Los Angeles, CA (PRWEB) November 01, 2013
The Home Improvement Stores industry is a mature retail industry characterized by a high degree of market concentration and homogeneous product lines, leading to high levels of price competition. Major players Lowe's and the Home Depot account for more than half of the industry’s total market share (see IBISWorld report 44411 for major player market shares). Concentration increased from 2009 to 2011 due to this rising competition and decreased demand: under these conditions, the Home Depot and Lowe's took advantage of economies of scale and opened stores, while many smaller industry players closed their doors.
Furthermore, do-it-yourself customers, who buy supplies for their own home improvement projects, supply much of the industry’s demand; do-it-for-me (DIFM) and professional customers also purchase industry goods and services. In the years prior to 2008, industry operators expanded their service offerings to gain market share; the popularity of these services translated to strong industry revenue and protected the industry, to some extent, from the crippling effects that the recession had on other construction-related industries.
Still, According to IBISWorld Industry Jocelyn Phillips, “the Home Improvement Stores industry's expansion slowed substantially from 2009 to 2011 after the subprime mortgage crisis decimated consumer demand for home improvement products.” National homeownership levels declined and consumers faced low disposable incomes as unemployment surged; these factors led to lower consumer investment in both new construction and home renovations and remodeling. “Low profit and an inability to keep up with intense price competition from large operators, forced many underperforming stores to close early in the period,” says Phillips, causing the number of industry establishments to decreased in 2013.
Nonetheless, the recent economic environment has been favorable to the industry. Rising confidence in the economy and higher incomes have encouraged households to make bigger purchases and engage in more home improvement projects, leading to a jump in revenue in 2012. Overall, industry revenue is expected to increase in the five years to 2013. The recovery in sales has increased industry profitability; margins have also increased from 2008 to 2013. As the economy continues to recover, these favorable conditions will likely continue through 2018. The number of housing starts is also expected to increase further, leading to a rise in demand for home improvement supplies. As such, revenue is forecast to increase by 2018. Even so, IBISWorld expects profit will fall, as industry expansion forces prices down and pushes labor and marketing costs up.
For more information, visit IBISWorld’s Home Improvement Stores in the US industry report page.
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IBISWorld industry Report Key Topics
Stores in the Home Improvement Stores industry sell a broad range of home repair and maintenance goods, such as hardware, tools, electrical goods, lumber and structural material for construction and renovations. Hardware stores, which are generally smaller and consequently sell fewer items, are excluded from this industry. Home improvement companies purchase goods from manufacturers and wholesalers, and sell them to end users, such as do-it-yourself consumers and professional contractors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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