Sears has announced a 13% drop in its holiday season sales and more than a dozen store closings with more almost sure to follow. Home Depot, meanwhile, has announced that it will cut 7,000 jobs and close its chain of EXPO stores. Presumably, this is just the first wave of reductions in the home improvement retail industry. As a homeowner, you might look at these numbers as just another indicator of economic recession, but these store closings could also be indicative of a transformation of the home improvement industry.
What this Means for Homeowners
Although it seems unlikely, an online rumor suggests Sears is seriously considering putting their business exclusively online, as a 21st Century catalogue sales company. Although bankruptcy still seems unlikely for any of the big three home improvement retailers—Home Depot, Sears, and Lowe's—the fact that the current economic recession stands to dramatically alter the home improvement box store industry is becoming increasingly certainư.
In the immediate future, most store closings mean nothing more than a certain number of homeowners that need to drive a little further to find a store location. The first round of store closings involves under-performing locations, where other locations can typically be found nearby. In some cases, you may also be able to find some great bargains as the need arises to reduce inventories. Indeed, while you may not notice it during your weekly trips to the grocery store, your monthly cable bills, or your annual medical check-up, the cost of many goods and services is falling. If you've been putting off that new tile flooring project, replacing the dryer that no longer dries, or refreshing the look of your bathroom with new fixtures and cabinet hardware, now is a great time to see what's out there.
Online Materials and Services
Undoubtedly more and more of the home improvement industry will be conducted online. More manufacturers are aggressively marketing their products online. Virtual showrooms are slowly increasing homeowners' trust in purchasing home improvement materials online. Online DIY services, advice, manuals, and videos are increasing homeowners' capabilities to forego basic contractors' services. Manufacturers now have DIY building kits for everything from fences to tree houses, laminate flooring to kitchen cabinets. Even contractors' services are being advertised over the web. Home improvement online referral services continue to grow in popularity. More than just an online phonebook, these services include comprehensive background checks, readily available customer service ratings, and painlessly solicited estimates and service offerings.
Internet may Trump Economy for Box Stores
While box stores are struggling to weather this economic storm, the online home improvement sector seems to be more closely following the continued growth of the web-based economy. ServiceMagic, the industry leader for home improvement online referral services, is the perfect intersection for these two conflicting economic forces. In 2007, this company processed 3,337,546 service requests from homeowners for projects ranging from maid service to kitchen remodeling, carpet cleaning to home additions. In 2008, this number increased to 4,250,146, a stunning 27%. If the growth for home improvement manufacturers' online sales hit even a fraction of this number in the upcoming year, this online conversion, as much as the poor economy, could account for a corresponding downturn to home improvement box stores.
Home Improvement Retailers: Dominant Force or Niche Market?
As time goes on, home improvement retailers are likely to focus more and more on the home improvement products industry that comprises the bread-and-butter of their business—the Home Depot Expo chains were just as much about design services and full-service home remodeling as they were about the materials and products. In the end, the future of the home improvement industry boils down to the same, single force it always has—homeowners making day-to-day decisions about their homes, their pocketbooks, and their peace of mind.
Will Home Depot, Sears, and Lowe's, among others, rebound from the current economic struggle stronger than ever, or will homeowners continue to pursue more direct contact with manufacturers and contractors? Will homeowners be comfortable buying a dishwasher, refrigerator, windows, doors, and furniture without first seeing them in person? Will computer software programs that enable homeowners to see virtual representations of home remodeling choices make samples and showrooms obsolete? Will home improvement blogs and online personalities embolden homeowners to tackle their own projects? And what role does this leave for the retailers to play?
