION BY MID-2017

After the housing crash of 2006, the US home remodeling market saw its worst downturn in history. Growth in home improvement spending has grown on average about 4.9% since then. Now, with home equity back and home prices on the rise, people are putting their cash to work to remodel and repair their homes.

Growth is expected to reach 8% by the start of 2017 and annual spending should reach an estimated $321 billion by the middle of next year, according to a new report from Harvard’s Joint Center for Housing. Kitchen and bath remodels are popular, along with high-yielding investments such as replacing insulation. Many are choosing to do multi-room remodels at the same time, up 67% from a year ago.

Growth in home remodeling is sure to boost sales for retailers such as The Home Depot, Lowe’s and Sherwin Williams.

Vendors who want better insights into their sales and inventory at their DIY retailers can CLICK HERE to learn more about our POS reporting solutions. 

Source: CNBC

ACE HARDWARE RANKS #1 IN CUSTOMER SATISFACTION FOR THE 10th YEAR IN A ROW

The J.D. Power 2016 Home Improvement Retailer Satisfaction Survey awarded Ace Hardware top ranking for their 10^th straight year. The study surveys 2,995 customers who purchased home improvement-related products from a home improvement retailer in the last 12 months, and was conducted in January and February 2016.

On a 1,000 point scale, Ace Hardware scored 810 in overall customer satisfaction, followed by Menard’s with a score of 803. Lowe’s placed 3^rd at 799. The overall average across retailers was 795, up from 788 a year ago. The Home Depot was just at the average with 794. The study found that average drops significantly when an initial greeting in the store takes longer than 2 minutes. Customers also want the retailer to provide advice, and be able to answer their questions effectively in the store. "The retailer's staff is most critical to differentiating the experience provided to customers, especially when it comes to the timeliness of greeting customers, answering their questions or providing advice," said Greg Truex, senior director of the at-home practice at J.D. Power. "Retailers that train their employees to engage with customers proactively and assist them are more likely to provide them with a satisfying experience during these moments of truth."

Ace scored 855 in staff and service compared to 811 average.

According to the Home Improvement Research Institute, home improvement consumer spend is on the rise, with an expected 4% increase this year to $332 billion.

Source: Chain Store Age, JD Power.com 

BUILDING SUPPLIERS SEE BEST QUARTER IN ALMOST A DECADE

Amid reports from the Commerce Department that housing starts in March were up 14.2% from last year, paint, drywall and other building suppliers are seeing an uptick in sales. Sherwin Williams reported on their investor call forecast-beating first quarter profits. They reported an 11% increase in sales revenue from its stores and a 44% improvement in profit.

USG Corp., manufacturers of drywall and ceiling tiles, reported the “best quarter we’ve had in almost a decade”. Sales increased 7% to $970 million.

Great weather is attributed to work on homes starting earlier in the year than usual. Illinois Tool Works Inc., supplier of screws, fasteners, nail guns and other items improved its operating margin to 21% from 17% last year. Says CEO Scott Santi, “We certainly exited the quarter in pretty good shape. We’re not seeing anything slow down.”

Building materials, garden equipment and supply dealers show estimated sales increases of 11.9% over Q1 2015. Analysts are predicting that Home Depot and Lowe’s may post stronger than expected sales for their quarters ending April 2016.

Source: Wall St Journal, Seeking Alpha

Lowes to Acquire Canadian Chain Rona

On Wednesday, home improvement retailer Lowe’s made a $2.3 billion bid for Quebec-based home-improvement chain Rona. The deal comes 4 years after an attempted hostile acquisition that faced opposition from major political parties. Initial indications point to a friendly deal this time around with approval from the Rona board of directors.

“One of the big differences between this and last time is obviously this time we have the unanimous approval and support of the board of directors of Rona as well as the management team” said Robert A. Niblock, Lowe’s chairman, president and chief executive. “We’re in a much better place than we were in 2012.”

Under the terms of the deal Lowes is expected to acquire all of the issued and outstanding common shares of Rona for C$24 per share in cash, and all of the issued and outstanding preferred shares of RONA for C$20 per share in cash. The total transaction value is C$3.2 billion (2.3 billion in US dollars).

"We believe the time is right to take the next step in the evolution of the RONA family. The team at Lowe’s has presented us with an excellent plan that enables our company to maintain its brand power while at the same time leveraging Lowe’s global presence to build upon and expand our reach. With commitments made by Lowe’s to our employees, potential new markets for Canadian manufacturers and product offerings for our independent dealers, this transaction presents the ideal opportunity for the continued growth of our company while delivering an attractive premium for our shareholders,” said RONA’s Chairman, Robert Chevrier.

Lowe’s has identified over C$1 billion of opportunities to further increase revenue and operating profitability in Canada. These include: expanding customer reach and serving a new portion of the market by applying Lowe’s expertise in certain product categories, such as appliances; enhancing customer relevance, utilizing Lowe’s strengths as a leading omni-channel home improvement company and drawing on its customer experience design capabilities; and driving increased profitability in Canada by leveraging shared supplier relationships and enhanced scale, as well as Lowe’s private label capabilities, in addition to eliminating RONA’s public company costs. Given these opportunities, Lowe’s believes there is potential to double operating profitability in Canada over five years.

"The transaction is expected to accelerate Lowe’s growth strategy by significantly expanding our presence in the Canadian market through the addition of RONA’s attractive business and excellent store locations across the country," added Niblock.  "Importantly, the transaction also provides Lowe’s with entry into Quebec, where RONA is the market leader and we have no presence.

Specialized retailers capturing DIY marketshare and amazon joins the home improvement ranks

The Farnworth Group published a study that found that specialized retailers are taking more of the DIY market from big-box home improvement stores like Lowe’s and The Home Depot. Amazon is making its appearance as a favorite online home improvement source.

The study analyzed purchase behaviors among a variety of retail channels and different buying audiences, looking at in-store and online purchasing, category differences and top motivators. 44% of homeowners ages 45-54 turn to specialty retailers rather than big-box stores for flooring needs. Homeowners ages 18-34 are twice as likely as their parents to shop at a paint store. All homeowners agreed that getting the best deal and being able to shop online were key motivating factors.

Retailers and their manufacturers who understand the younger buyer are creating marketing strategies like innovative apps to reach their audience. Consumers are shopping for home improvement items online more than ever, and Amazon continues to increase its influence.

Home improvement stores still have most of the market, but increased competition from online and specialty retailers will require those retailers to focus on knowledgeable employees and local expertise.

Source: benzinga

LOWE’S ANNOUNCES Q2 EARNINGS RESULTS ARE UP, FALLING JUST SHORT OF ANALYSTS EXPECTATIONS

Lowe’s reported an 8.4% increase in profit for Q2 2015, with net earnings of $1.3 billion and $1.20 a share. This up from last year’s Q2 earnings of $1.04 billion and $1.04 per share. Analysts were expecting results of $1.24 per share.

The home improvement retailer’s net sales rose 4.5%, which was in line with expectations. Same store sales at stores open at least a year were up 4.3%.

“We posted solid results for the quarter and were able to capitalize on big-ticket market share opportunities with strong growth in categories like appliances and outdoor power equipment,” Lowe's CEO Robert Niblock said in a statement.

As of July 31, 2015, Lowe's operated 1,846 home improvement and hardware stores in the United States, Canada and Mexico representing 201.4 million square feet of retail selling space.

For fiscal year 2015, Lowe’s expects to add 15 to 20 new home improvement and hardware stores, and expects total sales to increase 4.5% to 5%.

Sources: USA Today, MarketWatch

JUNE CONSUMER SPENDING REPORT SHOWS OVERALL DECREASE BUT HOME IMPROVEMENT SPENDING IS STRONG

The US Consumer Spending Index increased 0.4 points in June. The percentage of consumers who rate the economy as excellent or good has continued to increase each month, at 30.9%, though is much lower than the 68% who felt the economy is fair or poor. When asked if personal finances were getting better or worse, 30.7% answered better, 33.1% answered worse and 35.2% answered the same.

The Retail Spending Index decreased 0.5 points in June. Expected spending for July slightly decreased in every category except discretionary personal entertainment expenses, which increased to 14.9% in June versus 13.7% in May. The category with the largest percentage of expected spending was household improvements at 22.9%. Expectations are that spending next month will remain about the same as 51.3% expect to spend the same. However, 28.2% say they will spend more in July, the majority being adults with children.

Source: Chain Store Guide

HOME DEPOT APPOINTS ITS FIRST CHIEF INFORMATION SECURITY OFFICER

Home Depot Inc. has hired Jamil Farshchi as its first CISO. He will manage information security, data protection and vulnerability management, and will report to CIO, Matt Carey.

Mr. Farshchi was CISO at Time Warner Inc., where he created a federated, risk-based security program. Prior to that, he was vice president for global information security at Visa Inc.

This announcement comes months after the home improvement retailer confirmed its payment systems were breached, resulting in stolen email and credit card information at 2,200 US and Canadian stores.

 Source: The Wall Street Journal

Strong Remodeling Spending To Slow Pace Heading Into 2015

July 24, 2014

Growth in home improvement activity is expected to peak during the second half of 2014 and then begin to ease heading into next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program of Harvard University.  Revised estimates from the U.S. Census Bureau show the home improvement market grew 5.6% in 2013.  For 2014, the LIRA projects annual gains in home improvement spending of 9.9% with annual growth slowing to 7.0% in the first quarter of 2015.

"With the economy improving slower than expected and home sales struggling to keep up with last year's pace, the recent strong gains in remodeling spending will likely moderate later this year," says Chris Herbert, Research Director at the Joint Center.  "Although this presents a challenge for the remodeling industry, the LIRA continues to project significant growth going into 2015."

"Despite some headwinds, there continue to be promising signs for remodeling," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center.  "Remodeling contractor sentiment remains positive and house prices continue to rise in most areas of the country."

Source: Joint Center For Housing Studies at Harvard University 

Lowe's Expands Partnership With Porch.com

April 29, 2014

Lowe's and Porch.com have expanded their strategic partnership to the more than 1,700 Lowe's home improvement stores across the U.S.

Every Lowe's store in the country now features Porch as the in-store resource to help homeowners find the right home improvement professionals for nearly any project outside of Lowe's current installation services.  In addition, home improvement service professionals can sign up for a free Porch profile to help increase the exposure of their business to homeowners in need of their specific services.

"While we have already been able to help our customers with projects like installing flooring or remodeling a kitchen, our partnership with Porch means we can now guide customers to find help for nearly any home improvement service, from routine maintenance to dream projects," said Jay Rabello, VP new business development and corporate innovation at Lowe's.  "Homeowners trust Lowe's products and project expertise, and now that relationship can extend to the search for home improvement pros by providing a highly personal, localized experience through Porch."

Porch was first introduced at Lowe's stores in the Carolinas and the Seattle area in January.  If a Lowe's customer needs a professional for a service Lowe's does not currently offer, such as handyman, painting or landscaping services, employees can access the Porch network of pros on their mobile devices and in-store terminals to identify local providers.

"From day one, Porch has been on a mission to make home improvement simple, easy, and delightful," said Matt Ehrlichman, CEO of Porch.  "We launched our product just over six months ago and thanks to the enthusiastic feedback and support of our customers, Porch is becoming a true center of gravity for home improvement professionals and homeowners, enabling them to connect and work together like never before.  Our team is excited to continue our collaboration with Lowe's to improve every facet of the home improvement experience."

The partnership with Porch is the latest in a series of technology initiatives Lowe's has introduced to enhance the in-store support employees can offer customers, including equipping employees with iPhones to help customers access information, view how-to videos or locate product in the store efficiently.

Source: Retailing Today 

Americans Boost Spending On Remodeling

February 3, 2014

Homeowners Doled Out $130 Billion Last Year For Renovations

Americans are spending lavishly again to upgrade their homes, indicating they remain confident about the long-term prospects for the recovery despite recent signs of weakness.

Homeowners spent $130 billion on remodeling projects last year, according to data released Monday by the U.S. Census Bureau.  That was up 3.1% from 2012 and was the largest amount of home-remodeling spending since 2007, the year that the housing downturn began.  Permits for remodeling jobs in the U.S. rose 5.1% last year from 2012, the largest increase since 2010 when the figures began their rebound from a 10-year low, according to permit-tracking company BuildFax.

Rising spending on remodeling is in contrast to recent signs of slowing in new-home construction activity, indicating that a growing number of consumers have decided that upgrading their home might be a better investment than buying a new one.  Other factors at play include the limited inventory of existing homes and rising home values, which have made it easier for homeowners to finance their remodeling projects by borrowing against their equity.

Home-equity lending, which sank to its lowest level of the past 10 years in 2010, jumped 18% last year to $123.4 billion, according to estimates by Moody's Analytics.  That increased lending stems mostly from rising home values, which created more equity for many homeowners and lifted some who previously owed more than their home was worth, into positive territory.  According to real estate data firm CoreLogic, two-thirds of all U.S. homeowners had at least 20% equity in their homes as of last year's third quarter, up from 53.2% two years earlier.

"If home prices are going up and people have more equity in their home, things like remodeling and refurbishment will do well, because it's effectively the way of playing the reinvestment game," said Joseph LaBorgna, chief U.S. economist for Deutsche Bank AG.

The increased remodeling activity comes as thousands of contractors and tradesmen are expected to convene in Las Vegas this week at two trade shows geared to the remodeling and home-building industry, the International Builder Show and the Kitchen and Bath Industry Show.  The combined attendance is expected to exceed 80,000, the highest since 2008.

"From 2010 to 2013 is the difference between night and day," said Gary Drake, chief executive of Drake General Contractor Inc., a Los Angeles remodeling company that says it posted a 30% increase in revenue last year to $4 million.  "The phone is ringing more.  Old clients are calling me.  Architects are offering me work.  I'm actually turning down work now."

The increase in remodeling projects has revved up sales for a variety of home-improvement companies, from retailers such as Lowe's to paint company Sherwin-Williams, and local contractors who install everything from granite countertops to carpeting.

Michael Grosswendt, a builder and renovator of high-end homes in the Los Angeles area, said revenue and staff at his company, All Coast Construction, were nearly halved during the downturn to as low as $10 million and 25 workers.  As the market recovered in 2013, Mr. Grosswendt's revenue climbed to $15 million.  These days he's turning down work while keeping his staff at 25 and spending more time on fewer projects.

Suppliers are cashing in, too.  Masco Corporation, owner of brands including KraftMaid cabinets, Behr paints and Delta fauctes, posted $2.2 billion in sales in the third quarter, up 12% from a year earlier partly on strong sales of windows and cabinets.  Residential remodeling projects typically account for roughly three-quarters of Masco's sales.

Mohawk Industries, a global manufacturer of tile, carpet and flooring, saw U.S. sales of its product lines decline by 30% to 40% during the downturn.  In 2013, Mohawk posted quarterly gains, such as a 12% increase in sales of ceramic tile in the U.S. and a 3% boost in carpet sales, due at least in part to more remodeling.

"Those year-over-year gains for our products for remodeling are the first we have seen in the past six years," said Frank Boykin, Mohawk's chief financial officer.  "This is an indication of the potential pent-up demand in the remodel market."

Source: The Wall Street Journal

LIRA Indicates Home Improvement Spending to Rise

CAMBRIDGE, MA – All signs point to a strong rebound for home improvement activity in 2013, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.  Robust spending in the second half of 2012 suggests the remodeling recovery is already underway, and the LIRA projects annual homeowner improvement spending will see accelerating double-digit growth through the third quarter of 2013. This news comes just ahead of the release of the Joint Center’s biennial remodeling report, The U.S. Housing Stock: Ready for Renewal, scheduled for release next Wednesday, January 23.

“It’s encouraging to see the residential sector finally contribute to growth in our economy,” says Eric S. Belsky, managing director of the Joint Center.  “Through the first three quarters of 2012, investment in the residential sector was responsible for one out of every six dollars added to our GDP.  Moving forward, home improvement spending is expected to make an even larger contribution to GDP growth.”

“There are many external economic and political risks that could derail this remodeling recovery,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center.  “However, the solid momentum behind home building activity, existing home sales, low financing costs, and remodeling contractor sentiment all point to a solid start to the new year for home improvement spending.”

To read more about the LIRA visit thier website