Building, hardware and garden store sales are booming | Visa
Building, hardware and garden store sales are booming
Hardware and garden store sales increased by 12.8 percent as consumers remodel their homes
Consumer spending at building, hardware and garden stores increased 12.8 percent year-over-year (YoY) in August, according to the Visa Retail Spending Monitor, which reports spending on all forms of payment. The U.S. housing supply is keeping some prospective home buyers at bay, with housing stock up only 5.9 percent over the last 10 years, compared to an 8 percent uptick in the U.S. population. Many consumers are opting to remodel their homes rather than wait for the elusive housing market to pick up—a boon for building, hardware and garden sales. (The August data reflects minimal increased building as a result of the recent hurricanes, since Hurricane Harvey happened at the very end of August and Irma followed in September.)
The tight housing market is also driving up home prices. With prices increasing at a faster pace than household incomes, some consumers are finding it difficult to afford a new home. As a result, boomers are staying in their homes longer and remodeling, while many first-time home buyers are purchasing fixer-uppers. This was the case last year as well, when millennials’ credit spending at building, hardware and garden stores grew 23 percent YoY in 2016, more than double overall growth in the category.
Change in U.S. civilian population and housing stock
Sources: Visa Retail Spending Monitor (reports spending on all forms of payment); Census Bureau; TransUnion LLC
Lower prices help to drive business
Pricing is among the top three reasons why consumers choose their preferred home improvement and hardware merchants, including location (58 percent of consumers), price (43 percent of consumers), and product selection (36 percent).* With inflation down 0.8 percent YoY in August, declining prices are helping to boost sales in the market.
Deflation in tools, hardware, outdoor equipment and supplies (seasonally adjusted, Dec 1997=100)
Sources: Haver, Consumer Price Index/Bureau of Labor Statistics; Visa Business and Economic Insights; Prosper Insights & Analytics*
Millennials, low-income consumers move more—may need home supplies more too
In 2016, millennials represented 30 percent of the adults who changed residences. Not surprisingly, the main reasons millennials moved were for a new job or more space. According to a recent survey,* 11 percent of adult consumers (58 percent being millennials) said they plan to move to a new home, apartment or condo between July 2017 and July 2018. Income level also plays a role in residential moves, with lower-income adults (who are likely renters and have more flexibility) moving more than higher income adults—which may help to drive growth in home supplies, too.
Lower-income adults tend to move more (by average annual household income)
Sources: American Community Survey; Visa Business and Economic Insights; Prosper Insights & Analytics*
Demographic statistics from U.S. Census Bureau, American Community Survey
Millennial credit card spending from TransUnion LLC
Inflation statistics based on the Consumer Price Index, according to the U.S. Bureau of Labor Statistics
*Online survey of American consumers on behalf of Visa by Prosper Insights & Analytics, July 2017
Analysis provided by Visa Business and Economic Insights
Disclaimer: Monthly retail spending highlights are based on Visa’s Retail Spending Monitor, which measures estimated historical performance of certain segments of the U.S. economy across payment types. Retail sales (sales by establishments engaged in retailing merchandise) in the context of Retail Spending Monitor is a set of industry segments defined by the U.S. Department of Commerce. The Retail Spending Monitor analyzes data in a manner consistent with this definition for industry segments that are not auto related. The Retail Spending Monitor is based on a sample of aggregated, depersonalized Visa transaction data analyzed utilizing a proprietary economic and statistical model and is not reflective of Visa operational and/or financial performance. The Retail Spending Monitor is provided on an “as is” basis without any warranties of any kind, express or implied, including, without limitation, as to the accuracy of the data or the implied warranties of merchantability, fitness for a particular purpose, and/or non-infringement. The Retail Spending Monitor is intended for informational purposes only and should not be relied upon for marketing, legal, technical, tax, financial or other advice. Visa is not responsible for your use of the information contained herein, including errors of any kind, or any assumptions or conclusions you might draw from its use. Each Retail Spending Monitor report is as of the publication date, and Visa has no obligation to update the data contained therein.