Where will the growth come from?

We anticipate that close to three-quarters of Canadian home improvement and hardware dealers have ended 2011 with flat or negative growth (and, yes, most of them are in the latter category). And 2012 looks to be only moderately better. Housing starts are forecast to dip in 2012. Reno spending should be a bit more positive, affected as it is by sales of existing homes. In 2012, resales are expected to move up 4.6%.

Growth, then, will have to come from stealing market share.

But which retail formats will fare best? According to our 2011 Home Improvement Market Report, each retail format fared differently coming out of the recession of 2008, and each will face its own challenges in the coming year. Hardware stores can expect some growth in 2012, especially after seeing their collective sales drop by almost 10% in 2010. Some recovery will occur as consumers look to local markets as the “shop local” movement gains momentum, and as ageing consumers place more value on the convenience that smaller stores offer.

Building centres will make modest gains in 2012, though not as aggressive as the 3.1% gains made in 2010.

The retailers best positioned to grow are the big chains. And considering that the big boxes were most adversely affected by the slowdown of the recession and the two years that followed, they are expected to make the most significant gains in 2012.

While any improvement from the big guys will reflect, and hopefully, add to, the overall health of home improvement retailing, independents will have to be on their toes to avoid sustaining collateral damage from the big boxes. (See our HTV commentary on this below)


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