Hardware sales will improve as the housing market becomes stronger.
Los Angeles, CA (PRWEB) February 28, 2013
The Hardware Stores industry experienced quite a hammering during the recession. Like many retailers of household goods, the industry experienced an increase in demand from the real estate boom and a decline in demand when the housing market weakened. As a result of these contrasting periods, IBISWorld estimates that industry revenue has declined at an annualized rate of 0.4% to $21.9 billion in the five years to 2013. In addition to the unstable real estate market, hardware stores have had to weather lower consumer spending and increased external competition from the Home Improvement Stores industry (IBISWorld report 44411). To adapt to these changes, companies have renovated their businesses to attract more customers by diversifying their product lines and changing store floor plans, says IBISWorld industry analyst Sean Windle. In 2013, IBISWorld estimates that revenue will increase 2.0%, thanks to strong growth in per capita disposable income following a drop in 2009 and weak growth in 2010 and 2011. Furthermore, consumer sentiment is expected to rise a whopping 16.5% in 2013 as economic conditions continue to improve. These factors will spur consumers to spend more money at retail stores, including hardware stores.
Over the five years to 2018, industry revenue is projected to grow. The recovering housing market and increased spending on home improvement projects will help boost industry demand. Revenue growth and profit will remain low, however, because of continuing competition from home improvement stores and online retailers, continues Windle. There are no major players in the Hardware Stores industry, providing it with a low level of concentration. The size of hardware stores is generally small. Many well-known hardware stores operate as cooperatives, including Ace Hardware, True Value and Do It Best. However, these firms operate in the Tool and Hardware Wholesaling industry (IBISWorld report 42371), which is considerably more concentrated.
Despite rising revenue, the number of firms operating in this industry is expected to fall. This decline is largely due to expanding competition from online retailers and big-box home improvement stores like Lowe's and The Home Depot. The majority of firms in this industry are part of cooperatives, which are business organizations owned and operated by a group of individuals for their mutual benefit. Hardware cooperatives act as wholesalers and exercise large buying power, which translates into cheaper purchases for their members. Cooperatives also issue loans and provide advertising for new members. For more information, visit IBISWorld’s Hardware Stores in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry primarily retail a broad range of new home renovation equipment and supplies. Hardware, plumbing, electrical and paint-related tools are the most commonly stocked goods. Consumers purchase about 81.0% of this industry’s goods for private use, and contractors purchase the difference.
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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