Home Centers & Hardware Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 10,800 home center and hardware store companies in the US sell merchandise related to home repair, maintenance, and improvement. Hardware stores generally carry full lines of home repair and maintenance products, but may carry little to no lumber or building materials supplies. Home centers typically carry lumber and building materials in addition to traditional hardware. Companies may offer installation, project management, equipment rental, repair, or warranty services. Customers include DIY (do-it-yourself) customers, DIFM (do-it-for-me) customers, and commercial customers (builders, contractors).
Competition From Alternative Sources
Home centers and hardware stores compete with a variety of alternative sources, including building supply distributors; mass merchandisers; warehouse clubs; design centers and showrooms; and mail order and online retailers.
Complex Inventory Management
The sheer volume of individual stock keeping units (SKU) managed by home centers and hardware stores is staggering.
Industry size & Structure
The average home center employs 490 workers, and generates about $233 million annually, while the average hardware store employs about 15 workers and generates $4 million annually.
- The home center and hardware store industry consists of about 10,800 companies that employ about 898,000 workers and generate about $208 billion annually.
- The home center sector is highly concentrated; the four largest firms account for over 96% of sector sales. The hardware store sector is more fragmented; the 50 largest firms account for 41.5% of sales.
- Large companies include Home Depot, Lowes, and Menards. Thousands of hardware stores operate independently under purchasing cooperative brand names, such as Do It Best, Ace, and True Value.
Industry Forecast
Home Centers & Hardware Stores Industry Growth
Recent Developments
Jan 24, 2025 - Remodeling Spending to Improve in 2025
- Home remodeling spending is expected to see slight gains in 2025 after two years of weakening expenditures, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 0.4% to $513 billion in the first quarter of 2025 compared to Q1 2024. In the second quarter of 2025, remodeling spending will rise quarter-over-quarter to $505 billion, up 0.7% from Q2 2024. Spending will then increase to $506 billion in Q3 2025, up 1.2% from Q3 2024. In the fourth quarter of 2025, year-over-year spending is forecast to rise 1.2% to $509 billion. Joint Center expects improvements will be supported by rising home values, a steady labor market, and gradually improving sales of existing homes. Better retail sales of building materials and solid remodeling permitting activity should also support home improvement spending.
- Home builder confidence in the single-family market moved higher in January 2025 amid hopes of improved economic growth and regulatory reforms, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), ticked up one point to 47 in January from 46 the previous month. Any HMI reading over 50 indicates that more builders see conditions as good than poor. While builders are still concerned about high interest rates and elevated land and financing costs, they are also hopeful that policymakers are aware of the industry’s headwinds and will move to reduce regulations.
- The number of building permits issued for single-family, privately-owned housing units, a demand driver for wood windows and doors, increased 1.6% month-over-month but fell 2.5% year-over-year in December 2024. Single-family housing starts grew by 3.3% month-over-month but decreased 2.6% year-over-year in December. Single-family housing completions dropped 7.4% month-over-month and fell 7.4% year-over-year in December. While December’s housing starts and permits hit a 10-month high, elevated mortgage rates and an emerging oversupply of new homes could slow the home building market’s recovery, according to Reuters. In December, the number of unsold new homes on the market reached the highest level since 2007.
- In November, during their third-quarter 2024 earnings calls, Home Depot and Lowe’s said that tariffs proposed by the then-incoming Trump administration would likely increase their costs, according to Retail Dive and Supply Chain Dive. Lowe’s noted that while it diversified its stable of suppliers following the tariffs imposed during Trump’s first term, the firm still relies on overseas suppliers for 40% of its offerings. Higher tariffs would increase its costs. During its earnings call, Home Depot said that during the first Trump administration, the firm took an SKU-level approach to identify items subject to tariffs and find alternatives. However, Home Depot noted that new tariffs, particularly on Chinese goods, would impact the home improvement retailer.
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