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Upbeat Home lmprovement Market Forecast

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PR(IFII 1INE

PR(IFII 1INE

The home improvement products market long-term forecast remains strong with a 6vo aveta$e annual growth rate over the next five years. Sales in 1997 are expected to reach $142 billion. The 1993 market is projected to total $115.4 billion with an 8.8Vo increase over 1992 estimated figures, according to the latest Home Improvement Research Institute report

While the economy is slowly emerging from the recession, the 1992 home improvement products market appears to be on the road to recovery at a faster rate than total retail sales. Sales are estimated at $106.1 billion in 1992, closing 5.37o over revised 1991 sales of $100.8 billion, compared with a4.27o projected growth for total retail sales. Growth rates over the next five years iue expected to continue to surpass estimates for total retail sales.

The consumer market led the growth in home improvement products in 1992 with a 6.47o inqease over 1991 sales. Sales in 1993 are estimated to increase 7.lVo. Ovet the next five years, the consumer market is expected to grow at an average of 5.4Vo annually. This segment accounted for

69Vo of the 1992 estimated home improvement products market and will continue to represent over two-thirds of the market over the next five years.

Growth varies anong the four major merchandise lines comprising the consumer sector. Lumber and building materials represent a}rn,il 45Vo of the sales. 1992 sales in this segment showed the strongest rebound over 1991. Sales will average 5.37o annual growth over the next five years.

Lawn and garden equipment and supply sales have been hardest hit, but are expected !o rebound sharply with a 6.6Vo averafle annual five year growth forecast. Sales representl9%o of. consumer purchases.

Hardware, tools and plumbing, representing approximately 28Vo of total sales, are projected to grow at an average rate of SVo over the next five years. Paints, preservatives and supplies, 87a of consumer purchases, will show a slightly higher average annual growth rateof 5.2Vo.

According to revised projections 0y the Home Improvement Research Institute, the total professional remodeler market is estimated at $32.5 billion in 1992,2.7Vo over l99l revised sales of

$31.6 billion. This market represents 30Vo of the total home improvement products market and is forecast to increase slightly, averaging 32Vo over the next five years.

The pent-up demand for major home irrprovements should drive the professional remodeler segment in the next few years. It is expected to grow by l2.5Vo in 1993 to $36.6 billion. Growth will continue over the next five years at an average annual rate of 7 .37o reacbrng $46.2 billion in 1997

Regionally West South Central is expected to have t6.8qo average annual growth rate over the forecasted five year period with the remainder of the U.S. experiencing between a 5.6Vo ud 6.27o average annual growth rate. The South Atlantic, Middle Atlantic and West North Central are expected to perform below the national average of 6Vo.

New Hardwood ldentification

A new Hardwood Mark created by the Hardwood Institute will be used to distinguish genuine hardwood products ftom imitations and substihrtes. The new mark is available to ilumufacnrers and retailers.

Supply Lags Behind Markets

Lumber markets for 1993 are potentially strong, but the equivalent of nearly 207o of the nation's softwood lumber consumption and 307o of its domestic production are in limbo until the federal forest controversies in the Pacific Northwest and Northern California are resolved.

Timber sales in the region arc at a virtual standstill because of court injunctions and harvast restrictions over old growth forests and the northern spotted owl as a threatened species, the American Forest & Paper Association reports. "With no relief in timb€r supplies, lumber and panel prices, now 35 to 40Vo higher than a year ago, could rise to unprecedented levels," said Con Schallau, AFPA chief economist.

Future bright spots are President Clinton's promised summit !o resolve the timber crisis and anticipated growth in new housing of 100,000 to 200,000 units. This is expected to increase softwood lumber consumption to 48 billion board feet if high prices don't force substitution of non-wood uuterials.

Imports from Canada and increased production in the South can fill some of the vacuum, although at higher prices, the report explains. Builders afe expected to construct smaller homes or use substitute materials to reduce costs which may force some home buyers off the market. Exports are expected to stay near 1992's record $6.7 billion level.

Ernst Supports Citizen Group

Ernst Home & Nursery recently tried a new low profile way of keeping competition out of its backyard. The chain helped bankroll a Bellevue,'Wa., neighborhood group's carnpaign to stop rival Eagle Hardware & Garden's expansion, according to the Se attle - P o st Int e llige nc er.

Eagle uncovered that its competitor contributed $4,000 to BROIL (Bellevue Residents Opposed to Improper Land Use), the group fighting Eagle's attempts to remodel a local candy plant into a home center, the paper reported.

"What really gripes my butt is that these guys have been hiding behind a citizens group to do their difly work," Eagle chainnan David Heerensperger said. "Obviously, they're intimidated by Eagle because they've been losing cus0omers to us."

On Jan. 4, a superior court judge stopped construction of the Eagle store in Bellevue and directed city officials to revise the procedures that allowed Eagle to start remodeling in a light industrial zone.

The president of BROIL saw nothing wrong with accepting money from one of Eagle's primary competitors. "You ever tried to raise monev?" he asked.

Housing Starts Looking Good

Bolstered by lower mortgage interest rat€s and improved consumer confidence, housing starts swelled 5.5Vo n December to an annual rate of 1,302,000.

Single family unit starts rcsr-,3.7Vo to a 1,130,000 unit annual rate. Multifamily starts jumped l9.4Vo to 172,N0 units. Building permits rose 97o for single family homes, but fell 6.4Vo for multifamily units.

"I think we're entering '93 on a pretty good footing," at least for single fanily housing, said David Seiders, chief economisL National Association of Home Builders.

fT HAS been over a decade since Itne Total Quality concept began to surface as a priority for American businesses. Since then, countless theories, techniques and tools have been devised for achieving a Quality process. Up to now, though, every one of these approaches and systems has been developed to accomplish one goal: customer satisfaction. The customer's perception of a product and accompanying service has been and always will be the most powerful factor in a company's success. While Customer Focus sounds like a simple concept, it can be complicated and elusive.

The first premise of a customer focused operation is that customers and suppliers exist inside the company as well as outside. If employees live up to each other's requirements and expectations internally, the company will stand a better chance of staying ahead of external customers' needs. Like teanmates, they have to rely on each other. They need to be empowered to pinch-hit for each other. Empowerment should go beyond the ability to make polite excuses. Invisible systems inside the company can be improved at little or no expense, with the inpact obvious

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