HIRI event showcases insights

Attendees of the 2012 Home Improvement Research Institute (HIRI) Spring Conference in Arlington, Va., were promised insights and resources. And even before the last of seven speakers packed up his PowerPoint, the mission was accomplished.

For instance, Mike Fratantoni of the Mortgage Bankers Association shared that the U.S. economy seemed to be on the path to a self-sustaining recovery, an assessment he qualified with a “but” and an “and.”

“The ‘but’ is that the U.S. economy is more impacted by global events than we ever have been,” Fratantoni said. Greece and Spain cause concern. But what really keeps him up at night is the idea of “difficulties with Iran and the potential spike in oil prices.”

NPD Research’s Kevin Gilbert pointed to some of the big product category winners in 2011, based on its Consumer Tracking Service. Riding mowers increased 41%, electric saws increased 33%, and smoke/carbon monoxide detectors increased 25%.

Then there’s the insight from IHS Global Insight’s James Gillula, who predicted an annual increase in consumer market home improvement products of 5.4% in 2012, following an increase of 4.1% in 2010. The professional market is expected to grow too, with a 4.0% gain in 2012, compared with a 2.9% gain in 2011.

The all-day event held April 18 at the DoubleTree Hotel Crystal City in Arlington, Va., also included presentations from the U.S. Census Bureau on the American FactFinder tool, TNS and the 2012 Product Purchase Tracking Study, and a Stevenson Co. presentation on the paths consumers take before making a decision.

The short story from several of macroeconomic presenters was that the economy is growing. The slightly longer story: The economy is growing, but not very fast. Related to the macroeconomic growth is the all-important unemployment rate. Fratantoni said the Mortgage Bankers Association forecast calls for a slow improvement, from 8.6% at press time, to 8.0% by the end of the year, and further slow improvement to 7.5% by the end of 2013.

Consumer insights factored heavily, including the unpleasant trend of showrooming. NPD’s Gilbert defined the practice this way: “When shoppers come into a store to see a product in person, only to buy it from a rival online, frequently at a lower price,” he said.

NPD Research shows that showrooming is most prevalent in the power tool aisle, a category where 9.3% of consumers visited the store to research the product and turned around and made the purchase online. Hand tools (4.7% incidence) ranked second, followed by caulk/glue/adhesives (2.9%.) (See chart: “Browsing here, buying elsewhere”)

Across all home improvement categories, the average incidence of showrooming is 2.5%, according to NPD Research

Gilbert’s recommendation for retailers confronting this new challenge: Don’t fight the Web. To win in an environment where showrooming is prevalent, the idea is to combine touch and feel of brick-and-mortar retailing with the impulse and information of the online experience. Clearly, it’s not easy, but brick-and-mortar retailers should use their in-store advantage to help the consumer, cross-promote other categories and offer online opportunities where possible, he said.

In general, Gilbert had some optimistic statistics for home improvement sales, though he described his position as “optimistically cautious.” Among them, 83% of tracked home improvement categories showed increases in 2011.

And also encouraging is the 5.7 percentage-point decrease of consumers who say they intend to spend less than they did a year ago, according to NPD’s research. “[Fewer] consumers plan to spend less,” Gilbert said. “That’s a double negative, and that’s a good thing.”

HIRI’s Fall Conference is slated for Oct. 11 in Chicago.

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