Study Shows Shifting Competitive Landscape

  • Categories:

    Industry Trends, Marketing Insights

  • Date:

    October 21, 2015

Study Shows Shifting Competitive Landscape

Industry Trends, Marketing Insights

It takes more than low price to sustain success in this business.

A new study from The Farnsworth Group found that specialized retailers are capturing more of the DIY market from big-box home improvement stores like The Home Depot and Lowe’s, while online purchases continue to increase among both consumers and professionals. In fact, Amazon is making its first appearance as a favorite home improvement outlet.

“Amazon has the potential to give home improvement mainstays a real challenge,” said Leslie Gillock, vice president and director of insights at marketing firm Wray Ward. “Now that they’ve debuted as a favorite retailer for home improvement purchases, the industry stalwarts will have to work even harder to compete online.”

The study from The Farnsworth Group, a firm specializing in custom market research for the hardware, home improvement, construction and building material industries, analyzed purchase behaviors among a variety of retail channels and the different audiences’ motivations and drivers in choosing a retailer. Insights included overall in-store and online purchasing habits, categorical differences and top motivators.

The Farnsworth Group found that 44 percent of homeowners ages 45-54 turn to specialty retailers rather than big-box stores for their flooring needs. Meanwhile, homeowners ages 18-34 are more than twice as likely as their parents’ generation to shop at a paint store.

“It’s easy to assume price is the top motivator for younger buyers. But because paint is seen as a fairly inexpensive design solution, these consumers are more willing to invest in quality. Paint companies understand this, and they’ve responded with new marketing strategies like innovative apps to reach a growing audience,” Gillock said. “This is an example of the subtle categorical differences that exist among buyers, underscoring the importance of having comprehensive data.”

Regardless of age, homeowners can agree on two things: getting the best deal, and shopping online. Consumers with a heavy DIY focus look for deals frequently; where they look depends on generational factors. Younger segments are looking online and, increasingly, on social media, while older segments continue to look for coupons in the newspaper or their mailboxes. Across the board, consumers are going online for their home improvement needs more than ever before. In the study, homeowners with a heavy DIY focus were more than twice as likely as others to say their frequency of online purchasing is “much more frequent” than just one year ago – creating an opportunity for manufacturers regardless of retail channel.

When it comes to home improvement professionals, the study found that while big box stores’ share remains constant, online retailers like Amazon continue to increase their influence. This could be bad news for general building supply and lumberyard retailers that have not entered the online arena. However, “good customer service” and “knowledgeable employees” remain key drivers for building suppliers and lumberyards, while home improvement stores’ level of service is viewed as poor by professionals. Independent hardware retailer True Value is also moving up in that category, perhaps a nod to the company’s knowledgeable employees and local ownership.

“Most specialty retailers may not be able to match their big-box or online competitors when it comes to convenience and pricing, but they continue to hold an edge in the area of customer service,” said Brad Farnsworth, president and CEO of The Farnsworth Group. “Growing and nurturing relationships with home improvement professionals – getting to know their business and having excellent product knowledge – will be important for sustained success.”

Home improvement stores still have the lion’s share of the market, but they’re increasingly surrounded by competition, particularly among consumers, in the form of dynamic specialty retailers and the fluid world of online retail.


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