First Research US Industry Profile

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Home Centers & Hardware Stores
SIC Codes: 5211, 5251
NAICS Codes: 44411, 44413
Last Quarterly Update: 6/13/2022
Companies in this industry sell building supplies, lumber, hardware, tools, and other home repair and improvement products. Major companies include Home Depot, Lowe's, Menards, and True Value (all based in the US), as well as Kingfisher (UK), Leroy Merlin (France), OBI (Germany), and RONA (Canada).
The global home improvement market is projected to surpass the trillion dollar mark by 2027 from more than $760 billion in 2020, with a compound annual growth rate (CAGR) of more than 4%, according to Statista. Surging focus of people on zero-waste DIY projects to create an eco-friendly home is likely to reveal rewarding opportunities for the market growth.
The US home centers and hardware stores industry includes about 21,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $195 billion.
Home centers and hardware stores sell many of the same products, but home centers typically offer more building supplies (such as lumber and flooring) and appliances than hardware stores.
Competitive Landscape
Home remodeling and repair and new homebuilding drive demand. The profitability of individual companies depends on low-cost purchasing, effective merchandising, and competitive pricing. Large companies can offer wide selections, supply high-volume goods to builders, and have advantages in purchasing, finance, distribution, and marketing. Small companies can compete by offering specialty products, providing superior service, or serving a local market. The home center segment of the industry is highly concentrated: the top two companies dominate. The hardware stores segment of the industry is fragmented: the 50 largest firms account for about 40% of industry revenue.
Competition includes building supply wholesalers and distributors, lumberyards, mass merchandisers, warehouse clubs, and internet retailers. US home improvement sales are moving increasingly online, positioning Amazon to take market share from legacy players and spurring home centers Home Depot and Lowes to build out their omnichannel retail models. In 2018, online sales penetration of the US home improvement market reached 17%, with growth of online US home improvement sales far outpacing total channel growth, according to NPD Group. Home Depot's online sales grew by more than 26% in 2018 to account for 7.9% of net sales, while Lowes online sales account for about 5% of its total revenue. As in most other retail sectors it's disrupted, Amazon holds the lion's share of online home improvement sales with 82% market share, according to Jumpshot's eCommerce Data Report.
Many of the products sold in home centers and hardware stores are imported, with China being a major source. The escalating trade war between the US and China resulted in the imposition in May 2019 of a 25% tariff on imported building material. Additional tariffs imposed in September on some $300 billion in Chinese products, when combined with previous tariffs, tax nearly all Chinese goods, including cabinets, flooring, plumbing, major appliances, and tile. Higher materials costs due to tariffs are dampening demand for new home construction and remodeling projects and may result in lower sales and higher prices at home centers and hardware stores.
Products, Operations & Technology
Major products for US home centers and hardware stores include hardware, nonpower hand tools, and other building materials and supplies (about 60% of revenue); ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

Historical Profiles (PDF format)

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