Global Hardware Market Updates

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Global Hardware Market Updates

In this month’s global news, DIY sales continue to soar around the world with never before seen quarterly results in the US, Germany, Austria & Switzerland. In Japan, Cainz has opened their first membership-only pro store and Russia is seeing a trend toward smaller stores. Find out more below 

Lockdown & Stamp Duty freeze sees households making more home improvements

The Chancellor’s stamp duty holiday has convinced many that it is time to move home. Eight in ten homeowners, who have considered moving since lockdown began, say they are now even more likely to do so as a result of the announcement. In London, nearly a third (30%) are considering moving away from the capital.

Many homeowners are also still carrying on with home improvements to increase the value of their current property, with a third (32%) currently planning to undertake some form of renovation.

Looking back over the last 12 months, six in 10 (62%) homeowners have already made home improvements, spending an average of £3,000 on the work. Of these, 58% did so in favour of moving up the housing ladder. Over a quarter (27%) cited cheaper costs as a reason for undertaking home improvements than moving, while one-fifth (20%) wanted to increase the value of their current home for a later sale.

Lockdown has been a main driver to encourage homeowners to either move house or make improvements, with nearly two-fifths (39%) saying that they had been planning to make changes for a while and lockdown inspired them to do so. Over a third (36%) said that the decision came as a result of spending more time in their home which made them notice it needed improvements, while nearly a quarter (24%) said the extended time spent indoors has increased general ‘wear and tear’ within the home.

The Home Depot Announces Renewable Energy Goal

The Home Depot, the world’s largest home improvement retailer, today announced companywide sustainability progress in its 2020 Responsibility Report, which outlines the company’s 2019 progress on its corporate responsibility strategic pillars: focus on people, operate sustainably and strengthen communities. The report also introduces several new goals and provides an update on the company’s recent response to COVID-19 and social equality issues.

As part of its existing pledge to reduce carbon dioxide emissions by 50 percent by 2035, The Home Depot reduced its greenhouse gas emissions by 10 percent in 2019, driven primarily by energy reductions and supply chain efficiencies.

New goals include a commitment to produce and procure energy from 335 megawatts of renewable and alternative energy projects by 2025.

Read the full report here: The Home Depot 2020 Responsibility Report

 

Amazing 2nd Quarter Results at The Home Depot

I’ve never seen a quarter like this” analysts have said about the results posted by The Home Depot. Like for like sales are up by 25% compared to last year. It is thought the one of the main reasons behind this incredible growth is that customers are stuck at home during the coronavirus pandemic and are enjoying a “summer at home” tackling home improvement projects they have previously put off. 

Net Earnings at The Home Depot are $4.3 Billion compared to $3.5 Billion and earnings per share have increased by 26.8 per cent.   

The Home Depot has also announced that it will open three new distribution centres in Georgia over the next 18 months to support the growing demand for flexible delivery and pick-up options for professional and DIY customers.

In 2017, the company announced a USD 1.2 bn (EUR 1.02 bn) investment to expand its distribution network with approximately 150 new supply chain facilities nationwide, with the goal of expanding the company’s existing same-day and next-day delivery options to 90 per cent of the US population. 

The company is also working to make online shopping easier. How successful The Home Depot has been in this regard is shown by the increase of more than a billion dollars in revenue from online sales in the last six months.

In the first quarter of 2020, online sales increased by as much as 80 per cent, due in part to the effects of the Covid-19 pandemic. Interestingly, 60 per cent of customers collect their online purchases from the store.

Cainz Open a New Type of Membership-Only Pro Store

This August Cainz will open its first pro-concept store, “C’z PRO”, in Yokohama, Japan. This will be its entry into the membership-based wholesale business for construction professionals. Since July the company has started recruiting members on their C’z PRO website.

The C’z PRO store will offer a wide range of building materials and tools as well as a variety of services. The store will have a “Creative Space” for members only, providing rental tools, copy services, a library of catalogues and building material samples. Members will also be able to use this space as a meeting spot for information-sharing with each other, including free drinks.

Cainz has also developed a unique ordering service for their “C’z GO!” stores. An online application enables members to search and purchase all products offered in the store in real time. There are also three options for picking up the items: pick up at the store during business hours, pick up from a pick-up locker outside the store at any time, or have the goods delivered directly to the site.

Hornbach reports ongoing strong growth trend

Due to customer demand remaining high, the strong growth trend shown by Hornbach Baumarkt AG Group has continued into the second quarter (1 June to 31 August 2020) of fiscal 2020/21, according to the company. Provisional, unverified figures suggest that cumulative sales and adjusted EBIT have risen substantially in the first five months of the reporting year. Following the initial provisional results, group sales in both the second quarter and in the first half of 2020/21 will probably increase by around a fifth.

The forecast published for fiscal 2020/21 in the 2019/20 annual report of the Hornbach Baumarkt AG Group has therefore been adjusted. The board made it clear that the opportunities and risks associated with the coronavirus crisis are considerable and difficult to estimate. This is reflected in relatively wide ranges for the updated sales and revenue forecast for 2020/2021 as a whole. According to these forecasts group sales (previous year: EUR 4.4 bn) will grow in a band between plus 5 and plus 15 per cent. Depending on the extent of possible cyclical effects, the board currently believes that the adjusted EBIT will lie in a bandwidth of EUR 180 to 280 million (previous year: EUR 182 mio).

Trend toward smaller stores

A trend is developing in the Russian home improvement sector towards smaller stores located close to residential areas or in retail parks, usually with a higher footfall.

The number of large-format stores, known here as hypermarkets, is dwindling.

In 2019 market leader Leroy Merlin paved the way for this trend with the opening of three stores in the “Leroy Merlin Gorodskoi” supermarket format, each with a maximum retail area of 2,000m².

Maxidom, currently ranked in 7th in the market, is now working on a new format with a retail area of 4,000 to 5,000m² for St. Petersburg and the surrounding region.

Sales by French home improvement stores increased by 30 per cent in June

After a sharp fall in sales by the French DIY store operators in the months of March and April of this year, at minus 49.2 and 61.7 per cent, the industry was able to recover somewhat in the months of May and June.

Sales in May 2020 lay at 23.8 per cent and in June 2020 at 30.0 per cent higher than in the same months of the previous year. These figures from the Banque de France have been published by the French DIY retailers’ association FMB.

Despite the most recent positive development, sales relating to the whole of the year 2020 continue to lie at around 8.5 per cent below the previous year’s value, according to FMB.

Cashbuild Accquire The Building Company. 

Cashbuild, is pleased to announce that it has entered into a definitive sale and purchase agreement to acquire 100% of the issued share capital of The Building Company Proprietary Limited (TBC). 

TBC is a leading Southern African building materials retail and wholesale business, providing a full spectrum of services through its portfolio of 13 well-known brands across its three divisions. TBC has an established presence across the coastal regions of South Africa, comprising 160 TBC outlets and 21 franchise stores.

In the prior financial year ending 30 September 2019, TBC achieved revenue of c.R8.2 billion across the retail, wholesale and specialised divisions. In the twelve month period ended 31 March 2020, TBC achieved revenue of c.R8.0 billion.

Cashbuild’s management identified geographic expansion and incremental access to additional segments of the market as key areas for potential growth. An acquisition of TBC allows Cashbuild an opportunity to drive these growth initiatives while still maintaining its commitment to its customers in the South African and neighbouring markets.

DIY industry closes a challenging first half of the year with clear positive development.

The DIY industry in the DACH Region (Germany, Austria and Switzerland) have generally coped well with the first phase of the Corona crisis.

German retailers generated sales of 11.82 billion euros in the first half of the year, which is a record increase of +15.6 per cent (like-for-like of ​​+16.0 per cent)

DIY retailers in Austria (1.49 billion euros, + 8.3 per cent, like-for-like + 7.1 per cent) and Switzerland (1.82 billion CHF, + 3.5 per cent, Like-for-like +3.6 per cent) also showed very good performance in the crisis, despite some stores having to remain closed. However, the currently numbers only represent a snapshot in a very volatile and special economic situation.

A clear trend can be recorded in Germany: people have in repaired, refurbished, renovated and decorated their homes. A large part of this”Summer at home” trend is an increased spend on the garden and balconies.

The categories that are selling particularly well are:

  • Coating materials / painting accessories: + 37.6%
  • Wood (also garden wood): + 29.1%
  • Garden equipment (including garden houses): + 25.1%
  • Construction chemicals / building materials: + 24.9%
  • Garden furniture: + 21.4%

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