evolution of the home improvement channel

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EVOLUTION OF THE
HOME IMPROVEMENT CHANNEL
Greg Brooks
The Building Supply Channel
Channel, Inc
Inc.
5 April 2011
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LEVITTOWN, 1950
• 30 homes per day
• 1,000 square feet
• 2.4x income vs. 3.5x
• Built to be remodeled
1950s & 60s: The cash-and-carry era
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 Wickes & the Bay City Cash Way
 A complete “building materials
supermarket”
 Small builder-remodelers, DIYers
 No delivery, no credit, no service
 17% vs. 33% gross margins
 Demographic drivers
 Frugal, resourceful GI generation
Emerging specialization
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 1950s: The R&R boom
 Siding-window specialists
 1960s: Crews to subcontractors
 Roofing-siding distributors
 Drywall-ceilings distributors
 1970s: Builders embrace prefab
p
 Millwork, truss manufacturers
1970 & 80s: Home centers, home center warehouses
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 Changing demographics
 Up-and-coming Baby Boomers
 Professional retailers up the ante
 W. R. Grace, Evans Group, Ole’s,
Handy Dan, etc.
 Lumberyards miss the memo
 Memories of 1973-5, 1981-2
 Still “customer neutral”
1990s: The ultimate specialists
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“Those boys are clean-cut,
upbeat, and knowledgeable.
To say we can beat them on
service, I just don’t know.” —
Bob McClure, McClure Lumber,
ProSales, March 1994
HOME CENTER CONCENTRATION, 1997 vs. 2007
U.S. CENSUS BUREAU
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1997
2007
75.2%
92.7%
12.7%
0.3%
7.1%
0.7%
4.4%
0.6%
Top 4
5-8
9 - 20
5.5%
21 - 50
0.8%
All others
Lumberyards return to their roots
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 The longest boom in U.S. history
 Home builder consolidation
 From supermarkets to “shell
construction specialists
specialists”
 Manufacturing
 Labor management
g
 Impact on remodelers
 Equipment and inventory
LUMBERYARD CONCENTRATION, 1997 vs. 2007
U.S. CENSUS BUREAU
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1997
2007
18.3%
9.7%
71.7%
65.3%
4.9%
4 3%
4.3%
6.8%
5.7%
6.9%
6.4%
Top 4
5-8
9 - 20
21 - 50
All others
WHERE REMODELERS SAY THEY BUY
PROSALES, 2007
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LBM dealer
Specialist
Sub
Big box
Lumber
Vinyl siding
Insulation
Tools
Wood & F-C
F C siding
Roofing
Garage doors
Fasteners
Decking
Drywall
HVAC
Shelving systems
Molding
Paint & stain
Plumbing
Doors
Flooring & tile
Electrical
Windows
Cabinets & tops
Stairs
Fireplaces
p
Builders’ hardware
Appliances
Sealants & adhesives
TOP 25 HOME IMPROVEMENT MARKETS ($ BILLIONS)
HARVARD JOINT CENTER FOR HOUSING STUDIES (2009 $)
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$8.0 billion+
$6.0 - $7.9
$4.0 - $5.9
$2 0 - $3.9
$2.0
$3 9
< $2.0
SUPPLY MODELS VARY BY MARKET
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 Design-build markets
 Scherer Bros., National Lumber vs.
T W.
T.
W Perry
P
vs. Ganahl
G
hl Lumber
L b
 R&R markets
 Desert Lumber, Mill Creek Lumber
 The turnkey model
 Mill Creek Lumber vs. Robert
Bowden
U.S. REMODELING EXPENDITURES ($ BILLIONS)
HARVARD JOINT CENTER FOR HOUSING STUDIES
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350
326
Rental units
300
Owner-occupied
250
200
150
100
50
280
210
149
161
4
41
40
180
44
108
121
136
1995
1997
1999
48
229
52
286
54
49
57
162
172
2001
2003
231
274
232
0
2005
2007
2009
HOUSING STARTS PER 1,000 POPULATION, 1947-2010
CENSUS BUREAU
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12
10
1947-70:
7.2123
1971-90:
7.1482
1991-2006:
5.6686
8
6
4
2
0
1950s
1960s
1970s
1980s
1990s
2000s
AFTER THE GREAT RECESSION
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 Lesson learned: diversity
 Residential vs. commercial, new vs.
remodel
d l
 Potential new models
 Centralized commodities, standalone
specialties
 Remodeler consolidation
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EVOLUTION OF THE
HOME IMPROVEMENT CHANNEL
Greg Brooks
The Building Supply Channel
Channel, Inc
Inc.
5 April 2011