Good news in'92

By Steve Johnson Executive Director Home Center Institute

EO* those who believe the less I said about l99l business the better, there's good news for'92. Late last summer retailers began saying business was looking better. The Home Center Institute's economic forecast bears out their reports.

We expect the retail home improvement business to recover from the l99O-91 recession -". 'wit more rapidly than other segments of the economy. Following a flat 1991, we forecast real sales increases (adjusted for inflation) of 3Vo (real dollars) throush 1995. This compares to forecasts-of 1.97o real annual growth for all U.S. retailing through 1995.

Growth in the retail home improvement industry is slowing from its boom years of double digit increases. We see little net increase in the number of store units coming into the market, although turmoil-among home centers will continue with some opening new stores and others pulling back.

Slowing rates of sales growth and stagnant unit growth are classic characteristics of a maturing retail industry.

They also describe a fiercely competitive market in which the best managed companies survive and prosper.

The industry is adjusting to a market-share battle, where growth comes less from an expanding market than from taking business from competitors. The do-it-yourself consumer market, which drove home improvement sales for the better part of the 1970s and 1980s, is changing, too.

A study published this year by the Russell R. Mueller Retail Hardware Research Foundation found that 787o of U.S. households are already involved in do-it-yourself projects. While the rate of participation is not expected to increase substantially, the d-i-y consumer market will grow by about 7 million households durins the rest ofthe 1990s.

Given time pressures faced by most families, we anticipate the trend to buy-it-yourself and have someone else do the work will continue.

Story at a Glance

Real sales increases oI 3o/o (adjusted for inflation)...compound annualsales growth of 3olo (real dollars) through 1995...7 million more households in d-i-y consumer market...retail home improvement business will improve in '92.

Financial pressures, begun in the 1980s and exacerbated by the latest recession, may cause homeowners to delay or scale back some big-ticket home improvements, but we believe this is a short-term circumstance. Long term, homeowners have good reason to maintain and improve their homes: a home is the biggest asset on most personal balance sheets.