Working ‘from home’ or ‘on your home’
First of all, are we working ‘from home’ or ‘on our home’? This is how I start most presentations on the impact of the coronavirus on the home improvement market. I accompany this opening statement with the visual from the Netherlands below:
Granted, this could well be a grocery store or even a coffeeshop for that matter (less people allowed in store, so longer lines), but still it is visually very supportive of the story I tell based on the data we have.
About the European Home Improvement Monitor
Before diving into this, lets talk briefly on the data we have. USP has been running the European Home Improvement Monitor for many years now, a multi-client online survey in 11 countries among 26,400 consumers. Each month interviews are conducted and each quarter a report is published covering a certain trend in the home improvement market (think of online buying, DIY vs DIFM, A-brands vs private labels and so on). Obviously, we took the opportunity to add some corona related questions. This resulted in the data we base our conclusion on. For more information on the report, click here.
Spending more time on home improvement jobs
As said, we conduct interviews with consumers each month and so far have data for April and May. What is very clear to see is that consumers are spending more time conducting home improvement jobs due to the coronavirus. In April, an average of 20% of European consumers mentioned that they where doing more jobs, compared to 18% of consumers indicating that they conducted less jobs. So a plus of 2%. This increased in May to 25% of consumers indicating more jobs versus 14% doing less. So the plus increased to 11%!
Obviously, there are big differences between the 11 countries in this study. A key factor seems to be the severeness of the lockdown and the fact if DIY stores where open or closed. For example, in the Netherlands, where DIY stores never closed and people where instructed to work from home as much as possible, 32% of the consumers indicated they did more home improvement jobs and only 8% mentioned doing less jobs due to the coronacrisis. On the other end of the spectrum we find Poland, where 18% said more jobs, vs 24% stating less jobs done. Also, there is a difference in age as well. Millennials seem to be doing the most jobs due to the coronavirus compared to other age groups. Income or DIY experience also have an impact (higher income and higher skill level leads to higher jobs done).
So what could be the reason for this? I think the most logical reason is that people have more time to spare because they are working from home (and spend less time in other leisure activities), are less willing to hire professionals to do the job for them (more on that later) and because the majority is working from home, jobs that need to be done become more visible. Finally, the very good weather conditions also helped out quite a bit when it comes to home improvements jobs in the garden/balcony & the outside of the house/apartment.
Consumers more likely to visit DIY stores again
More and more consumers are also getting more comfortable with visiting DIY stores. Even tough 53% of European consumers still indicated in May that they tend to avoid public places including DIY stores, 37% was perfectly comfortable visiting a DIY store. Compared to April, that was a plus of 17%! It can be expected that this number becomes even higher in the upcoming weeks.
Drop in outsourcing home improvement jobs
Home improvement is obviously more then just DIY behavior. In the past years there was a trend towards more outsourcing (DIFM) of home improvement jobs due to the aging population and less willingness to do complicated jobs by primarily younger generations. This trend was already slumping a bit end of 2019 due to the high labor shortage among professionals and consequently higher costs of, and longer waiting time for, a professional to do the job for the consumers. That being said, a huge decrease of DIFM can be noted in the European home improvement market. Besides the fact that in some countries renovation and construction was completely shut down (like Spain), consumers where just not comfortable having professionals in their home. The rather picked up the brush themselves.
In April, a whopping 71% of all European consumers would rather postpone any job where a professional would be needed. In May, this number dropped, but still 57% of consumers where not open to have a professional in their homes. Combine this with the fact that many consumers decided to do more jobs themselves already and the uncertain financial situation/ consumer confidence, this does not bold well for the professionals in the construction industry who rely heavily on residential renovation projects. In fact, in the most recent Dutch BouwMonitor conducted by USP, it’s very clear that the finishing sector (painters, floor laying companies etc) are hit the hardest by the coronacrisis. No surprise given the numbers above.
Again this is very country depended. In Spain and Italy people are most hesitant to have a professional in their home (74% and 69%). Consumers in Austria, Denmark and the Netherlands are most open to having a professional do the home improvement job for them (+- 58% in all countries).
More online buying
One of the key effects of the coronacrisis is the huge increase in online buying behavior of European consumers. This is also the case for home improvement products. Normally, paint would be a product category with a very low share of online sales. Yet when we asked the European consumers where they would buy there paint if they needed to do a paint job, the share that answered online was really high.
In April, 32% of European consumers indicated to order online if they would do a paint job. However, as more and more DIY stores are reopening in countries where they were close or consumers in countries where the stores where still open are more comfortable going there, people are reverting back to their old ways. The 32% decreased to 28% (which is still really high for a product category like paint) and expected to continue to decrease.
DIFM jobs become DIY jobs or are postponed
Looking into the future and trying to give prognoses for the home improvement market for the second half of 2020 and for 2021 is really difficult. There are many factors that have a strong effect but are still not predictable. Will we have a second wave of infections? This can have a huge impact. However given all of the data we have and the Q1 earnings and predictions for Q2 becoming public of the DIY retail chains, it’s clear that the home improvement market (in contrast to the construction market) is positioned for a rapid recovery.
We can clearly see that in countries where the DIY stores were open, home improvement didn’t completely melted down. In countries which closed the DIY stores, but now have reopened them, we clearly see a strong recovery as well. There is also less of a connection between a low consumer confidence and the amount of DIY jobs done. At least, less so then in other industries. However the home improvement market is more then just DIY jobs alone. DIFM is set to decrease sharply as consumers either do the job themselves or are postponing DIFM jobs.
Now what?
USP has been providing many insights for free in these challenging times. The April report of the impact of corona on the home improvement market has already been distributed. If you missed it, please reach out via hoogenboom@usp-mc.nl, so I can then send you a free copy.
As we had a lot of very positive feedback on the insights we provided, we have/plan to do 4 more measurements (May is already done, June, July and August). From June onward, we will be including even more questions on the impact of the coronavirus.
These additional insights will be free for all of our subscribers to the European Home Improvement Monitor, or available against a small fee. When of interest, just let me know and I can explain what to expect and the costs.
Thank you for reading, I hope it was of interest and feel free to contact me via hoogenboom@usp-mc.nl
