At HIRI event, a big picture is served
Orlando, Fla. — James Gillula said he expects the United States unemployment rate to fall below 6.5% by mid-year. He cautioned that a slowdown in China could impact the U.S. economy. And he expects the home improvement industry to recoup pretty much all of its weather-related losses from the hash winter.
Those were some of the macroeconomic ideas supplied by Gillula during the 2014 Home Improvement Research Institute Spring Conference held here April 10.
Gillula, the managing director of consulting services for IHS Global Insight, delivered an outlook for the U.S. economy and home improvement spending that called for increases in real consumer spending of 2.5% in 2014 and 3.1% in 2015.
Growth in the home improvement products market is expected to be even more robust, according to the IHS figures. Total sales in constant prices should increase from 3.0% growth in 2013 to 5.0% growth in 2014 (see chart).
The interest rate story, always important to home improvement marketers, is a little more complicated. IHS’s reading of this, he said, is that the Federal Reserve Board will keep short-term interest rates very low until deep into 2015, but long-term rates continue to edge up. Obviously, lower rates are better, but this slow rise in 30-year mortgage rates "doesn’t have to derail a housing recovery," Gillula said.
After a 19% gain in 2013, housing starts will continue their rise as demand grows. In 2014, IHS expects an 18% increase in total housing starts, and a big 34% gain in 2015. Growth in household-formation rates are driving a large part of the optimism in this metric.
Still, the 2014 forecast was reduced slightly in the past few months. Why? Part of that reduction was the result of the extra cold winter, he said. But also general cost pressures in new-home construction dampened expectations slightly.
When walking through each of the metrics and measures, the trend was for growth and general optimism. However, Gillula added: "Our macro forecasters would say, ‘Walk with caution.’ "
The IHS economic outlook presentation was one of seven research-oriented presentations at the HIRI Spring Conference.
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Research hones in on North American attitudes
Orlando, Fla. — Here at the 2014 Home Improvement Research Institute (HIRI) Spring Conference, Sarah Catlett, VP of The Futures Company, took a high-level, continental look at consumer marketing.
Catlett kicked off the HIRI conference with a quick look at Target’s disappointing venture into Canada. The Minnesota-based retailer’s efforts to change the way Canadians shop has fallen short, she said, partly because the company missed consumer and cultural cues.
Her presentation, titled "Not Just Another United States: Distinguishing Consumer Attitudes in Canada, Mexico and the United States," included the observation that Canadians don’t necessarily share the U.S. appreciation of one-stop shopping. There was also Canadian pride in Zellers stores that didn’t transfer to Target following the latter’s acquisition of the former.
"In order to understand how to do business in Canada and Mexico, you have to understand the market forces, and also the consumer and the culture," said Catlett. "Not all North American consumers are created equal."
Catlett pointed to variations in values north and south of the border. For instance:
• In Canada, 68% say they want to show pride in domestic-made products, compared with 60% in the United States and 66% in Mexico.
• In Canada, 82% of consumers say they are looking out for sales and special offers, compared with 78% in the United States and 66% in Mexico; and
• In Mexico, 75% of consumers are concerned with sexism, compared with 32% in the Unites States and 42% in Canada.
Catlett rolled out the idea of a "Values Frequency Meter," which varies across North American markets. The Futures Group’s meter showed Canada higher in secularism and lower in religiosity; and it showed Mexico with a higher interest in societal stimulation and less in societal stability. (In other words, Mexicans were more likely to agree with the statement: "I would prefer to live in a society that readily embraces change and new ideas.")
"When working across global markets, you need to create a brand that is globally resonant and locally relevant," she said. Cultural values can amplify or distort your brand message, she added.
The Futures Group was one of seven research-oriented presentations on the agenda for the HIRI Spring Conference.
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Remodelers group names new chairman
During the 2014 Spring Business Meeting, the National Association of the Remodeling Industry named immediate past president Art Donnelly of Legacy Builders & Remodelers Corp. in Mount Sinai, N.Y., as its chairman of the board.
According to the group, Donnelly will continue to focus on helping NARI provide positive experiences for its members and their customers through professional and educational opportunities.
“I want NARI to be considered synonymous with success, by encouraging professionalism in the industry through increased awareness and commitment to the highest standards in its members,” Donnelly said.