Despite a revival in spending, competition from home improvement stores will hurt sales.
New York, NY (PRWEB) March 17, 2014
Bolstered by a revival in spending on home improvements, the Lawn and Outdoor Equipment Stores industry experienced a moderate recovery over the five years to 2014. “As consumers' confidence in the economy and disposable income improved, households increased their spending on items such as lawn and garden tools,” according to IBISWorld Industry Analyst Will McKitterick. Downstream demand from the Landscaping Services industry (IBISWorld report 56173) also increased as the housing and construction market revived and homeowners and businesses resumed repair and maintenance projects to lawns and gardens put on hold during the recession. As a result, industry revenue is expected to increase by 2.4% to $5.1 billion in 2014.
Despite positive signals from a number of economic indicators driving the industry's recovery, operators' growth has been constrained by fierce external competition from home improvement stores such as The Home Depot and Lowe's Companies Inc. “Big box stores such as these are leveraging their size to achieve significant cost savings on comparable products, passing the difference down to consumers in the form of lower prices,” says McKitterick. Industry revenue, though increasing, has been hampered by this competition, modestly increasing at an annualized rate of 0.3% over the five years to 2014. Operators were forced to lower their margins to remain competitive, and many merged in an attempt to increase market share and remain profitable while others exited the industry entirely. As a result, the number of enterprises is expected to decline at an annualized rate of 0.3% to 3,794 over the five years to 2014.
While rising consumer confidence and increasing disposable income hint at better times ahead for industry operators, these positive indicators mask serious unsoundness in the industry's underlying fundamentals. The Home Improvement Stores industry (IBISWorld report 44411) is expected to continue to undersell industry operators over the next five years, while an emerging group of online sellers further erodes operators' sales. The emergence of a new line of environmentally friendly products that feature gas substitutes and lower emissions will present an opportunity for lawn and outdoor equipment stores to recover some lost demand. Nevertheless, large home improvement stores will be better positioned to satisfy the emergence of environmentally conscious customers.
For more information, visit IBISWorld’s Lawn and Outdoor Equipment Stores in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Lawn and Outdoor Equipment Stores industry sell lawn and outdoor power equipment and replacement parts to household consumers, farmers and ranchers, and other professional workers. Products include rotary mowers, rear engine riding mowers, garden tractors and shredders, chainsaws, leaf blowers, brush cutters, hedge trimmers and more. Players in this industry also provide repair services. This industry excludes home improvement stores and e-commerce companies selling lawn and outdoor equipment.
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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