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
Nov 25, 2024 - Home Centers Brace for Potential Tariffs
- In November, during their third-quarter 2024 earnings calls, Home Depot and Lowe’s said that tariffs proposed by the 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 a 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.
- Home remodeling spending is expected to resume stronger growth by the middle of 2025, according to the Leading Indicator of Remodeling Activity (LIRA) report released in October by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to decrease 2.1% to $469 billion in the fourth quarter of 2024 compared to Q4 2023. In the first quarter of 2025, remodeling spending will drop 2.1% from Q1 2024 to $454 billion. Spending will then rise to $473 billion in Q2 2025, up 0.6% from Q2 2024. In the third quarter of 2025, year-over-year spending is forecast to increase by 1.2% to $477 billion. The Joint Center expects improvements to be supported by improving existing home sales and higher home values, which will boost spending for necessary replacement and discretionary remodeling projects.
- Home builder confidence in the single-family market increased in November, marking the third consecutive month of sentiment improvement, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose three points to 46 in November 2024. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The NAHB said builders are generally upbeat about the election outcome, and future sales expectations improved in November. The HMI survey also showed that 31% of builders reduced home prices in November, and the average price reduction fell slightly to 5% from 6% in October.
- Home improvement industry observers expect remodeling spending to rise in 2025 as more homeowners borrow against the rising equity they have in their homes, according to The Wall Street Journal. After a significant uptick during the pandemic, as people were stuck at home, remodeling spending has been lackluster. Higher interest rates also made it more expensive to finance major renovations. In September 2024, the Federal Reserve cut interest rates for the first time in four years. Rates are expected to continue dropping, which could prompt many homeowners to leverage the value locked in their homes and take out loans for improvements.
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