How Home Depot And Lowe’s Will Grab Share In The Burgeoning $33 Billion Outdoor Living Market

“The spring sales season is one of the key sales drivers for Home Depot and Lowe’s.” … [+] says Drew Reading, Bloomberg Intelligence.

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Spring is finally here and people are bursting everywhere to get outside. According to a study by the home insurance group Hippo, people spent more time and more than $ 84 billion on home renovations and repairs in 2020 alone during a year of being locked up at home.

At the top of the list of improvements was the outdoors, followed by the kitchen, home office, and home gym in the survey of 1,000 American homeowners. Two-thirds (66%) spent more than $ 1,000 modernizing and repairing their homes, and even more (71%) said they want to continue the same accelerated pace of renovations this year.

And, like last year, the outdoor living areas will continue to receive more attention, especially as the latest round of government economic reviews coincides with the spring home improvement sales season.

Looking at the impact of the stimulus plan for Q2 2021 across many categories of consumer spending, Bloomberg Intelligence this year highlighted improvement in home improvement, especially outdoor projects. Home Depot HD and Lowe’s LOW in particular benefit from this.

“The spring sales season is one of the key sales drivers for Home Depot and Lowe’s,” said Drew Reading, senior US construction and improvement analyst at Bloomberg Intelligence.

This year, the home improvement giants will get an extra rebound as they were forced to limit activities in the spring of 2020 of last year to ease store traffic. But as more people get vaccinated, Home Depot and Lowe’s are opening their doors and preparing for an even bigger spring sales season in their lawn, garden and outdoor living departments.

And not only will the home improvement be looking for improvements in the outdoors, but Reading is also forecasting strong growth in home professionals.

“With home sales at their highest levels for the past six months, which is a big driver of home improvement spending, we are seeing pent-up demand for larger ticketing projects that require a contractor,” explains Reading. “From that perspective, we expect major ticket purchases for these companies to outperform over the course of the year.”

Overall, the consumer market for outdoor products like garden tools, plants, furniture, hardscapes and the rest totaled $ 32.8 billion in 2020, up 12% from $ 29.3 billion in 2019, so the Freedonia Group. This far exceeded Freedonia’s modest increase of 3.3% estimated prior to 2020.

And it could well maintain that heady pace of double-digit growth as consumers embark on even more ambitious outdoor projects this year, as Reading expects.

“Given how ‘nervous’ people are about getting outside and how strong their home was, tackling outdoor projects is a quick, impactful change. Combine that with the timing of the stimulus tests and it all goes straight into the hands of Home Depot and Lowe’s, ”says Reading.

Home Depot’s spring begins online

Having learned last year that its consumers’ purchase journey typically begins online, Home Depot is using its digital presence to inspire customers to think about improving their outdoor spaces.

“We believe that retailers who create a seamless, connected experience and connect the physical and digital worlds are well positioned in the market,” wrote CEO Craig Menear in the latest annual report.

While the company had sales of $ 21.9 billion in 2020, which hit $ 132.1 billion, an increase of 19.7% over fiscal 2019, the indoor and outdoor garden departments have together blown the roof in terms of growth and are up almost 30% year over year.

The indoor garden alone was the company’s top moneymaker, at $ 14.3 billion, or 10.8% of sales, compared to next-level equipment at 9% of sales. The outdoor garden wasn’t far behind at $ 9.6 billion, or 7.3% of sales.

Sarah Fishburne, Home Depot’s director of trend and design, describes its clients, who rely on more ambitious projects, as key growth drivers for the company, especially outdoors where a little sweat can pay off.

“With the pandemic, more people are doing projects they weren’t necessarily comfortable or ready for before, but now they’ve had time to watch videos and do their research, and have set out to build a fire pit and put on light make or add paving stones, ”she says.

Encouraged by an 89% increase in sales through its digital platforms last year, Home Depot has built its digital resources to attract customers to its roughly 2,000 stores.

This is where the Spring Outdoor Living Ideas section on its website comes in. Filled with over 1,000 ideas, it includes:

  • Buying guides that explain how to choose the right products for the customer’s needs;
  • Inspiration guides to get an idea of ​​what can be done to improve the outdoors;
  • Influencer guides from designers who provide inspiration for outdoor remodeling; and
  • Project DIY guides that show the guides for a range of projects with an assessment for project difficulty and time to completion.

In terms of trends, Fishburne anticipates strong demand for seating this year, from extra chairs for the front yard to expansive couches for relaxing on the patio, and tall tables and chairs for al fresco dining.

People will also be looking for products that will help increase the amount of time they can spend outdoors, including ambient lighting for the night, umbrellas and patio canopies for shade and weather protection, nets against insects and fire pits, and heating elements to keep the season off to extend.

More potted plants and lots of greenery will be on the agenda, as will the demand for more decorative accessories like pillows to add the finishing touches.

The sky is literally the limit when it comes to outdoor decorating.

“The inside affects the outside and the outside affects the inside more,” says Fishburne. “People are fed up with being in their four walls and want to take them outside. You are now looking at your outdoor area and decorating it like your dining room or living room. “

Lowe’s envisions all of the possibilities

With around 1,700 locations in the U.S., Lowe’s is about two-thirds the size of Home Depot, but it outperformed its main competitor last year, rising 26.1% to $ 89.6 billion.

And while it doesn’t report segment sales, its competitors’ results are a fitting indicator of Lowe’s, as the company’s EVP for merchandising, Bill Boltz, said Lowe’s outdoor living and lawn and horticultural categories were seeing comparable growth in the fourth quarter of 2020 of over 30%.

To keep the good times going, Lowe’s has extended its usual spring weekend kick-off to a month-long celebration called SpringFest. Every Thursday through April, customers can register for free roadside collection of family-friendly outdoor activity kits such as: B. a Garden-to-Go-Kit sponsored by Miracle-Gro SMG on April 8th (registration already closed in my region). a Mystery Garden Pinata on April 15th; Tree saplings for Earth Day April 22nd; and a butterfly garden kit on April 29th.

Marisa Thalberg, EVP brand and marketing manager, presented the concept of the SpringFest during a virtual press conference and explained it as the “idea of ​​the will” [Lowe’s] continue to have the opportunity to be at home. It’s an ethos for us now, in addition to an advertising line. ”

To that end, Lowe’s adds the unexpected to the usual suspects found in hardware stores, such as dishes and a wide range of decorative accessories, as well as trampolines, tents, binoculars and telescopes for backyard adventures.

At the press conference, Boltz described the spring season as the retailer’s holiday season, and his research showed strong results. Almost 90% of homeowners who finished household products in the Covid year plan to do more this spring. And around 70% of respondents have no plans to travel this spring, which means they will have plenty of time to do new home projects.

“With the change of season comes a change in mindset and what we want to be is inspiring,” added Thalberg. “We want our role to unleash the potential to help our customers create focused experiences at home and see home as the ultimate destination, be it a haven or a place for fun and escape. Everything is possible. ”

The winner is …

As the saying goes, “The early bird gets the worm,” and an Easter weekend stroll through the outdoor sections of my local home depot and Lowe’s stores in southeastern Pennsylvania revealed that Lowes is the early bird.

It wasn’t that Home Depot wasn’t ready, but Lowe’s was ready. For example, Home Depot’s outdoor garden displays were sparse, but it’s early in the season for in my area. Even so, Lowe’s garden area was filled with trees, perennials, and annuals that were now suitable for planting.

In the store, both were stocked with plenty of outdoor living equipment and hardware, but Lowe’s had a wider selection of patio furniture, accented with colorful displays of decorative outdoor accessories like umbrellas and rugs. Multi-sensory, Lowe’s Easter flower displays were particularly fragrant even through my mask.

Based on that sample, I found Home Depot pretty much as expected, but Lowe is really inspiring, but then I’m not the type of shopper whose heart beats faster for a souped-up garden tractor or fancy gas grill.

While both Home Depot’s Fishburne and Lowe’s Thalberg state that customers are fairly evenly distributed when it comes to gender, it’s clear that Lowe’s is exploring the possibilities for its female customers, like its surprising New York Fashion Week sponsorship shows last fall.

“We want to empower all of our customers regardless of their gender, from the easiest DIY customer or someone who wants us to do this for them, to our most experienced professionals,” said Thalberg in a subsequent phone call.

“But the breadth and selection that we now offer in our stores and online, and the experiences we have made, are really unique. When we did New York Fashion Week it opened people’s attention to the amount of incredible decor and home furnishings that we have on offer. For our customers, regardless of their DIY expertise, we’re creating a better experience for all of them by the end of the deal, ”she concluded.

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