Home improvement retailers are hoping to leverage projections for more aging housing stock and higher home prices during the Spring Selling Season.
Early Spring Has Already Arrived at Lowe’s & Home Depot Stores
Home improvement retailers are already rolling out power tools and garden supplies in anticipation of its industry’s peak home improvement season in conjunction with housing’s Spring Selling Season.
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According to the Federal Home Loan Mortgage Corporation, about 50% of all single-family homes in the US were built before 1980 and many of these aging homes need new roofs and/or replacements for burst pipes. Industry experts in both housing and home improvements anticipate that more of these aging homes will be sold to buyers who will then need to repair them.
Additionally, many homeowners may be inspired to sell their homes after seeing home prices appreciate an average of +15%, according to CoreLogic, during 2021. Those same inspired homeowners may choose to repair/remodel their homes before listing them in order to cash in on that home appreciation.
Obviously, Lowe’s and Home Depot, and others, want to be ready for those homeowners.
Pandemic Years Good to Home Improvement Retailers
The last two pandemic years have been quite profitable for Home Depot and Lowe’s. Pandemic lockdowns initially sent homeowners home with time on their hands to “notice” and then repair what needed fixing around their homes.
Since the onset of the pandemic, Lowe’s shares have climbed an eye-popping +120%. Home Depot’s shares have increased nearly +60%. Each company is to report Q4 2021 earnings at the end of February.
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Sales Expectations for 2022
Zack Fadem, a retail analyst with Wells Fargo, expects that home improvement spending in 2022 will remain elevated relative to the past “two years of really robust growth” despite questions around high inflation rates and climbing interest rates.
Home Depot has not shared its projections for 2022 but Lowe’s has indicated that it anticipated total sales in fiscal 2022 to range between $94B t0 $97B, comparable to 2021 total sales of approximately $95B.
Bill Boltz, executive vice president of merchandising with Lowe’s said, “The wear-and-tear and the lack of housing pushes the consumer to think about ‘How do I improve the living space that I already have?”
Joe Derochowski, industry advisor of home improvement for The NPD Group, a market research firm that tracks retail sales, said the challenge for home improvement retailers is to make home projects easy and/or worth the effort and expenses those projects require.
Derochlwski is also big on inspiring consumers to make more aspirational purchases. He said, “We’re craving not just new, but spice, a pizzazz, an energy. We’re craving something that’s even more..” such as upgrading the “non-essentials” like the guest bedroom or laundry room.
More Employees & More “Amenity” Products/Services
Home Depot is gearing up for increased demand by hiring +25% more full- and part-time employees this spring’s home improvement season.
Lowe’s is gearing up by offering a greater variety of merchandise by launching private label decor brands, more exercise equipment and testing mini-Petcoshops inside some of its stores. It has already added a website and app features to enhance convenience for its DIY customers.
Both Home Depot and Lowe’s are doing backflips for home professionals who spend bigger and more regularly than DIYers by offering them loyalty programs and opportunities to win things such as a Ford 150 pickup.
Lastly, both Lowe’s and Home Depot think that current real estate dynamics are on their side. Homeowners have more to repair and replace due to heavier home use during the pandemic, limited home inventory and high asking prices all translate into more people having to create rather than buy the house of their dreams.
Thanks to CNBC.