High Prices, Lack of Product Availability Affect Sales by Building Materials Retailers

The latest retail sales report by the US Census Bureau showed that retail sales by building materials and garden equipment and supplies retailers declined more than 2% in November. While retail sales for the year were up more than 13% compared to 2020, this fall in sales for the month was a matter of concern for many in the industry. The drop in retail sales could be attributed to a number of factors, key among them being:

• rising lumber prices and continuing high prices for a wide range of building materials
• shortages of Christmas trees (which are often purchased at garden supply centers and big box retailers) in some parts of the US
• a slowdown in DIY activity by homeowners as autumn turned to winter – homeowners are less likely to undertake home improvement projects in inclement weather
• the end of hurricane season, when lumber and other materials used to fix and repair structures are often purchased in the aftermath of storm landfalls
• a retrenchment in consumer spending as the holiday season approaches – some consumers reduce discretionary spending in anticipation of an increase in spending in December

Looking forward, building materials and garden equipment and supplies retailers are anticipating an uptick in sales in December. Prices for lumber and other building materials are expected to remain high – as will new home construction, boosting sales of these products. Furthermore, December has traditionally been a time when people bought “big-ticket” items as gifts for themselves or others. Sales of these items – which include appliances, power tools, and lawn mowers – are expected to be good, as many consumers will continue to invest in their homes, such as by replacing older appliances or upgrading lawn and garden equipment to maintain the exterior appearance of their residences.

TFG analysts will continue to monitor retail sales – as well as numerous other indicators – to gauge their effects on the US economy going forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.