With Arbor Day on April 28, we thought we’d take a look at how home improvement is shaping up for the spring. As noted in previous reports, there was a structural pull-forward demand for home improvement and home furnishings during COVID-19. Home furnishings has softened of late, (because how many couches does one really need) whereas home improvement has proven more resilient. People have focused on sprucing up their primary residence, either because higher mortgage rates have made moving a bit less attractive for now, or because of the increase in working from home, necessitating more investment in creating more space or making the existing space more inviting.
After a YoY drop throughout the month of March 2023 for home improvement, the second week of April is showed a YoY increase. Harbor Freight Tools has performed rather admirably through this time period. With its emphasis on low prices due to investment in their own test labs and factories, this may have proved to be the brand of choice during a period of relatively high inflation. The second week of April saw an increase of 25% over last year for Harbor Freight Tools. Lowe’s is seeing a big jump in traffic, as it is up 15% for the second week in April. Menard’s is up 10%, whereas Home Depot is up 2% and Ace Hardware is up 4% YoY.
Despite the strong April start, 2023 is likely to be a "year of moderation in demand for home improvement retailers" owing primarily an increase in price sensitivity among home improvement consumers and the continued shift away from goods to services. However, as we discussed in February, there are signs that this category has seen some structural changes coming out of the pandemic due to increased home wear-and-tear and housing age keep home improvement (which is driving an increase in the number of unique visitors to home improvement retail locations, despite the year-over-year declines in visits).