Smoother sailing for lumber prices?
After nearly three months of weak pricing in North American lumber markets, there is evidence that many of those prices have reached a bottom. Structural panel prices are also showing greater resilience and increasing in some instances. The ride down took a lot longer than most traders had anticipated. This proved costly to many wholesalers who, back in April and May, believed a short-lived decline followed by a bounce in prices was a more likely scenario.
Now, after an extended price downturn, expectations among those in the industry are much more restrained. "I think we’re going to bump along during the summer without any big ups or downs," was one trader’s assessment of future price direction and a popular opinion among market participants. Certainly, the willingness of producers to adjust output to balance with summertime demand will play a large part in prices over the next few months. "It feels like we’re producing for over 1 million housing starts when it doesn’t appear as though we’re quite there yet," noted another trader recently.
Lumber inventories owned by the wholesale segment of the industry began to decline in May, dropping 2% from April, according to figures released by the U.S. Census Bureau. This was the first month-over-month drop in wholesale lumber inventory since November of last year. Then in June, more distributors reported purging their inventories of high-priced stock, declining to purchase those volumes that would average their inventory costs lower. In essence, they took it on the chin in preparation for a better buying opportunity.
Now, that opportunity appears to be here. Wholesalers are clearly more open to purchasing, although not with the same vigor as the first four months of this year. So far, it has been, at the very least, enough to stop the heavy bleeding.
This article was provided by Crow’s Market and Price Service/RISI. For a free trial of this service, visit RISI.com/crowsfree.
Stats show brands sway men’s hearts
Add this intelligence to the battle of the sexes: In almost every home improvement category, men value “brand” over “price” more frequently than women do.
That’s part of the story from research from Media, Pa.-based ICR, the international research and consulting firm, conducted on behalf of HCN. New ICR analysis shows that older consumers’ (65 and over) brand consciousness flares up especially in the categories of paint, bathroom fixtures and carpeting.
The research adds to the previously reported findings showing that across a spectrum of nine home improvement categories, price matters most in carpeting, and brand matters most in power tools (Visit Research at hbsdealer.com: “Brand and price battle for attention,” HCN, June 2013).
It’s the realm of the psychologists to explain why men and women differ in their values. Mark Delaney, VP at ICR, presents the following observation: “In general, we found that males in almost all of the cases found brand more important than price in the selection of products in these categories.”
The gender discrepancy peaks in the power tool aisle, with a delta of 14 percentage points. The sexes are equally brand-conscious (61%) when buying kitchen appliances. Bathroom fixtures stand out as the lone category where females’ brand-consciousness beats that of men.
Why? It’s complicated. But there are simple theories regarding the differentials in the age group categories showing older consumers’ preference for brands over price. For instance, older consumers tend to have the affluence that reduces the importance of price relative to brand.
“There’s also the theory that older consumers have more home-owning and repair experience,” Delaney said. “And they may have been burned by decisions made solely on price in their younger days when perhaps their income didn’t support more expensive brands.”
ICR points out the 65-and-older age demographic represents 23% of the U.S. population, and their spending power warrants careful consideration in any marketing efforts. “It would be foolish to ignore this segment of the population who is to a large extent aging in place and demanding quality products,” Delaney said.
The ICR survey also looked at various regions of the country, and a few interesting findings emerged. In the case of kitchen appliances, the importance of brand was highest in the West, where trophy kitchens are the status symbol — both indoors and outdoors, in some cases. Also, brand importance for windows was highest in the North Central region.
Delaney commented: “We see more severe weather in that region of the country than some others — therefore folks may want the additional peace of mind a known brand often provides — but it’s also interesting to note that some of the largest window brands happen to be located in that region.” He added: “Coincidence?”
ICR is an international consulting firm based in Media, Pa. It specializes in sectors, including home and home remodeling and consumer packaged goods. Contact: [email protected].
5 key stats from HIRI’s Reference Guide
Pound for pound, it’s one of the most valuable reads in home improvement. The Home Improvement Research Institute’s (HIRI’s) Reference Guide weighs in at 238 10-in.-by-7-in. pages.
The 2013 edition (with a cover price tag of $495, but free for HIRI members) is loaded with the foundation blocks of industry marketing plans — from percent of consumers who bought glue guns as a replacement of an existing product (52%, page 48) to the average price of landscaping and sodding a new house ($6,491, page 210.)
No two people will read the 2013 HIRI Reference Guide the same way, but for what it’s worth, here are five stats that seem to jump off the page from an editor’s perspective.
1. Total number of retail DIY outlets on the decline
DIY hardware stores, home centers and lumberyards saw a unilateral decline over the past 12 years, with total figures for these categories coming in at 39,390 for 2012 (compared with 42,000 in 2001). Businesses described as DIY lumberyards saw the sharpest drop-off with a decline of 14.47%.
2. Light bulbs rule
Among high-incidence products studied in the "2012 Product Purchase Tracking Study," light bulbs were the clear winner with a purchase incidence of 37.8%. That’s a brilliant lead over the runner-up category of nails, screws and anchors, which came in second at 24.5%.
3. Growth is black across the board
Though average annual growth rates were almost unilaterally in the negatives during the recession years of 2007-2011, 2012 numbers (and those projected for 2013-2017) are 100% trending upward. Paint and preservatives, as well as gypsum and specialty boards, had the highest growth rates in 2012.
4. Southern hospitality
Per region, the South occupied the largest share of 2011’s home improvement product sales with a total of $119.6 billion out of a national total of $284.9 billion. This is due, in part, to the region’s dominant number of occupied housing units, but sales per household still topped those of the Northeast, Midwest and West.
5. Decked out a little less
Among outdoor features in new single-family houses, decks actually saw a decline since 1995, with patios and porches maintaining their steady growth in popularity. Thirty-five percent of new houses had decks in 1995, compared with 25% in 2011. Porches, on the other hand, are a growth area that experienced the most drastic uptick, an increase of 22%.
HIRI is a non-profit member-supported research group. For more information, visit hiri.org.