Spending on remodeling will pick up, spurring modest revenue growth
Los Angeles, CA (PRWEB) April 22, 2012
Sales have been drying up for operators in the Paint Stores industry during the five years to 2012. Professional contractors and homeowners typically purchase industry goods during new residential construction and home renovation projects. Therefore, significant declines in housing starts and remodeling following the housing market's collapse caused demand to plummet. Consequently, revenue is expected to decline at an average annual rate of 4.7% over the five-year period. However, since 2010, demand conditions have slowly improved, with the economy gradually strengthening. Housing starts rose for the first time in two years in 2010, increasing by an estimated 6.0%, and they are expected to jump up considerably in 2012. Also, remodeling sentiment is stabilizing according to the National Association of Home Builders. As such, IBISWorld expects that revenue will increase 2.4% over 2012 to total $8.5 billion, after growing 2.1% in 2011.
During the past five years, competition from home improvement stores like Home Depot and Lowe's has further held back the industry's growth. According to industry analyst Eben Jose, “by leveraging their size, these national retailers can achieve significant cost savings on comparable products and pass them down to consumers in the form of lower prices.” As such, they are increasingly attracting customers away from paint specialty stores. Operators reduced their price markups to remain competitive, hurting their overall performance. Such poor performance has caused many underperforming firms to exit the industry. The number of enterprises is expected to decline at an average annual rate of 4.0% during the period, from 4,491 in 2007 to 3,660 in 2012.
IBISWorld forecasts steady growth for the Paint Stores industry in the five years to 2017. While competition from home improvement stores will likely persist, the upturn of the housing market will boost sales, benefiting the industry. Consolidation has increased during the past five years, with major player Sherwin-Williams dominating the industry. However, Jose says “industry participation is set to increase slightly as improvements in the housing market encourage new firms to enter.”
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This industry retails a broad range of paint, wallpaper and other wall-related supplies. Products include stain, varnish, painting equipment and accessories that are used for interior and exterior surfaces. Firms purchase wall coverings from domestic and international manufacturers and wholesalers; then, they retail them to the general public and contractors. This industry does not include home improvement stores, hardware stores and lumber and other building material dealers.
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.