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 10,700 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 10,700 companies that employ about 859,000 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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Mar 25, 2024 - Price Growth Outpaces Wages
                                • In Q4 2023, producer prices for building materials and supplies dealers increased slightly, according to the Bureau of Labor Statistics (BLS). BLS data show that hardware store wages declined moderately over the same period. A loosening of the US labor market may help ease retailers’ margin pressures from rising wages. Home center and hardware store employment in Q4 decreased slightly compared to a year earlier, according to the BLS.
                                • In mid-March, Home Depot announced it would open four new distribution centers in support of its professional customers, according to CNBC. The new facilities – which are about five times the size of a Home Depot retail location - will be in Detroit, Los Angeles, San Antonio, and Toronto. Home Depot has been building out its distribution facility network that supplies contractors, remodelers, and other home services professionals by adding 14 supply hubs in major metropolitan centers since 2020. The company is courting housing pros as high interest rates have eroded consumer appetite for big-ticket DIY projects. Professionals and DIYers each account for about half of Home Depot’s sales, but pro spending tends to be steadier.
                                • The National Association of Home Builders (NAHB) expects the residential remodeling market to remain flat in 2024 compared to 2023, then grow by about 2% in 2025. Remodeling is supported by a lack of existing homes on the market, high homeowner equity, and the aging of US housing stock. However, finding skilled labor is still a challenge for remodelers.
                                • According to the recently released 2024 version of the What Home Buyers Really Want study by the National Association of Home Builders (NAHB), US home buyers are looking for smaller homes. The study found that in 2023, the typical buyer wanted a home with 2,067 square feet of finished area, down from 2,260 in 2003. The NAHB study is supported by data from the US Census Bureau on housing starts. In 2023, the average size of new homes started in the US fell to 2,411 square feet, the lowest in 13 years. The size of homes started has been trending lower since peaking at 2,689 square feet in 2015.
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