From air filters to bathroom faucets, the home improvement industry is booming. With conservative estimates of an industry worth more than $400 billion, home improvement retail sales continue to advance. What’s driving these trends toward home improvement? A number of factors. But most intriguing is how home improvement purchases are changing. Though giants like Home Depot, Lowe’s, continue to dominate the home improvement industry, new competitors are appearing. With over 6% growth annually, home improvement retail is attracting a lot of attention.
Home Improvement Trends Have a Strong Economic Foundation
With the housing market crash of 2008, the home improvement industry saw notable declines. But that has changed. In the past 5 years, homeowners’ equity has more than doubled to an estimated $6 trillion. This equity has fueled incredible growth in home improvement product sales as a result. Likewise, after tightening their belts during the recession, Americans learned how to get more bang for their buck. This value-focused mentality has also encouraged more DIY home improvement projects among homeowners.
In addition to value creation and home equity growth, other incentives for home improvement projects also exist. Mortgage rates have risen over the last 3 years, and this also makes home improvement opportunities more appealing. Likewise, real estate markets are much more stable now. Therefore, individuals are more likely to make improvements in their home themselves rather than buying another home altogether.
Home Improvement with Multi-Generational Appeal
Social trends are also contributing to a booming home improvement industry. For baby boomers, home improvement is appealing because it allows them to “age-in-place.” With relative minor investments, home improvement projects can readily accommodate lifestyle changes. Similarly, home improvements are often more affordable for individuals on fixed incomes when compared to relocation costs.
Baby boomers are not the only generation to embrace home improvements, however. Millennials are also driving current home improvement trends. Millennials are now the largest generation, and many are entering their 30s. With more than half enjoying incomes over $80,000, millennials are purchasing their own homes and investing in home improvement. Many also see home improvements as a means to pursue creativity and self-expression.
Technological Shifts in the Home Improvement Industry
One major boost for many home improvement projects is the demand for smart home technologies. These types of projects allow both convenience and greater energy efficiency, which can be easily achieved with DIY home improvements. Likewise, the number of tutorials and online home improvement guides further support DIY efforts. Through information empowerment, many consumers are willing to tackle larger home improvement tasks.
The most significant technological trend in the home improvement industry is online sales growth. In 2017, online sales for home improvement products rose 34% totaling $20 billion. Advances in online platforms providing enhanced customer service accounted for part of this rise in home improvement revenues. At the same time, faster delivery times for online home improvement product sales also played a role. For firms in the home improvement industry, a quality online presence is a priority for the future.
Innovators in the Home Improvement Industry
As you might imagine, Home Depot continues to lead the home improvement industry with roughly $101 billion in revenues last year. But their rank reflects an ability to change with the times. Home Depot is investing $1.2 billion to enhance delivery of home improvement products. Most customers will enjoy same-day or next-day delivery as a result. Home Depot also added 1,000 new hires to their technology team to enhance online home improvement interfaces.
The changes at Home Depot have been driven in part by new competitors to the market like Amazon. Amazon’s vast retail market and delivery networks pose a notable threat to leaders in the home improvement retail sector. Another potential threat, BuildDirect, offers an innovative e-commerce platform for quality home improvement products. In addition to predictive analytics and direct-to-home shipping, BuildDirect also recently named several Amazon executives to their leadership team.
Other new entrants into the home improvement industry are also appearing. Treehouse takes a different approach by exploring the “do-it-for-me” segment of home improvement consumers. Treehouse home advisors help homeowners move from ideation to installation while arranging local services to complete home improvement projects. Given that this home improvement segment is worth $200 billion itself, Treehouse looks to make big waves in the industry.
No End in Sight
The home improvement industry looks to be quite dynamic, and its growth quite profound. With new technologies down the road, like 3D printing, the continued interest in online services is very likely. And with millennials and baby boomers dominating societies, home improvement product demand will continue to rise. At least for the near future, present home improvement growth trends look to be inevitable.