The North American Hardware and Paint Association (NHPA) has been conducting its annual Cost of Doing Business Study (CODB) for more than 100 years.
This is the study where we gather real-world information from thousands of independent home improvement retailers to gauge how they are performing.
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A couple months ago, we completed the CODB for 2020 and the results were somewhat startling.
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First off, we knew 2020 was the largest year-to-year increase we had ever seen in sales for the home improvement industry. In just one year, sales rose by 22.3%, hitting nearly $500 billion industrywide.
Now, thanks to our CODB, we see just how dramatic the impact of that increase was on independent hardware and home center operators.
For starters, hardware stores and home centers both recorded the highest-ever net operating profits (8.9% of sales for hardware stores and 6.7% for home centers).
They also reported having some of the highest cash on hand we have ever seen in our 100+ years of gathering this data.
Add to these statistics that, during our mid-year review, when we asked hundreds of independent home improvement retailers how they were performing in 2021 versus the record-setting pace of 2020, we learned that more than 60% of the retailers we surveyed were reporting sales increases.
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In all, our mid-year review found that independent home improvement retailers were seeing an average increase of about 7.3% in sales from last year.
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So, why is this important to the industry’s manufacturers and service providers? Well, consider a few more facts…
The industry’s independent retailers are coming off of two of the biggest sales years they have ever experienced.
These past 18 months have also been two of the most profitable periods these groups have ever recorded, and they are sitting on more cash than they have ever had.
There is no way around it—they are going to invest this windfall into their operations. Right now, retailers are also a bit handcuffed as they look for growth opportunities.
Green field expansion is slowing as retailers struggle to find property, fixtures and employees to ramp up new operations. (This is one of the reasons the acquisition market is so hot right now).
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So, with investment opportunities for new stores limited, more retailers are looking inward for growth. In fact, nearly half of the retailers we surveyed said they plan to make investments in new products and categories in the coming year!
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This means there is no time like the present to reach out to these retailers to let them know why your product and brand deserve their attention and investment!
Even though supply chain challenges still persist, now is the time to reach out to retailers who are looking to expand and expose them to how you can help them grow!
The numbers add up. We have NEVER seen a time like this in the industry since NHPA has been gathering data. Retailers are well capitalized and poised to grow. The only question that remains: Will it be with your products and brand, or your competitor’s?
For more information about the Cost of Doing Business Study or to purchase the latest copy, click here.
