Posted by: Diane Capuano
Retailers in the home improvement sector are anxious for the economy to improve, anticipating the time when consumers will loosen their purse strings and start spending again. However, those who are expecting a return to the robust consumer spending habits that occurred prior to the recession should heed the words of Doug Stephens, president of Retail Prophet Consulting (at right).
“Going forward, I think we will see a new degree of thoughtfulness and responsibility on the part of consumers that will last well into the new decade,” Stephens told Paint & Decorating Retailer magazine. “We will still aspire to buying that new car or home renovation, but we’ll be more inclined to go about acquiring it in a financially responsible way.”
Aging Baby Boomers
The North American home improvement industry did very well in the last couple of decades, thanks to the dollars spent by the baby-boom generation. However, as baby-boomers age, the home improvement industry cannot expect to see the same level of robust spending.
“I would hesitate to forecast the next decade based on the last,” said Stephens. “The baby boomers who drove unprecedented levels of consumption are now between 45 and 64 years old and past their peak consumer years. As they downsize and empty their nests, spending in categories like home improvement will steadily decline and be picked up in other areas such as health care.”
A Smaller Gen X
Coming on the heels of the baby boomers is Gen X, which is approximately 15 percent smaller than the generation preceding it. As a result, Stephens foresees a decline across a range of categories. “So, while there may be some pent-up demand for paint and decorating products (following the recession), I see other forces at work that will put downward pressure on the category in general. Generation Y (born 1985 to 2005) will bring increased consumption levels but I don’t think the home channel will begin to benefit from that segment of the market for at least five years.
“If in fact the market ceases to increase in size, it will put all retailers in a position where they’ll have to pry market share from competitors in order to grow,” Stephens concluded.