Home improvement retailers sell a mix of do-it-for-me (DIFM) and do-it-yourself (DIY) building supplies, tools and lawn equipment. They also offer professional services like installation and repairs. Home improvement chains include hardware stores, lumber yards and more. They operate both online and in-store locations. In the United States, the two biggest players are The Home Depot and Lowe’s. Together they hold a massive 81% of the market share, leaving smaller competitors in the dust.
The COVID-19 pandemic drove a surge in DIY activity in 2020 as consumers invested in their spaces to improve their lockdown experience. This boosted the demand for home appliances, lumber materials, tools and more. The industry saw continued growth even as restrictions began to ease in 2021.
Despite rising interest rates and inflation, and higher mortgage and home prices, homeowners are willing to invest in their homes and are looking to make improvements that meet new lifestyle demands. This is great news for home improvement retailers.
A key driver is that consumers have started to view their homes as a sanctuary, where they can spend quality time with family and friends and work remotely. They are prioritizing renovating their spaces to better suit their needs and ensuring that they can live comfortably at home. This will continue to drive growth in the home improvement sector for many years to come.
Large home improvement retailers like The Home Depot and Lowe’s have been able to pass on inflation, raw material price increases and supply chain challenges to their customers in order to maintain strong profit margins. They are able to do this by investing in their brands and offering customer-centric experiences.
Having a robust digital strategy is also important for home improvement retailers. As consumers increasingly move away from brick and mortar to shop online, they will seek out retailers that provide a seamless, consistent shopper journey between channels. This will ensure they can deliver a world-class customer experience that will keep them coming back for more.
Home improvement chains that are able to deliver a high level of customer satisfaction will be rewarded with loyalty and will see their sales grow, regardless of the industry landscape. Whether it’s through digital channels or in store, there are opportunities for small and mid-sized home improvement retailers to gain ground on the dominant duopoly. Smaller chains can leverage their local expertise and nimble operating structures to better serve their customers and build stronger relationships with them. This will help them to develop a loyal following and compete effectively with the larger home improvement retailers. By developing a strong digital presence, they can create a seamless shopper journey for their customers and provide them with a unique experience that isn’t available anywhere else. This will give them a competitive advantage in the highly commoditized industry. Read our article on Home improvement retailer to learn more about this trend.