Retail outlook: Remodeling still the sweet spot

HomeFeatured PostRetail outlook: Remodeling still the sweet spot
D&M Interiors in Appleton, Wis., has experienced robust home remodeling activity in the first quarter.

By Ken Ryan During the height of the COVID-19 pandemic, flooring retailers largely benefited by the surge in home remodeling projects that ensued when homeowners opted to invest in home renovation projects as opposed to lavish vacations and entertainment. Many dealers feared that once the pandemic subsided and the economy really opened up, spending on projects would dry up. Thankfully, that doesn’t appear to be the case.

The Leading Indicator of Remodeling Activity (LIRA), released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, projects a healthy pace of mid-single-digit gains in annual home renovation and repair spending this year, with 4.8% growth to continue for the first quarter of 2022. What’s more, the study found that homeowners are undertaking even larger discretionary renovations.

LIRA reported that the financial boost stemming from recent federal stimulus payments coupled with strong home appreciation—has allowed homeowners to continue to invest in the upkeep and improvement in their homes. “This lift in incomes and ongoing strength of the housing market are providing homeowners with incentives to make even greater investments in their homes this year,” said Chris Herbert, managing director of the Joint Center for Housing Studies.

Naturally, all this is music to the ears of flooring retailers as they continue to enjoy robust activity. “We started this year off with a bang and it hasn’t stopped,” said Denise Fike, CFO of Fike Bros. Carpet One, Selinsgrove, Pa., echoing a refrain shared by many of her colleagues. “The No. 1 area in residential remodeling for us has been complete remodels of baths, including walk-in showers. Other areas that are very popular are changing existing carpet to hard surfaces in living room/dining rooms, often with the entire main living area being covered in the same material.”

While business has never really slowed for Home Carpet One in Chicago, owner Joel Schreier has noted a shift in the way consumers are shopping. “Early on during the pandemic, it seemed like most of the business was coming from consumers moving to new homes,” he explained. “Over the last couple months, we have seen a shift to residential replacement. The focus for most consumers has been a room at a time and it has run the gamut in terms of the work being done. Exercise rooms, basements, bathrooms and runners seem to be the most common areas of focus.”

Most dealers are seeing the majority of their retail business coming from renovations whether from new home sales or from people who are deciding to stay put and fix up their homes. “With the housing market being so hot, customers are purchasing homes with the low interest rate and renovating the kitchens, baths and basements,” said Matt Wien, director of sales for Marshall Carpet One Floor & Home, Mayfield Heights, Ohio. “On the flip side, sellers are renovating the same areas in order to get a premium for their house in this market.”

Retailers say homeowners are sparing no expense in fixing up their homes.

The LIRA report affirmed what is occurring at businesses like D&M Interiors, Appleton, Wis., which has seen off-the-charts retail/renovation activity in the first quarter, fueled by multiple-room projects at higher-than-average tickets, according to owner Bill Huss.

In Birmingham, Ala., Mindy Arnette, residential sales manager for Brian’s Flooring & Design, is seeing what she called “an intentional increase” in residential renovation projects. “The majority of our clients are remodeling bathrooms and kitchens that have been long overdue for an update. We have seen clear gains in our first quarter 2021 and our projections mirror those of LIRA.”

What’s appealing to retailers like Gerry Yost, director of carpet, area rugs and window treatments for Avalon Flooring in Cherry Hill, N.J., is the pace of these projects. As he explained, “Customers are fixing up their homes top to bottom but not at the same time, so it is a sustained growth. They are focusing on one area at a time. As usual, kitchens and baths are the top contenders but, in actuality, every room in their homes is getting upgraded.”

While kitchen remodels are trending at Independent Carpet One Floor & Home in Westland, Mich., total home remodels are turning up with increased frequency. “We are seeing people redo whole-house carpeting,” said Cathy Buchanan, owner. “Homes that were built, say, 15-20 years ago are now refurbishing the look and feel, whether it be new cabinetry or sanding and refinishing of hardwood floors.”

The surge in business is not region specific, either, as flooring retailers from the Northeast to the Florida coast are continuing to take advantage of pent-up demand. “We are seeing gains in all residential categories,” said Sam Locher, vice president of business development and marketing, A.J. Rose Carpets & Flooring, with three Massachusetts locations. “For Q1 of this year, we have seen a large increase over both 2020 and 2019 and expect the trend to continue. It seems to be spread fairly evenly across the board among whole homes, kitchens and baths.”

For John Taylor, owner of Taylor Carpet One Floor & Home, Fort Myers, Fla., sales activity in residential home remodeling has shown a large increase year over year, and 2020 was a stellar year. “Existing home sales have been very good to the point where inventory is low,” he said. “The ones buying these homes are fixing them up and we are seeing larger jobs where they are completely redoing all of the existing floors.”

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May 24/31, 2021

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