Paint and Wallpaper 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 1,500 firms in the US sell paint, wallpaper, and related supplies to consumers and commercial contractors. Major product categories include architectural paint; painting equipment; coatings; painting supplies; and wallpaper.

Sensitivity to Remodeling, Construction, and Economic Trends

Demand for architectural paint and wallpaper is dependent on the health of the remodeling and construction industry, which is cyclical and influenced by economic conditions.

Seasonal Fluctuations in Demand

The paint market is seasonal and subject to uneven demand throughout the year.

Industry size & Structure

The average paint and wallpaper retailing company employs less than 10 workers and generates $8 million annually.

    • The paint and wallpaper retailing industry consists of about 1,500 firms that employ about 40,600 workers and generate about $13 billion annually.
    • The large paint and coatings manufacturers, such as Sherwin-Williams, PPG, Kelly-Moore, and Diamond-Vogel, dominate the paint and wallpaper retail landscape through company-owned locations. Sherwin-Williams is also one of the largest distributors of wallpaper in the US.
    • About 36% of firms generate less than $500,000 annually; 25% generate between $500,000 and $1 million annually.
    • About 83% of firms employ fewer than ten workers.
    • Franchises account for a small (about 2.5%) of the industry.
                                  Industry Forecast
                                  Paint and Wallpaper Stores Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 17, 2022 - Existing Home Sales Drop
                                  • Sales of existing US homes, a key demand driver for paint and wallpaper stores, fell 1.5% in September from August and were down 23.8% year over year, according to the National Association of Realtors (NAR). August marked the eighth consecutive monthly drop as rising interest rates slow home sales. NAR chief economist Lawrence Yun said, "The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%."
                                  • High interest rates, elevated building materials prices, and a lack of affordable inventory pushed home builder sentiment lower in November, according to the National Association of Home Builders (NAHB). Homebuilder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell five points to 33 in November 2022 from 38 in October, marking the 11th consecutive monthly decline. Any HMI reading over 50 indicates more builders see conditions as good than poor. Amid weak buyer traffic, 37% of homebuilders reported cutting prices in November compared to 26% who reduced prices in September, according to the NAHB.
                                  • Home centers Home Depot and Lowe’s managed to pull off sales wins in the third quarter even as inflation was rising, according to Construction Dive. Home Depot’s sales rose 5.6% year over year to reach $38.9 billion. Lowe’s Q3 sales of $22.5 billion were up 2.4% over Q3 2021. Both retailers said sales growth in Q3 was strongest for their professional customer segments as consumers cut back on DIY spending due to high inflation. Paint and wallpaper stores may experience a similar shift in the balance between pro and consumer sales that major home center retailers have seen.
                                  • Nonresidential construction firms’ backlogs contracted in October, according to the Associated Builders and Contractors (ABC). The ABC’s Construction Backlog Indicator dropped to 8.8 months in October, down from 9 months in September. However, backlogs were up compared to October 2021’s 8.1 months. October’s weakness was led by the commercial and institutional segment, which fell to 8.8 months in October from 9 months in September. The heavy industrial segment’s backlog grew from 8.5 months in September to 10.3 months in October. The infrastructure backlog rose from 7.2 months to 8.9 months over the same period. However, despite a shrinking backlog, the ABC’s Construction Confidence Index for sales climbed to 57.2 in October over September’s reading of 55.1. A Confidence Index sales reading of 50 or more indicates most contractors are optimistic about sales.
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