Rising fuel and food prices due to inflation are forcing all Americans to rethink their spending habits, and discretionary buying decisions from just a year ago are being changed so families can make groceries and fill gas tanks.
The retail building supplies industry, which primarily deals with do-it-yourself and home improvement projects, will be a large area that will be impacted by developments in discretionary spending.
Nationally, big-box retailers account for more than $250 billion in sales, and recent quarterly reports from these giant conglomerates suggest some shifts in consumer sentiment could be dragging sales down.
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While housing starts have remained strong and overall demand for multi-family housing and commercial construction holds up, the retail sector is underperforming, and this is one of the main reasons why there is had some setback in the wood products markets.
The problem for many of these large retail companies is that inventory of many retail products was purchased months before the Russian-Ukrainian war, rising interest rates, the new shutdown in China and the squeeze subsequent inflation.
While there are many items in the supply chain that will remain tight, particularly on the structural materials side, you’re likely to see some special offers popping up in early summer as these retailers scramble to empty inventory in place.
Here are the areas to look for offers:
- In the lawn and garden, there seem to be lots of truckloads of unused mulch, pine bark and potting soil in the parking lots. In today’s market, installing or renovating flowerbeds at home does not have the same importance as filling the gas tank. Additionally, bagged goods and other seasonal lawn and garden items have a shelf life and a short period to sell. Chances are that many lawn and garden products will have deep discounts as summer wears on.
- Decking material is another area manufacturers have reported slowing to pre-pandemic levels. In the past two years, when people were confined to their homes, many bridges were built to accommodate outdoor COVID-19 events, and this summer the need is not so great. Also, building a deck on your home is usually a want, not a need. Since winter is not a good time to build a deck, look for deals on deck and dock materials as summer progresses.
- It goes without saying that if people start doing less DIY around the house, the demand for tools will decrease. Most retailers struggle to sell tools in good times because they buy too many of them, and with the strength of online tool sales, these products on store shelves could gather a lot of dust over the next few months. . If inflation has gotten all your discretionary money, then tools can be good items to buy in the summer as a Christmas present. Tools, as well as electric lawn equipment, will likely see huge discounts as the summer season turns into fall.
- Another area that will likely see discounts is paint. Yes, the paint stays waterproof, but a major downturn in DIY projects will slow down paint sales as most use paint when doing a project at home. Although this is a petroleum-based product that manufacturers may be hesitant to carry, the problem will be the overstock situation in many stores. Paint is prone to aging and freezing, and in the long run, most retailers know it’s a bad idea to store it for long periods of time.
As supplies were tight, many retailers likely overbought anticipating higher demand and are now looking for a way to pull it off shelves. Start looking for paint deals this summer if you want to upgrade a room in the fall.
There’s a saying in the procurement industry in markets like this: the best markdown is your first markdown. Don’t be shocked to see real discounts on select lawn and garden lines as well as decorating products as summer rolls on and overbuys collide with the sales season.
Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the show “Around the House” which can be seen on AroundtheHouse.TV.