Each year the Home Improvement Research Institute (HIRI) puts on a conference bringing together leaders in insights, sales, product, channel and marketing from manufacturers and retailers. These industry professionals gathered this week for two days in Chicago to listen to Building & Home Improvement experts including Lawrence Yun, Chief Economist from NAR, Jonathan Spader, Sr. Researcher from Harvard’s Joint Center and Zach Williams, CEO of Venveo. While the HIRI event affords attendees a great opportunity to network with colleagues, it also provided some key takeaways.
- A softening market is likely near
- Remodeling will remain strong
- Conversations are critical
- Technology, technology, technology
A softening market is likely near
Call it a re-set, call it a recession, the message was clear that due to some economic and industry headwinds, the building market is due for a softening in the next 2-3 years. Factors contributing to this include increased material costs due to commodity prices and tariffs, increased labor costs due to a shortage of labor, increased home prices due to lack of inventory and the lack of affordable, entry-level homes. The Farnsworth Group regularly tracks key market indicators such as affordability and mobility rates to keep our clients “in the know” on challenges to the industry that often reveal market opportunities.
Remodeling will remain strong
Mobility rates are lowering. Data shows that homeowners are now in their homes an average of 10 years compared to prior rates of 7-8 years. The housing stock continues to age. This results in homeowners wanting and needing to update or repair their homes. Home prices are going up, mortgage rates are increasing and affordability is decreasing. All these factors mean homeowners are staying put more and more. Therefore, the remodeling market is expected have solid growth for the next few years. Think about your customer mix and product position. What are you doing to meet the needs of remodelers, replacement contractors and DIYers? The Farnsworth Group works with clients to answers needs of these audiences and how your products, brands and channels align.
Conversations are critical
Younger generations are using technology to shop and capture information in ways not available 10 or even 5 years ago. With Gen Y and Gen Z quickly becoming the dominant share of the U.S. population, manufacturers and retailers must understand their needs and develop mediums that support their needs. As Zach Williams from Venveo stated, “the customer doesn’t need you”. However, they still want you to be a part of the conversation. Today, it means using technology to allow customers access on their terms whenever they want. Conversations may be through bots, social or several other sources. What is your brand doing to participate? Are you communicating a feature or solving a problem? The Farnsworth Group can help your firm understand your brands perceptions and why customer do/do not purchase your product. These answers can help you deliver an impactful message in your conversations.
Technology, technology, technology
HIRI provided a panel of executives from Kohler, Lowe’s, HomeAdvisor and Hanley Wood. TEach commented that the opportunities of the home improvement and building industry will revolve around technology advancements and our uses of it. This includes using technology to better communicate with customers on their needs. It also involves understanding applying data analysis to predict and respond to buying behaviors.
Technology seems to also be a catalyst in changing how we build and maintain homes. Using it to create prefab buildings as seen with SOM Architecture and their AMIE work, or with healthy homes and the work done by Delos Labs.
It’s clear technology can provide some solution that better enable the customer as well as help our industry manage the current challenges of labor and costs. Perhaps the combination of industry headwinds and advances in technology will propel our industry to evolve. Bringing with it amazing opportunity.
Written by: Grant Farnsworth, gfarnsworth@thefarnsworthgroup.com