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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 11,200 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 500 workers, and generates about $213 million annually, while the average hardware store employs about 10 workers and generates $2 million annually.

    • The home center and hardware store industry consists of about 11,200 companies that employ about 917,000 workers and generate about $358 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
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 16, 2022 - Residential Remodeling to Remain Robust in 2022
                                • Even as pandemic conditions wane, homeowners are expected to continue to invest in home improvements. Home remodeling spending is expected to remain strong for most of 2022 before tapering off in the fourth quarter, 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 11.3% to $390 billion in the first quarter of 2022 compared to Q2 2021. On a year-over-year basis, quarterly remodeling spending levels are forecast to rise 15% in Q2, 19.7% in Q3, then moderate slightly to 17.3% in Q4 when spending will reach $430 billion.
                                • Retail sales for building material, garden equipment, and supplies dealers increased 0.5% in value month over month on an adjusted basis in March 2022 and were up 1.8% on an unadjusted basis compared to March 2021.
                                • US existing home sales, a demand driver for remodeling activity, declined 2.7% in March from the prior month and fell 4.5% compared to March 2021, according to the National Association of Realtors (NAR). The NAR said that rising interest rates and home prices are reducing consumers’ buying power. The NAR said it expects transactions to drop by 10% in 2022, which should help moderate rising home prices.
                                • Homebuilder sentiment, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, decreased to 77 in April 2022 from 79 in March, marking the fourth consecutive monthly decline. Higher materials costs and rapidly rising interest rates are making housing less affordable, which is weighing on builder confidence. Builders report that sales traffic and current sales conditions are at their lowest levels since summer 2021. Higher mortgage rates and supply chain disruptions have unsettled the US housing market, especially for potential first-time homebuyers.
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