Growth in construction industry does not lead to more home improvement jobs
The GDP growth rate in Europe has grown with on average around 1% or less per year and the construction industry has grown on average with 2% per year in Europe in the last years (source: European Architectural Barometer/USP Marketing Consultancy). Although modest, the European outlook seems to be positive. Looking at the home improvement market, the number of home improvement jobs and the total spending in home improvement seem to remain stable instead. We notice a discrepancy between the growth of the construction industry and the total spending in home improvement and the number of home improvement jobs. The European Home Improvement Monitor elaborates on how the home improvement market is developing each quarter. 26,400 European DIY consumers have been surveyed for this research.
Growth in construction industry
In the last years there is on average a growth of 2% in the European construction industry. In Spain and the Netherlands this growth is biggest(around 6%) and it is smallest in Italy and Poland (1 or 2%). The order books for professionals active in the construction industry are filling up rapidly and many new-build projects and renovation projects are being conducted. It is expected that the construction industry will grow even more in the future in most of the European countries.
No real growth in spending in the home improvement market
There is no real growth when it comes to the total spending in the European home improvement market. The EU average is stable. There are differences in each country however. In Austria, Denmark, Poland and the Netherlands the growth is above 5%. In other countries like Italy and the UK, there is a large decline that has a significant impact on the EU average. In contrast with the growth in construction, the home improvement market is not performing as well.
Stable number of home improvement jobs
Consumers do the most home improvement jobs from the months March till September, which clearly shows that there are seasonal patterns in the home improvement market. Furthermore, there is no clear visible impact of the growth of economies and construction on the number of home improvement jobs, like painting. The number of painting jobs is similar to several other home improvement categories, like tools, HVAC, Kitchen, Bathroom and so on.
Why is the number of home improvement jobs not increasing?
One of the possible explanations is that the amount of repair and maintenance jobs is currently less often necessary, because the durability of the products is higher than in the past. One example of such a product is paint, which leads to a decline in sales of repair and maintenance products. Another reason why the number of home improvement jobs is not increasing is that consumers spend more on other products than home improvement products. Electronics is one example of such a product. While consumer spending in general is increasing, the consumer spending on home improvement is not.
Moreover, consumers do not always have the funds to conduct their desired home improvement jobs, especially with starters. Directly after buying a house, their funds are limited due to stricter legislation on mortgages. Financial institutions have become more careful with providing mortgages to consumers. When consumers have less money at their disposal after buying a house, they will spend less money in conducting a home improvement job, so they postpone part of their desired home improvement jobs.
Why is the spending in home improvement not increasing?
The first reason why the total spending of the home improvement market is not increasing is the fact that the share of Do-It-For-Me (DIFM) is not growing yet. Due to the aging generation and the younger generation that is less DIY minded, we expect that the share of DIFM jobs will increase on the mid to long term. Consumers who do the job themselves usually spend less than when they have a professional do the job for them. However, the number of home improvement jobs in which a professional is involved hasn’t increased.
The second reason is the increase of competition and competitive pricing by the growing importance of online channels for the consumer. Online channels lead to more competition and more pressure on prices. In addition, a lower share of consumers buy at a specialty shop nowadays. In 2017 this was only 10% which is a decrease of 2 percentage points compared to 2016. This could lead to lower spending per product by consumers.
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