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Weather forecasts: Getting warm

BY HBSDEALER Staff

Weather’s impact on sales cannot be denied, but one of the principles of Bethlehem, Pa.-based Weather Trends International (WTI) is that retailers must concern themselves not so much with the actual weather forecast, but rather the change in the weather compared with the previous year.

Looking into August, Weather Trends is predicting heat.

"People think 90-degree weather drives air conditioner sales," said WTI’s Bill Kirk. "Not necessarily. Take a 95-degree heat wave in New York City. If the year before was 100 degrees during the same period, then the demand for air conditioners would be down about 50%. What matters is the delta" — meaning the difference between the current trend and the previous-year trend.

The eastern third of the United States, with the exception of the Northeast, will see very warm temperatures in August 2013.

Temperatures in the West will also trend above normal, but it will be cooler than last year’s August, which was the hottest August in the region’s recent history. The latter part of the second week of August and into the third week has all the indications of high temperatures across the Midwest and East, except New England.

According to WTI, retail merchandise plans built off of last year will result in an overstock of hot weather categories in the West, while in the eastern third of the nation demand for warm weather products will be stronger than last year, especially in the second and third weeks of the month.

In the rain department, rainfall is expected to be heavier in the Rockies and Plains states, which will dampen demand for outdoor-related project materials. Another active August is anticipated for tropical systems, especially later in the month. The highest-risk area for a land-falling storm, should one occur, would be along the Texas coastline.

For consumer-friendly, long-range forecasts anywhere in the world, visit wt360.com. Business services are available at wt360business.com.
 

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Smoother sailing for lumber prices?

BY Gary Zauner

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.
 

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Stats show brands sway men’s hearts

BY HBSDEALER Staff

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].

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