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Vol. 64 • Issue 1 • January 2024 • PDRmag.com

Published by the North American Hardware and Paint Association

Market Measure Turn to the Industry’s Annual Report for Insights Into 2024 Page 22

NEW

Experts Weigh in on Strategic Planning, Merchandising & More Page 6

Heat Up With 3 Trends in Exterior Wood Care Page 36

JANUARY ISSUE SPONSOR

CALL FOR 2024 NOMINATIONS

Recognizing young leaders who represent the future of independent home improvement retailing

• 20

ILE

Youn Reta g iler Year

L A

G O R

WARDS P

NHPA

North American Hardware and Paint Association

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of th e

28TH Do you know an inspiring young retailer? Submit your nomination by February 28, 2024. Learn more at YourNHPA.org/yroty.

N G R E TA

OU Y A HP

Nominations are now open for the 2024 Young Retailer of the Year awards!

12/14/23 11:31 AM

Vol. 64 • Issue 1 • January 2024 • PDRmag.com

Published by the North American Hardware and Paint Association

Market Measure Turn to the Industry’s Annual Report for Insights Into 2024 Page 22

NEW

Experts Weigh in on Strategic Planning, Merchandising & More Page 6

Heat Up With 3 Trends in Exterior Wood Care Page 36

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U YO

R NHP A

COMING IN FEBRUARY

1025 E. 54th St. Indianapolis, Indiana 317-275-9400 NHPA@YourNHPA.org YourNHPA.org

NHPA EXECUTIVE STAFF Bob Cutter President & CEO

COMMUNICATIONS Melanie Moul Research & Content Strategy Manager mmoul@YourNHPA.org

Dan Tratensek Chief Operating Officer & Publisher

Austin Vance Production Manager Julie Leinwand Special Projects Manager Lindsey Thompson Senior Editor lthompson@YourNHPA.org Jacob Musselman Content Coordinator jmusselman@YourNHPA.org Autumn Ricketts Graphic Designer Olivia Shroyer Graphic Designer Freda Creech Sales & Production Assistant Samantha Mitchell Productiong & Design Assistant Nathan Piper Marketing Coordinator

ASSOCIATION PROGRAMS 800-772-4424 | nhpa@YourNHPA.org Katie McHone-Jones kmchone-jones@YourNHPA.org Director, Member Services & Events

Implementing Effective Loss Prevention Strategies Retail theft has become an increasingly significant concern for independent retailers. In the February issue of Paint & Decorating Retailer, we’ll look at what’s driving the new wave of retail crime and then offer practical ways to address retail loss in your own operation.

Kim Peffley kpeffley@YourNHPA.org Director, Organizational Development & Consulting Jesse Carleton jcarleton@YourNHPA.org Training Manager & Editor Renee Changnon rchangnon@YourNHPA.org Retail Engagement Specialist

SALES Jordan Rice 217-808-1641 | jrice@YourNHPA.org Regional Sales Director

CIRCULATION, SUBSCRIPTION & LIST RENTAL INQUIRIES CIRCULATION DIRECTOR Richard Jarrett, 314-432-7511, Fax: 314-432-7665

OUR MISSION

The North American Hardware and Paint Association (NHPA) helps independent home improvement and paint and decorating retailers, regardless of affiliations, become better and more profitable retailers.

David Gowan Chief Financial Officer & Executive Vice President, Business Services Scott Wright Executive Director, Advanced Retail Education Programs Whitney Mancuso Executive Director, Innovation & Engagement

NHPA BOARD OF DIRECTORS CHAIRMAN OF THE BOARD Ned Green, Weiders Paint & Hardware, Rochester, New York EXECUTIVE VICE CHAIRMAN Scott Jerousek, Farm and Home Hardware, Wellington, Ohio DIRECTORS Alesia Anderson, Handy Ace Hardware, Tucker, Georgia Jay Donnelly, Flanagan Paint & Supply, Ellisville, Missouri

PAINT & DECORATING RETAILER (ISSN 1096-6927): Published monthly except December by the North American Hardware and Paint Association, 1025 E. 54th St., Indianapolis, IN 46220. Phone: 800-737-0107. Subscription rates: January through November issues, $50 in U.S., payable in advance. Canada $75 per year. All other countries $100 per year. Single copy $7, except July issue, $25. Periodicals postage paid at Indianapolis, Indiana, and additional mailing offices. Postmaster: Send address changes to Paint & Decorating Retailer, P.O. Box 16709, St. Louis, MO 63105-1209. Returns (Canada): Return undeliverable magazines to P.O. Box 2600, Mississauga, Ontario L4T 0A8. PM# 41450540. Copyright © North American Hardware and Paint Association, 2023.

Ash Ebbo, Clement’s Paint, Austin, Texas Joanne Lawrie, Annapolis Home Hardware Building Centre, Annapolis Royal, Nova Scotia Michelle Meny, Meny’s True Value, Jasper, Indiana SECRETARY-TREASURER Bob Cutter, NHPA President & CEO

NHPA CANADA NHPA CANADA Michael McLarney, +1 416-489-3396, mike@hardlines.ca 330 Bay Street, Suite 1400 Toronto, ON, Canada M5H 2S8

January 2024 | PAINT & DECORATING RETAILER

N T E N TS

Volume 64 | Issue 1 | January 2024 PaintandDecoratingRetailer

PDRMagazine

DEPARTMENTS Viewpoint . . . . . . . . . . . . . . . . . . . . . 4 Fresh Coat . . . . . . . . . . . . . . . . . . . 14 New Products . . . . . . . . . . . . . . . . 16 Newsmakers . . . . . . . . . . . . . . . . . 44 Calendar . . . . . . . . . . . . . . . . . . . . . 46 Finish . . . . . . . . . . . . . . . . . . . . . . . . 48

EXPERT INSIGHTS

Business Strategy . . . . . . . . . . . . . . 6 Setting Goals GARY PITTSFORD

Retail Operations . . . . . . . . . . . . . . 7

COVER STORY

Merchandising Fundamentals TONY CORSBERG

Retail Innovation . . . . . . . . . . . . . . . 8

Your Annual Report With insights from industry experts and data highlighting the performance and projections for the home improvement channel, the North American Hardware and Paint Association has assembled your key resource for 2024 .

Eliminating Obstacles to Employment GINA SCHAEFER

Marketing Minute . . . . . . . . . . . . . 9 Starting Simple JIM CARPENTER

Ask Kim . . . . . . . . . . . . . . . . . . . . . . . 10 Collaborative Problem-Solving KIM PEFFLEY

MARKET MEASURE

Industry Breakdown

Industry Insights

Chain Results & Financial Profiles

Get the data on industry performance and see projections for industry sales from NHPA and HIRI .

Hear from industry executives how the industry has changed and read their strategies for supporting independent retailers in 2024 .

Reference big-box performance highlights and market share profiles of the industry’s leading chains all in one place .

MARKET MEASURE

CATEGORY FOCUS

The Industry’s Benchmark

HIRI Analysis

Heating Up Outside

See highlights from the 2023 Cost of Doing Business Study and how to use it to benchmark your business this year .

Gain perspective and plan for the year ahead with insights and projections from the Home Improvement Research Institute .

Discover three trends that will shape the exterior wood care category in 2024 and best practices for selling these products .

PAINT & DECORATING RETAILER | January 2024

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P OI N

CONNECTIONS

How to Reach Dan dant@YourNHPA.org

Dan Tratensek

A Focus On Change

“The more we can put down our flags and the more voices we can bring to the discussion to share and learn with one another, the better off we all are.”

’ve been employed at NHPA for nearly 30 years. Wow, right? During these nearly three decades, I’ve seen both the organization and my role within it go through a lot of changes. When someone used to ask me what I did for a living, the answer was pretty simple: I’m an editor of a business magazine. Most people understood this job, and there wasn’t a lot of follow-up explanation required. Now, when someone asks me what I do, the answer is a bit more complicated. Today, rather than throwing out my title, I typically say something like, “I attend meetings.” I don’t know if it is just my vocation that has gotten more complicated or if it’s actually everything we all do. There just might not be a “simple” explanation for anyone’s job anymore. One thing that really hasn’t changed in the time I’ve been with NRHA (now NHPA) is the way we describe our position in the industry. We typically tell everyone we are like the Switzerland of the home improvement channel—a place that doesn’t take sides and where everyone is welcome and everyone in the channel can have a voice. Last year, with the launch of our Independents Conference, we wanted to exemplify this principle to the industry. We wanted to create an event where everyone could come together under one tent in support of the independent retail channel. It’s also why we ardently support other industry events like the National Hardware Show. The more we can put down our flags and the more voices we can bring to the discussion to share and learn with one another, the better off we all are. It’s in that spirit that you are going to notice some changes in the coming months both in this magazine and from your association. We are doubling down on our commitment to serve as the industry’s village square. Part of this will mean bringing additional viewpoints and voices to the table to share their experience through the pages of this magazine and in our other media properties. Additionally, we will continue to engage with our industry partners who support independent retailers by supporting them. We will continue collaborating with organizations like the National Hardware Show to find ways to help make their events even more meaningful to the channel. And lastly, we will challenge ourselves to cultivate new partnerships with anyone and everyone who supports our mission of helping independent retailers run better and more profitable operations.

So with this commitment, I wish you all a Happy New Year! Now let’s go out there and prove we are stronger together!

Dan M. Tratensek Chief Operating Officer & Publisher

PAINT & DECORATING RETAILER | January 2024

S ST R A GY

BUS

OPERATIONS

Get Your Valuation Access business valuation services and explore businesses for sale on the NHPA Retail Marketplace at YourNHPA.org/marketplace.

E XP E R T I N S I G H T S

Make Changes in the New Year

’ve watched the retail hardware and lumber industry mature over the last 50 years. The industry is now stronger, more high-tech and doing better financially. A high percentage of retail hardware stores, lumberyards and paint stores are doing very well, but there’s always room for improvement. Below are a few ideas to consider in the new year. Make it a goal this year to spend at least two or three hours per month working on the business rather than in the business. Hire a reputable business valuation firm familiar with your industry to prepare a business valuation to understand the current value of your business and determine what areas need improvement. When I look at a company’s business valuation and financial statements, there are certain areas I concentrate on. For example, what’s the gross margin on products being sold? The national average is about 40%*. If your gross margin is less than 40%, do what you can to improve it. Review and collect on old accounts receivable. Is your payroll in line? That’s usually the biggest expense. The national average for payroll, including all salaries, is around 20%*. If you’re off target, make adjustments. As your gross margins go up and your expenses come down (or flatten out), that means more free cash flow, which means increased business value. This is an important area of focus if you plan to transition the company in the next few years. It doesn’t matter who the buyer is—the buyer needs the highest cash flow you can produce. Picking your exit planning team is essential in the last three to five years before you transition the business. Meet with them at least once or twice a year to be sure your exit plan is on track. The three members essential to your team are a corporate attorney, an accounting firm familiar with all your taxes and a business financial adviser. If your children are going to be taking over, in those last three to five years, make sure you take them with you to every meeting you have with your banker, your attorney, your accountant and each of your vendors. A high percentage of owners in this industry are baby boomers between the ages of 60 and 80, and over the next five to 10 years, most of them will be transferring their business. A strong, high-profit financial statement makes these transitions easier for everyone.

Meet Gary Gary Pittsford has helped hundreds of family business owners with valuations, exit planning, estate documents, retirement income security and net worth protection. Gary served as president and CEO of Castle Wealth Advisors, which was acquired in 2021 by Creative Planning to form a new division providing services for corporations, LLCs, family limited partnerships and others across a range of industries. Creative Planning Business Services offers expanded services for business owners. Gary retired from Creative Planning in December 2023 and now functions as a consultant, continuing to work with business owners nationwide.

CONNECT gary@castleconsultingco.com

Gary Pittsford

Partner & Chief Valuation Officer (ret.) and Consultant Creative Planning Business Services *Source: 2023 NHPA Cost of Doing Business Study This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

PAINT & DECORATING RETAILER | January 2024

RET

OPERAT

TRAINING

Build Your Merchandising Foundation Registration for the 2024 Foundations of Merchandising Management Live! is now open at YourNHPA.org/foundationslive.

E XPE R T I N S I G H T S

It’s Time to Invest in Merchandising Fundamentals

hen NHPA asked me to contribute to the pages of Paint & Decorating Retailer, I was honored. For the past couple of years, I have worked closely with the association to develop and launch the new Foundations of Merchandising Management course that you may have heard about or perhaps attended. This new program will once again be presented in Las Vegas at the National Hardware Show in March. It’s also available online as part of NHPA’s advanced education curriculum. The Foundations of Merchandising Management course is based on my 45 years of merchandising experience in the independent home improvement channel. During my career with Friedman’s Home Improvement, which operates four dual-path stores in northern California, I was successful in spearheading a major rebranding initiative, implementing new merchandising strategies that included assortment planning for consumers and pros, creating visual merchandising standards, promotional planning, store design and other initiatives that enabled us to effectively compete and grow alongside the industry big-box retailers since they entered our market years ago. I am also a founding member of NHPA’s Marketing and Merchandising Roundtable, where during the past 12 years I have learned and shared many merchandising management best practices with my fellow retailers. When I retired from Friedman’s as vice president of merchandising a few years ago, and with encouragement from people in this industry, I began helping other independent retailers with their merchandising management initiatives. This work inspired me to create Merchant5 Advisors. As the name suggests, Merchant5 is an advocate of the five principles (5 Ps) of merchandising. We help retailers craft their unique 5 P Recipe so they can deliver their own unique brand that differentiates them from the competition. Effective and successful merchandising management requires a lot more than just placing products on a shelf in a cool way. Merchandising is more comprehensive and requires both purpose and intent. It’s this type of purposeful and intentional merchandising that increases sales, optimizes the performance of your inventory and improves the retail space and overall customer experience. It’s understanding the “what, why and how” of all the merchandising disciplines that will make a difference at checkout and in the minds of your customers. As the industry adjusts from the fallout of COVID’s supply chain challenges the past few years, the timing for evaluating your merchandising execution should already be happening. It’s time to course-correct, clean up and rebuild these merchandising disciplines that will enable you to grow and prosper for the business that lies ahead.

Meet Tony Tony Corsberg’s nearly 45-year career began when he worked as a stocker at Friedman Bros. Hardware in Santa Rosa, California. He eventually served as vice president of merchandising, where he spearheaded the rebranding initiative that created Friedman’s Home Improvement, which today operates four large-format home centers with lumberyards in northern California. Tony retired from Friedman’s in 2018 and later started his consulting firm Merchant5 Advisors, guiding independent retailers in merchandising initiatives. In 2022, he was integral in the development of NHPA’s Foundations of Merchandising Management program.

CONNECT Email tonycorsberg@gmail.com Merchant5.com

Tony Corsberg

Principle Merchant5 Advisors

January 2024 | PAINT & DECORATING RETAILER

RET A

INNOVA

RESOURCES

Supporting Small Learn more about the organizations helping small business succeed and how you can join the efforts at PDRmag.com/small-business-rising.

R E TA I L E R I N S I G H T S

There Is Power in Community

he new year always brings with it a time to reflect—to look back on accomplishments and plan for the year ahead. Each year, I try to build on my previous goals and milestones even though sometimes I think I’ve hit the jackpot already. Recovery Hardware. In 2016 a dear teammate of mine told me that was the name the community had begun calling our first hardware store in Washington, D.C. It’s true we had spent the previous 13 years hiring returning citizens and folks from the recovery community, almost on accident. In our efforts to build a strong corporate culture, we consciously eliminated the obstacles to employment, which included removing the felony box from our application and overlooking gaps in work history. Our first teammate had been imprisoned for 17 years and our second was battling an addiction to crystal meth. Both of those things create incredible long-term challenges—obstacles to employment, access to healthcare programs and the ability to be trusted by people who perceive them differently. I didn’t know at the time that recovery rates hover around 5%, and 85% of those rearrested are unemployed. But I did know that people want a purpose—a place to belong where they feel seen. And a good job can provide those things. As the business founder, the nickname meant even more to me than our hiring practices. Our first location opened in a neighborhood that had been destroyed by riots in 1968. For decades, Logan Circle sat dormant, overlooked and unloved until people started moving east in Washington, hoping for more affordable housing. When we opened, surrounded by boarded up houses and storefronts, we became part of the recovery efforts of the beautiful community I came to call home. I was also in a recovery of sorts. Having been laid off from three tech companies in the previous two years, I was ready to craft a new life for myself and forging a path in Logan Circle seemed like just the ticket. As it turns out, Recovery Hardware was the perfect nickname for our burgeoning business. It eventually became the title of my book published in 2022 that chronicles the challenges of running a hardware business, the beauty of community and the recovery that we can create as small business owners in this country. I know so many of you can relate. Dream big in 2024.

Gina Schaefer

Founder and Former CEO A Few Cool Hardware Stores

PAINT & DECORATING RETAILER | January 2024

Meet Gina Gina Schaefer is the founder and former CEO of over a dozen hardware stores in the Washington, D.C. area. Gina’s big passion is developing urban markets, supporting small businesses and helping women succeed in all aspects of the hardware industry. She has tirelessly focused on the “Return to Main Street” movement in Washington, D.C. to promote Shop Local campaigns and community revitalization in urban areas.

CONNECT Email gina@acehardwaredc.com LinkedIn Gina Schaefer Scan the QR code to learn more about Gina’s work to promote small businesses and second chances.

T I N G MI

RESOURCES

Hard-Working Marketing Discover marketing insights and resources to get the word out about your operation at YourNHPA.org/marketing-guides.

R E TA I L E R I N S I G H T S

Focus on a Solid Foundation

hen it comes to retail LBM marketing, I find myself being able to think and talk about it for hours. As the son of a builder, my first job at 15 was at our local True Value hardware store where I began my working life stocking shelves, cutting keys and mixing paint. The foundations established in that environment prepared me for—and continues to challenge me—in my role as the director of marketing for Curtis Lumber. Retail marketing has evolved from its predecessors of advertising, merchandising and communications, and nonmarketers often describe it as something complicated and mystical. I believe this is a little by design. Companies that sell marketing solutions want to make it more complicated than it really is, plus you have the constant bombardment of new tactics, new social media networks and new things to learn. Peers in the industry, other business leaders and friends with a side hustle often ask me what I think they should do to be better at marketing. The answer is rarely any of these new and complicated techniques. Most people are so busy with running the day-to-day business that some of the marketing basics get missed, and without a dedicated team, they can go for years without being addressed. The answer is to keep it simple. Start by doing a Google search of your company name. Do the results have the correct hours and phone numbers? Search your store’s top category and town—like “paint store Tucson”—and see what you find. If you are unhappy with the results, you can find companies that provide local listings management and can help with correcting this foundation. Think of your online presence as the phone book and storefront of the digital age; without the proper information, people will just scroll to the next company or number. Do you have a contact form on your website? Where does it go? Are you sure you’re getting the information? So many times we test, test and test again, only to find out that the form goes nowhere. It’s gotten harder than ever to gather customer information and quote requests, and the worst thing that can happen is a customer sends a message and you never answer them because you didn’t get their message, all while the customer is waiting for a response. It’s so easy to assume that our information is correct, the website is working properly and the people getting the leads are following up. However, the old adage of what is inspected is respected holds true here. It never hurts to act like a customer and remember that just one missed phone call or email could equal thousands of dollars in lost sales. The trick to being better at marketing and moving to the next level starts with a solid foundation. There is no sense in generating leads or phone calls to numbers that do not work and quote requests to email addresses that go nowhere. Focus on the basics and then build from there.

Meet Jim Jim Carpenter serves as the director of marketing for Curtis Lumber, a family-owned business that has been operating since 1890. Over the past 18 years, he has been instrumental in implementing various marketing strategies that have helped the company grow and expand to encompass 23 locations across northern New York and Vermont and exceed over $300 million in annual sales. Jim is committed to finding new and innovative ways to reach customers and improve the overall customer experience at Curtis Lumber.

CONNECT Email jim.carpenter@curtislumber.com LinkedIn Jim Carpenter

Jim Carpenter

Director of Marketing Curtis Lumber

January 2024 | PAINT & DECORATING RETAILER

K KI M

INDUSTRY EVENTS

Meet Up With Familiar Faces Networking, education and more await at industry events this year. See the list of dates at YourNHPA.org/cal.

E XPE R T I N S I G H T S

Collaborative Problem-Solving

nyone who knows me knows I am passionate about the independent home improvement industry. It’s evident from the fact that every vacation or trip I take inevitably involves visiting a hardware, lumber, home center or paint store. Fortunately, my husband shares this fascination, particularly for custom-designed 5-gallon buckets, making these excursions an adventure we both enjoy. I know I am not alone in my vacation store visits—can you relate? When I joined the association as a consultant, one of my main goals was to expand the sharing of best practices throughout the entire industry. Each store I visited showcased something remarkable, alongside some growth opportunities. Over my three decades in the industry, I’ve come to realize that there’s hardly a problem without a solution—someone out there has likely already figured it out. As we begin this new year, I’m committed to supporting the industry by introducing a column where you can freely ask any questions you’re grappling with or simply seek more insights. Drawing from my own personal experiences and the extensive knowledge available within the industry, I’m dedicated to bridging the gap between the challenges we face and the abundant solutions within our reach. A recurring concern from the retailers I consult with is, “Shouldn’t I already know how to do this?” My unequivocal response to this is always a resounding, “No.” It’s perfectly natural not to have all the answers—we’re all constantly learning and evolving. What truly matters is recognizing that it’s absolutely acceptable to seek guidance, advice or feedback. There should be no shame in reaching out, whether it’s to someone within your network or someone entirely new. I’m passionate about dispelling the stigma associated with uncertainty. It’s highly likely that you’ve conquered a problem that someone else is currently grappling with, and in turn, they might hold the key to solving your own predicament. I know that I am learning something new every day. So, I’m eager to hear about the challenges you’re navigating or the aspirations you’re pursuing but haven’t quite mapped out yet. No question is too big or too small. If you’re wondering about something, chances are others are too. Asking your question will not only help you but also help others within this industry we love. Please feel free to submit any questions you may have to AskKim@YourNHPA.org, or scan the QR code at the bottom of this page, and we will begin sharing those questions and creative industry solutions with you throughout the year. I look forward to working together to bridge the gap to support the independent channel. Remember, we are stronger together.

Kim Peffley

Director of Organizational Development & Consulting North American Hardware and Paint Association

PAINT & DECORATING RETAILER | January 2024

Meet Kim Kim Peffley is the director of organizational development and consulting with the North American Hardware and Paint Association (NHPA). With nearly 30 years of retail experience, her management and leadership knowledge enables her to offer professional training covering many aspects related to effectively leading a team in a home improvement retailing environment. Peffley leads retailers through comprehensive organizational change to improve internal communications and create stronger teams.

CONNECT Email kpeffley@YourNHPA.org LinkedIn Kim Peffley To submit a question to Kim, scan the QR code below

CALL FOR 2024 NOMINATIONS

Recognizing young leaders who represent the future of independent home improvement retailing A P H

• 20

Nominations are now open for the 2024 Young Retailer of the Year awards!

Youn Reta g iler Year

NHPA

North American Hardware and Paint Association

of th e

28TH Do you know an inspiring young retailer? Submit your nomination by February 28, 2024. Learn more at YourNHPA.org/yroty.

N G R E TA U O Y IL

L A

WARDS PR

S H COA

RESEARCH

Read the Full Report

Explore more highlights from the 2023 Bentley-Gallup Business in Society Report at PDRmag.com/society-report.

Making a Difference

What’s Your Societal Impact?

55%

as many Americans say small businesses have a positive impact compared to large businesses

of Americans would change jobs for a company that they feel “makes a greater positive impact on society”

You have an advantage as a small business operator as 85% of Americans say that small businesses have a positive impact on people’s lives

1 in 4 would change jobs even with a 10% pay cut

WHAT

71% of workers ages 18 to 29 would make this change

T H E

People Want 3 DATA POINTS ABOUT WHAT EMPLOYEES LOOK FOR IN A JOB A T T R A C T I N G W I L L I N G A N D E N G A G E D E M P L O Y E E S is still a top priority—and for some, a concern—coming into the new year. In a recent study of nearly 5,500 U.S. adults, Gallup and Bentley University sought to identify current priorities for employees and what prompts people to change jobs. See some highlights here and consider how you can ensure your operation meets your team’s expectations of a supportive workplace.

“Successful businesses need to be responsive to their customers and their communities.” —E. LaBrent Chrite

President, Bentley University

Source: 2023 Bentley-Gallup Business in Society Report

PAINT & DECORATING RETAILER | January 2024

3 Job-Seeker Priorities Fair wages

High-quality health care benefits

Enjoyable workplace culture

95% of respondents rate having a “workplace culture that I like” as important, tied with high-quality health care benefits and just one percentage point below fair wages

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Retailer Recommendations Send an email to editorial@YourNHPA.org telling us about the products your customers love and why they are such a hit in your business.

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My Magic Carpet was created to provide a one-piece machine washable rug solution that is affordable and easy to use. Simply put the one-piece washable rugs in any washing machine. My Magic Carpet rugs are affordable and durable for every room and come in over 80 designs in several sizes.

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daichcoatings.com or peter@daichcoatings.com Marble Dream® is a real marble coating system engineered to be applied easily using just a few simple coating steps with no special artistic skill required. The versatile Marble Dream® system gives you a choice of several different looks, from softly elegant marble veins and accents to something more distinct and defined.

CANDLE FLIGHT

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With scents inspired by therapeutic herbs, the Calming Candle Flight features four 2-ounce candles in tins that will each burn for 10 hours. The flight scents include Balance, Clarity, Harmony and Renew. Keystone Inspired Co. candles are hand-poured in small batches with scents inspired by the tranquility only found in nature, are free of artificial dyes and made with the highest quality ingredients.

PAINT & DECORATING RETAILER | January 2024

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January 2024 | PAINT & DECORATING RETAILER

STICKERS

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January 2024 | PAINT & DECORATING RETAILER

INDUSTRY INSIGHTS

2024

THE INDUSTRY’S ANNUAL REPORT

hile few might call what the home improvement industry experienced during the pandemic a party, 2023 had all the feelings of a day-after hangover as businesses struggled to find their footing and were left dealing with the aftermath of three years of outsized growth. It’s not fair to blame the industry’s woes in 2023 solely on the explosion in business experienced during the pandemic or the subsequent supply chain issues. Rather, three factors provided the major headwinds that seemed to stall growth throughout the year: Weather, deflation and slowing sales on big-ticket items. Before we dive into the causes, however, let’s take a look at the numbers. While the U.S. Census Bureau was tracking industry sales down about 2.8% through the first three-quarters of the year, NHPA’s prediction was that the year would finish down about 3.8%. This would put overall industry sales in 2023 at approximately $544.6 billion and would mark the first year-over-year decline in sales the

industry has experienced since 2008-2009* when sales dropped nearly 10%. Now, it is important to point out that this backslide comes on the heels of three straight years of extremely strong growth that averaged about 10% a year—significantly higher than the 3% or so that the industry would average in a typical year. So, while the industry undoubtedly stumbled a bit in 2023, it was from a much higher platform than it had ever seen. In fact, there were many in the industry that predicted a “reckoning” was due in 2022 and yet the industry still charged forward.

HeadWinds

As pandemic spending cooled and supply chains began to normalize, the previously mentioned challenges proved too much for the industry to overcome in 2023. Among all the difficulties faced throughout 2023, weather may have been the most vexing. In a typical year, the home improvement industry will always face its share of weather-related issues. In most cases, these impacts

*Source: 2011 Market Measure Report, North American Retail Hardware Association

PAINT & DECORATING RETAILER | January 2024

PODCAST

Listen to the Experts

INDUSTRY INSIGHTS

Our friends at the Home Improvement Research Institute offer their insights into expectations for 2024. Listen to Episode 99 at YourNHPA.org/pod.

are typically felt regionally, and any negative weather trends tend to be offset by positive weather cycles later in the year. This simply wasn’t the case in 2023. Were it not so trite to say it, you might label 2023 as “the perfect storm” of weather challenges for home improvement. Too mild a winter, too wet of a spring, too hot of a summer all seemed to play out this year, all of which postponed homeowner projects that simply never came to pass. When you add to the weather woes the fact that many homeowners also curtailed spending on big-ticket items for the home, it’s easy to see why industry sales slipped. One retailer summed up consumer attitudes toward spending rather succinctly early in the year when he said, “Everyone bought that fancy grill or patio furniture over the last two years. They just aren’t going to rush out and buy new ones now.” Consumers also, as expected, began spending money on other discretionary pursuits such as travel (which saw record highs during the year), concerts and dining out. And inflation had them spending more on essentials like fuel, food, vehicles and more. Lastly, while inflation was being felt across many areas of the economy, in 2023, it was pricing deflation among building materials products that also contributed to overall lower sales versus 2022.

Looking AheAd

Most economists are still looking at 2024 with caution. Some are even predicting a brief and

somewhat gentle recession to occur toward the middle of the year. Whether an actual recession is in the cards remains to be seen. However, NHPA is predicting that home improvement will still struggle against some of the challenges that dampened growth this year. In fact, NHPA is forecasting relatively flat sales for the industry in 2024 with an anticipated growth of only about 0.9%. This projection is closely aligned with the predictions of other organizations like the Home Improvement Research Institute (see Page 34 for their analysis), which predicted growth for the industry of about 0.8% in its latest size-of-market report. Over the next five-year period, NHPA is also dialing back its growth predictions for the industry, anticipating a slower slog back to the typical growth rates we see in this industry. NHPA’s latest estimates put the five-year compound annual growth rate for the industry at just 1.3%. This is somewhat more conservative than HIRI’s five-year outlook, which pegs growth at about 1.9%. Another factor worth noting as we look toward the next five years is a continued decline in the number of store units across the industry. While consolidation continues to offer a solution for many independent retailers looking to exit the industry as they head into retirement, NHPA feels that store counts will continue to decline as independent owners age out of their businesses.

What We’ll Cover

Industry Breakdown

Independent Retailer Index

Industry Insights

Chain Results

Financial Profiles

Cost of Doing Business Study

HIRI Analysis

This Market Measure report is compiled by NHPA staff from a variety of sources that are attributed throughout.

January 2024 | PAINT & DECORATING RETAILER

INDUSTRY BREAKDOWN

LEGEND

2023

Sales YOY Growth

U.S. Home Improvement Industry Sales

Home Improvement Sales by Month

North American Hardware and Paint Association Projections

(in billions)

Compound Annual Growth

700

January

$35.4

February

$34.3

March

$42.2

300

April

$43.6

200

May

$50.9

100

June

$46.7

July

$42.2

August

$44.3

September

$40.3

YTD

$379.9

2022-2027 = 1.3%

IN USD BILLIONS

600 500 400

$566.1

$544.6

$549.2

$569.0

5.9%

-3.8%

0.9%

3.6%

$585.5

$602.5

2.9%

0 2022

2023

2024

2025

2026

2027

Home Improvement Product Sales Performance Home Improvement Research Institute/IHS Projections at Current Prices

Compound Annual Growth 2022-2027 = 1.97%

600

IN USD BILLIONS

500 400

$561.4 5.1%

$551.2 -1.8%

$555.9

$577.7

0.8%

3.9%

$595.0

$618.9

3.0%

4.0%

Sales Growth 2022 vs. 2023

300

January

4.1%

200

February

1.6%

March

-5.9%

April

-6.3%

May

0.8%

June

-3.8%

July

-3.9%

August

-2.8%

September

-6.4%

YTD

-2.8%

100 0 2022

2023

2024

2025

2026

2027

IN USD BILLIONS

Home Improvement Retail Sales 600

U.S. Department of Census Monthly Retail Sales Report NAICS 444/NSA

500

Compound Annual Growth 2017-2022 = 7.1%

400 300

$365.7

$377.5

$384.5

200

4.7%

3.2%

1.9%

$425.6 10.7%

$514.5 $477.8

7.7%

12.3%

100 0 2017

2018

2019

PAINT & DECORATING RETAILER | January 2024

2020

2021

2022

Source: U.S. Department of Census/ Monthly Retail Sales Report NAICS 444/NSA

2024

INDEPENDENT RETAILER INDEX

SURVEYING THE CHANNEL

What the Index Tracks

THE INDEPENDENT RETAILER INDEX OFFERS REGULAR INDUSTRY ASSESSMENT

or more than a year, the North American Hardware and Paint Association (NHPA) and The Farnsworth Group have partnered to produce the Independent Retailer Index. This industry tracking tool serves as a regular measure of the independent channel’s performance. Reports are published each quarter, and all data is presented in aggregate. Where Retailers Plan to Invest In every installment of the survey, we ask retailers where they’re planning to invest during the next quarter. In Q1 2024, nearly 50% of respondents are putting money back into their businesses in all areas that we assess, with technology solutions being the top reported planned investment at 58%. At this time last year, retailers were planning to invest most in staff in Q1 2023 (61%).

No additional investment

•

Total sales

•

Transaction count and size

•

Inventory investment

•

Cost of goods

•

Gross profit margins

•

Future expectations

•

Retailers’ investment plans in inventory, staff, technology solutions and property, plant and equipment

Join the Retailer Research Panel The more retailers who participate in the index, the more valuable it is as a tracking tool. Scan the QR code to share your data in the next installment.

A small investment

A large investment

Unsure

Q1 2024 INVE STM E N T PL AN S Te ch n ol og y Sol ut i on s

35%

52%

6% 6%

I nve n tor y

45%

48%

St af f/ E m pl oye e s

42%

10% 6%

Pro pe r ty, P l an t or Equi pm e n t

45%

32%

19%

January 2024 | PAINT & DECORATING RETAILER

2024

INDUSTRY INSIGHTS

How did business change for ALLPRO in 2023 compared to 2022? Business was much more stable as it relates to pricing and product availability than 2022 where there were numerous price increases and lingering product shortages. What challenged our numbers this year was that our members were still working off inventory from the previous year when they took advantage of pre-price increase purchasing as well as competing for scarce products. In addition, this year saw the demand soften with increases in supply by competition and a slowing demand. Throw in a tremendous amount of rain in both the Northeast and the West, all made for a more challenging year as it relates to sales. The good news is that 2023 will serve as a much better benchmark to gauge future growth. What were some challenges in 2023 and how did ALLPRO address them? The challenge this year was helping our members understand that we are in a new “season” of the economy and switching gears quickly from an aggressive purchasing posture to ensure product availability to more of a “run your business” in a much more disciplined fashion. That entails monitoring your P&L, making smart purchasing decisions and investing capital only where it makes sense. There is also a new variable to consider, which is money in the bank now makes money for the first time in over a decade. This will mean that the deals will have to be better before members invest and purchase larger orders. Having two large shows that bring members together Michael Beaudoin allowed them to collaborate Executive and help each other as we Vice President ALLPRO navigate this new cycle.

PAINT & DECORATING RETAILER | January 2024

What are some critical areas of focus for ALLPRO going into 2024? What is the anticipated impact or benefit for your members? We are going to switch our investments from building out our distribution business and start investing heavily in driving the demand for the ALLPRO Brand for sundries and an identity for an ALLPRO member. This will continue the evolution of making the ALLPRO Brand more dominant within the group, helping our members’ profitability and creating a unique experience not found in the national chains. In addition, we are also bringing members together in a roundtable networking format to continue to expand their relationships within the group that they can rely on to help navigate the future. We have two meetings scheduled in May, one in Las Vegas and the other in Chicago. This is in addition to our investments in both our spring show in Orlando and fall show in Austin, which continue to grow. What are your projections for 2024 for the home improvement industry at large and the independent channel specifically? I am budgeting for modest growth in 2024 of around 3%. I understand that there are challenges in the housing industry as well as softening demand in many other areas, but with better weather and a full year to make changes in your business, the members will find new opportunities and find a way to win. I was very proud of the energy they brought to our shows in 2023, and there was still a sense of excitement and optimism. The strength of our model, which consists of entrepreneur owners with many of them being multigenerational, is that they have seen everything and nothing rattles them.

“I was very proud of the energy they brought to our shows in 2023, and there was still a sense of excitement and optimism.”

2024

INDUSTRY INSIGHTS

forced to conduct virtual events and meetings and had to delay plans to bring distribution center operations personnel together. To combat this, we made exciting strides in 2023 to learn and collaborate by conducting and attending in-person shows and a Distribution Center Workshop, hosted by Blish-Mize in Atchison, Kansas. The Distribution Center Workshop allowed operations managers to discuss common challenges and the best practices to combat them to make material handling and operations more efficient as a whole. How did business change for Hardlines Distribution Alliance in 2023 compared to 2022? In 2023, at Hardlines Distribution Alliance (HDA), we worked to streamline our marketing, merchandising and accounting processes and forged strong partnerships as a single organization since HDA began in April 2022. In addition, we continued to adapt to the post-pandemic home improvement marketplace. Disruptions in the supply chain, including pockets of scarcity and oversupply, presented challenges to purchasing and sales teams throughout our network. Overall, our distributor members have returned to pre-pandemic fill rates in the mid to high 90% range, which is a great improvement from 2022. What were some challenges in 2023 and how did HDA address them? One of HDA’s primary objectives is to share ideas, innovations and best practices with our diverse and robust network. The pandemic had a detrimental effect on our ability to host in-person events and network during an unprecedented economic period that deeply impacted the market and consumer spending habits. These economic shifts, including difficulties finding and retaining employees and the growing cost of operations due to inflation, have persisted in 2022 and 2023. We were

Shari Kalbach President HDA

Steve Synnott CEO HDA

PAINT & DECORATING RETAILER | January 2024

What are some critical areas of focus for HDA going into 2024? At HDA, we focused on executing several new data integration systems in 2023 in the final phases of aligning former Distribution America and PRO Group operations. As we welcome 2024, distributor members and vendor partners will benefit from these improved systems that more efficiently execute accounting processes and support the group’s buying power. In addition, streamlined promotional systems will highlight the value available to all members and partners within the HDA network. What are your projections for 2024 for the home improvement industry at large and the independent channel specifically? While certain segments of the market are forecast to grow in 2024, our overall prediction is for flat sales performance compared to 2023. Growth of less than 1% magnifies the need to operate efficiently, streamline product and promotional delivery and trim costs without compromising value delivered to customers. We believe the ongoing effects of inflation and rising mortgage rates will dampen new construction and remodeling projects while repair and maintenance segments will attain modest growth. HDA’s network concentrates more heavily on repair and maintenance which are the segments we hope will see modest growth in 2024.

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C H A I N R E S U LT S

Top Chains: Individual Performance 2022 Sales (in billions)

Stores in 2023*

Stores at End of FY2022

(as of Q3 2023)

Home Depot

$157.4

2,322‡

2,333‡

Lowe’s

$97.1

1,738

1,746^

Menards Inc.

$13.4*

328*

—

Sherwin-Williams

$22.1

4,538#

4,976*

Atlanta

Mooresville, North Carolina

Eau Claire, Wisconsin

Cleveland, Ohio

Sources: Company reports and NHPA research ‡Includes operations in the U.S., Canada, Mexico and all other locations ^Includes U.S. operations; Lowe’s discontinued Canadian operations in February 2023, resulting in fewer stores in FY22 *Source: National Retail Federation Top 100 Retailers 2023 List # Includes locations in U.S., Canada, Latin American and the Caribbean region; Q3 store counts include Paint Stores Group and Consumer Brands Group data

Market Share Profile Top Chains: Combined Performance Net Sales

(at the end of FY2022)

2018

$195.2

9,314

2019

$207.3

9,351

2020

$210.2

9,379

2021

$251.9

9,475

2022

$290.0

8,926

Source: NHPA calculations

No. of Stores

(in billions)

PAINT & DECORATING RETAILER | January 2024

FINANCIAL PROFILES

2022 Financial Profiles of Leading Publicly Held Chains Operating and Productivity Profile

Sherwin-Williams

Home Depot

Lowe’s

4,538≠

2,322

1,738

Distribution Centers

24^

400+

100+

Average Size of Selling Area (sq. ft.)

—

104,000

112,000

Total Sales

$22.1 billion*

$157.4 billion

$97.1 billion

Total Asset Investment

$12.8 billion

$76.4 billion

$43.7 billion

Total Inventory

$2.6 billion

$24.9 billion

$18.5 billion

Sales Per Square Foot

—

$627

$498

Inventory Turnover

4.9x

4.2x

3.5x

Net Sales to Inventory

11.9x

15.8x

19.1x

Total Sales Per Employee

$343,349

$333,764

$316,287

Average Size of Transaction

—

$90.36

$103.64

354.2%

211.9%

174.1%

Sherwin-Williams

Home Depot

Lowe’s

Net Sales

100%

Cost of Goods Sold

57.9%

66.5%

66.8%

Gross Margin

42.1%

33.5%

33.2%

Total Operating Expenses

27.2%

18.3%

22.8%

Net Income (Before Taxes)

11.6%

14.3%

9.3%

Sherwin-Williams

Home Depot

Lowe’s

Total Current Assets

26.6%

20.6%

22.1%

Cash

0.9%

1.8%

1.4%

Receivables

11.5%

2.1%

n/a

Inventory

11.8%

15.8%

19.1%

Other

2.3%

1.0%

1.2%

Fixed Assets

73.4%

58.7%

56.2%

Total Assets

100%

Current Liabilities

26.4%

30.2%

44.6%

Long-Term Liabilities

73.6%

67.7%

88.0%

Net Worth

0.0%

2.1%

-32.6%

Total Liabilities and Net Worth

100%

Number of Stores (at end of FY2022)

Gross Margin Return on Inventory Income Statement

Balance Sheet

*All domestic and international sales, including stores, consumer brands and international—company-operated stores (“Americas Group”) represent 57% of S-W sales ≠U.S. and Canada stores only ^includes distribution centers for the Consumer Brands Group and Performance Coatings Group in the U.S. only

January 2024 | PAINT & DECORATING RETAILER

RESEARCH

The Industry’s Benchmarking Tool

2024

Compare your operation against typical and high-profit peers. Purchase the 2023 Cost of Doing Business Study at YourNHPA.org/codb.

THE COST OF DOING BUSINESS ANNUAL BENCHMARKING STUDY

he 2023 Cost of Doing Business Study presents the North American Hardware and Paint Association’s (NHPA) annual financial and operational profile of independent hardware stores, home centers, lumber and building materials (LBM) outlets and paint and decorating outlets. This study assesses the financial performance of home improvement retailers who graciously submitted confidential financial reports for fiscal year 2022 to NHPA. The study presents composite income statements and balance sheets plus averages for key financial performance ratios. Retailers can use this data to measure their own performance against industry averages. The data develops benchmarks retailers can use to establish financial plans to improve profitability.

Methodology

The annual Cost of Doing Business Study is made possible through the cooperation of hardware store, home center, LBM outlet and paint and decorating outlet owners and managers who provide detailed financial and operational information on their individual companies.

Questionnaires were mailed to a sampling of hardware stores, home centers, LBM outlets and paint and decorating outlets in the U.S. to collect detailed financial and operational information for 2022. The analysis in this report is the result of extensive review by NHPA. All individual company responses are completely confidential. Most of the figures in this report are medians. The median for a particular calculation is the middle number of all values reported when arranged from lowest to highest. The median represents the typical company’s results and is not influenced by extremely high or low reports. To determine high-profit stores, all participating companies were ranked based on net profit before taxes. The high-profit companies in each segment are those that make up the top 25%. The figures reported for each of the high-profit segments represent the median for that group. While reviewing the numbers on the following pages, it is extremely important to note that each year, this report contains figures from a different sample group of stores.

Paint and Decorating Outlets Sales Per Customer

Key Business Indicators

$300

50%

$250

40%

Typical

High-Profit

42.9% 42.2% $237

$200

$237 $186

30%

$163

$150

20%

$100

10%

25.3% 25.6%

7.5% 3.2%

0% Typical

High-Profit

Single

Multi-Store

PAINT & DECORATING RETAILER | January 2024

Gross Margin After Rebate

Total Payroll

Profit Before Taxes

That means overall figures have the potential to vary widely from year to year based on the respondent group of stores participating each year. We use year-to-year comparisons to illustrate general trends over time, not to draw specific year-over-year conclusions. In this year’s study, 1,129 independent home improvement stores participated, a 7.5% increase from the prior year and a record for the study. Paint and Decorating Outlets

The paint segment continues to be a struggle to get a fair representation of stores although we increased to 80 locations this year, which is the highest since the segment was created. Comp sales were up 5.49% which created record sales per store of $2.4 million, record assets of $825,000 and record sales per customer of $237. Purchase rebates of 4.3% were significantly higher than any other year, but were driven by one company

with a large number of stores. This led to gross margin being relatively flat (42.9% vs. 43.1%) to the prior year. Payroll was the highest ever and by far the highest of any segment at 25.3%. Profit before tax was 3.2%, which is a significant drop over the prior two years (14.5% and 8%) and the lowest level since pre-COVID (3.1%). As with all other segments, paint retailers are spending their money on inventory as cash is at an all-time low (5.7%) and inventory is at an all-time high (52.7%). Record sales also contributed to records in several per-square-foot metrics, including sales ($855), gross margin ($367) and inventory ($157). The number of EE (6) is down one from the prior year and is the lowest level ever. However, sales ($394,226) and gross margin ($169,123) per employee are the highest ever so paint retailers are maximizing employee production.

How to Use This Study To get the most out of these selected results from the 2023 Cost of Doing Business Study, follow these tips. •

Compare numbers. Determine your operating expenses as a percentage of sales and calculate your balance sheet as a percentage of total assets. Compare those numbers to the study results for typical and high-profit stores.

•

Look beyond the percentages. Compare your real-dollar expenditures as well.

•

Consider the results. If you find your store’s individual data veers sharply from what’s contained within the study, explore the cause behind the discrepancy and develop a plan to bring your numbers on par with high-profit stores.

•

Participation counts. Overall figures can vary from year to year based on the group of participating operations. Year-to-year comparisons are helpful for illustrating general trends over time.

Figures to Know •

Average transaction size is the total sales over a period of time divided by the total number of transactions in that same period. Use It: Measure your average transaction size weekly to spot shopping trends and establish a baseline for your business.

•

Payroll is the total cost of owner and employee salaries, insurance payments and benefit plans. Use It: Compare your payroll expenses to typical and high-profit operations to find areas you could cut.

Join the Research Panel Support the independent channel by participating in the NHPA Retailer Research Panel. Head to YourNHPA.org/research or scan the QR code to sign up. You will receive invitations from NHPA to complete brief surveys about six to eight times a year, and your data remains completely anonymous.

January 2024 | PAINT & DECORATING RETAILER

2024

H I R I A N A LY S I S

2024 OUTLOOK FOR HOME IMPROVEMENT SPEND Provided by Dave King, Executive Director, Home Improvement Research Institute

he economic situation, and the home improvement industry overall remains mixed based on HIRI’s Monthly Economic & Industry Update report which tracks about 40 macroeconomic variables, made available to HIRI members. The extent to which the economy moves into a moderate recession is still dependent on the Fed’s battle against inflation, which remains stubbornly above their 2% goal. Although there are signs that the labor market is slowing, the federal funds rate will remain comparatively high throughout 2024 in an effort to cool the labor and housing markets. The Fed has a tremendous challenge: Solving for inflation without being able to address the root cause of the issue, which is a market with too few homes for those wanting to own them. The U.S. is estimated to have about 6 million fewer homes than it needs, and there is no skilled labor solution or financial incentives for new residential construction to address the issue. Despite the high interest rates, still over 7%, the housing market remains relatively strong. This surprising strength in the housing market is being driven by the very low availability of existing homes for sale which is supporting home prices, even resulting in increases in many markets. While discretionary income and savings rates have dipped from their historic highs, they remain higher than average to fuel continued home improvement expenditures. Homeowners, armed with home equity and guided by a desire to remodel-in-place rather than buy a new home that contains their upgrades, will further sustain home improvement spend. It’s not all good news though. Through the last two years, consumer sentiment has dropped, and a lack of moving has meant fewer dollars spent getting homes ready to sell or move into. As we look toward 2024, home improvement spend is also anticipated to stabilize. Economic indicators provide a mixed bag of positive growth versus downward pressure on growth. Overall,

34 PAINT & DECORATING RETAILER | January 2024

as consumer sentiment improves, so too does home improvement activity. The drag of consumer sentiment is evidenced in contractor backlogs as those backlogs continue to shrink and contractor confidence is in decline. Still, HIRI’s Size of Market Forecast through 2027 is anticipating an upward march, averaging 3% year-over-year market growth, which will culminate in a total market size over $600 billion by 2027. Doubling the total market size in just over a decade signals a market strength that stretches far beyond the short-term tremors currently impacting customer sentiments and spending behaviors. In this era where the home has emerged as an all-encompassing sanctuary, the pursuit of home improvement is more than just an economic activity — it’s a manifestation of the desire for comfort, safety, functionality and personal expression. As the economic landscape evolves, one thing remains clear: the trajectory of home improvement continues to point upward, driven by the winds of financial prudence and the aspiration for an ever-enhanced dwelling. See more data from this analysis when you download the complete 2024 Market Measure Report at YourNHPA.org/market-measure.

About HIRI The Home Improvement Research Institute (HIRI) is the only nonprofit organization dedicated to home improvement research. The organization empowers its members with exclusive, ongoing home improvement data and information for making better business decisions. Members are the home improvement industry’s leading manufacturers, retailers and allied organizations. Learn more at hiri.org.

2024

H I R I A N A LY S I S

Consumer Price Index (CPI) 315 310 305 300 295 290 285 280 275 270 265

23 p

pr A

ar M

n Ja

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22 p

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22 M

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ct O

260

The U.S. Bureau of Labor Statistics Consumer Price Index (CPI) remained steady the past three months but is up 3.2% from October 2022. Source: U.S Bureau of Labor Statistics

Homeowner Spend on Home Improvement, Repair or Maintenance Projects (in the last 30 days)

$10K+

17%

$0 - $99

$5,000 - $9,999

16%

35%

$1,000 - $4,999

Homeowner Spend

20%

$500 - $999

$100 - $499

Source: The Home Improvement Research Institute and The Farnsworth Group’s Monthly Home Improvement Tracker, November 2023

January 2024 | PAINT & DECORATING RETAILER

CA T

O RY FO CU

Outward Style Tapping Into Trends to Sell Exterior Wood Care Products BY

JACOB

M US S E LM AN

s co-owner and manager of Schroeder Log Home Supply, John Schroeder has been selling exterior care products for over 15 years. During his tenure, Schroeder has seen exterior wood care trends come and go. He shares with Paint & Decorating Retailer the trends to track for 2024 and best practices for selling exterior wood care products.

PAINT & DECORATING RETAILER | January 2024

January 2024 | PAINT & DECORATING RETAILER

OPERATIONS

Meeting a Need Discover how one retailer added paint sprayer rentals to his operation to provide an extra level of service at PDRmag.com/renting-sprayers.

IN THE KNOW Schroeder Log Home Supply

has seen a trend in customers purchasing dark stains.

Dark Stains and Colors Looking at the stain and paint colors of the year for 2024, dark colors are dominating the landscape for the year. Schroeder says he is seeing the same trend with customers wanting darker stain colors for their exterior projects. When picking a color for staining, the process for application is fairly similar across pigments. Oftentimes, dark stains require more precision and can leave streaks if done incorrectly, whereas lighter colors are much more forgiving during the application process.

PAINT & DECORATING RETAILER | January 2024

“An advantage to darker stains, or stains with higher amounts of pigmentation, is they typically offer more UV protection and consequently longer life,” Schroeder says. “But with more pigment added, you also displace the amount of binder ratio, and so the stain may break down and get chalky sooner.” Many of the modern exterior stain systems utilize a clear maintenance coat so that the performance benefits of pigment are protected by that top coat, Schroeder says. Because they dry faster, water-based stains are less forgiving compared to oil and lead to more drip

Log Home Market What is the outlook for log home building in the future? marks and lap marks, but those challenges can be overcome by sound application methods, Schroeder says. “In terms of color, black has been popular with our customers, often complimented with cedar tones or other colors,” Schroeder says. “It’s interesting pairing dark colors with natural tones. Most people like black, and it can be impactful to have it complemented with a cedar stain contrast to make them both pop.” Schroeder is choosing one of these dark-toned colors of the year for his store’s renovations and updates. He’ll be using Onyx, the color of the year from Sansin on the outside trim of the building.

As the demand for rustic charm continues to shape housing preferences, many homebuyers and builders are turning to the ways of our founding fathers, log cabins. Homeowners are navigating a landscape of innovative treatments and sustainable practices, redefining the maintenance routine for these timeless abodes. According to data from Transparency Market Research, driven by growth in agritourism and an increase in disposable income, the overall log cabin home market is expected to see a 7.6% rise worldwide from now until 2031, opening up opportunities to create a niche category in your exterior wood care department.

Limitations on VOCs Through the Environmental Protection Agency (EPA) and the Clean Air Act of 1970, volatile organic compounds (VOCs) are regulated, and many states have enacted their own rules regarding VOCs, leading retailers to search for alternative options for customers. For Schroeder, regulations in different states limit what he’s able to sell. “Limitations on VOCs and some deep penetrating oils make them difficult to source in most areas,” he says.

“It’s interesting pairing dark colors with natural tones. Most people like black, and it can be impactful to have it complemented with a cedar stain contrast to make them both pop.”

Common items your store can stock to serve log home builders and owners 1

Chinking and sealants

Brushes and other applicators

Exterior and interior stains and finishes

Wood hardener

Sanding pads

Wood repair epoxy

—John Schroeder, Schroeder Log Home Supply

January 2024 | PAINT & DECORATING RETAILER

FULLY STOCKED Along with log cabin supplies, Schroeder Log Home Supply stocks paints, stains and sundries.

Because of the regulations, as well as diversity in customer needs and preferences, Schroeder says he carries a variety of formulas. Along with traditional penetrating oils, he carries waterborne finishes with plant-based resins considered to be cleaner alternatives. Latex and acrylic water-based finishes have also become more popular in recent years. He also suggests providing education for your customers on VOCs and alternative products. Schroeder says he will give a basic explanation of what VOCs are if the customer is interested. In addition to his in-store education, Schroeder also offers his quarterly email newsletter, where he provides

40 PAINT & DECORATING RETAILER | January 2024

information about new products and other best practices related to exterior and interior wood care. Customer Education When ordering products for exterior wood care, Schroeder recommends becoming educated on basic wood science and coating chemistry to help customers make informed decisions. Schroeder says finding the perfect time window for exterior finishing in Minnesota is a challenge. For exterior projects, he recommends his customers pre-stain wood components indoors and watch the forecast for the ideal installation window.

Tony Corsberg

Foundations of Merchandising Management Live! Instructor

Principal, Merchant 5 Advisors

40+ years of merchandising management experience in home improvement retailing

Improve Your Merchandising to Drive Additional Sales Foundations of Merchandising Management Live! is back at the National Hardware Show, March 26-27, 2024. Get hands-on training and valuable merchandising strategy insights from the North American Hardware and Paint Association (NHPA) at the hardware industry’s leading annual event. Hurry, seating is limited! Register by February 1, 2024

YourNHPA.org/foundationslive

Schroeder Log Home Supply sells everything a customer building a log cabin would need, from hand tools, various stain pigments, primer and more. The store also offers product samples so customers can test them out to be sure they will work for their projects.

PAINT & DECORATING RETAILER | January 2024

“Surface temperature is more important than ambient temperature when staining.” Schroeder says. “In the heat of the summer, it’s advisable to plan work around the building to avoid direct sunlight, otherwise the surface may be too hot and the finish will flash dry and will fail to get a proper bond to the wood fiber.” Stocking moisture meters and surface temperature meters allows customers to ensure the surface is at optimum conditions for stain or finish adhesion and can contribute to add-on sales. When giving customers recommendations, Schroeder says asking good questions about the client’s project is important so you are able to give correct information. “We’re educationally driven, so when it comes to helping customers make choices on finishes, we ask questions to learn more about their project, whether it’s new construction versus restoration, whether VOCs are a concern or not,” Schroeder says. “Depending on what their needs are, we steer them toward a few options. The decision is ultimately theirs, but we’re there to gather information, answer their questions and help their situation.”

The industry’s marketplace for buying and selling independent home improvement businesses and posting jobs. BUSINESS FOR SALE

BUSINESS FOR SALE

Northwest Farm & Home Supply Co.

Home Improvement Supply Store Location: Missouri Gross Revenue: $1.04 million

Location: Lemmon, SD Gross Revenue: $3.21 million The main building is a total 27,213 sq. ft. of retail and warehouse space on 4 acres. The main bldg. was constructed in 1994 with additions constructed in 2002 and 2004. Single story with 22’ clear height in 11,459 sq. ft. of lumber warehouse, three grade level doors and two dock height doors. BUSINESS FOR SALE

This historic home improvement and hardware store is a staple of its community and operates from its headquarters in the Kansas City Metropolitan Area of Missouri. The Company is a long-standing retailer and installer of consumer and commercial improvement products.

BUSINESS FOR SALE

Hoosick True Value

Albrights Hardware & Garden Center

Location: Hoosick Falls, NY Gross Revenue: $1.26 million Price: $1.875 million This opportunity offers a turnkey sale of a general hardware business located in northeastern Rensselaer Co., New York. The business serves five towns and southwestern Bennington Co., Vermont, and 25 miles east of Troy, New York.

Location: Allentown, PA Gross Revenue: $1.9 million Price: $1 million

BUSINESS FOR SALE

Central Vermont Paint, Flooring and Decorating Business Location: Vermont Gross Revenue: $2.82 million Price: $1.1 million

Full-service decorating store providing flooring, paint, window treatments, kitchen/bathroom remodeling, cabinetry product offerings, design assistance, specialized service, and professional installation. BUSINESS FOR SALE

Private Business

Location: Alabama Gross Revenue: $2.21 million Price: $649,000

Albrights Hardware is an established hardware store with strong neighborhood ties and has been a Lehigh Valley staple for over 50 years. The current owners have owned the store since 1992. Albrights serves its loyal customer base by providing quality products and exceptional customer service.

BUSINESS FOR SALE

SEEKING BUSINESSES

For our next acquisition, we are looking for:

We are looking for:

The Aubuchon Company

• • • •

Single-store and multi-store hardware operations Located in northeast and southeast United States Store size of 5,000-30,000 ft2 At least $3 million in average store sales

Bolster Hardware • • • • •

Private Business

Location: Pennsylvania Gross Revenue: $1.6 million

Gold Beach Lumber Yard

Geography agnostic With or without real estate Store revenues of $1.5M+ We prefer to honor the family name and heritage in the local community by not changing the name We prefer to keep all employees as part of the acquisition

• • •

Single-store and multi-store hardware operations Located in the Pacific Northwest Store size of 5,000 ft2-30,000 ft2

Now Offering Business Valuations Post a Job | Sell Your Business | Buy a Store | Public and Private Listings Available To see full listings, visit YourNHPA.org/marketplace or email marketplace@yournhpa.org

S M A KE

ASSOCIATION

Be in the Know NHPA offers a wide range of newsletters and digital content. Subscribe to get industry news, trends and information at YourNHPA.org/subscribe.

What You Need to Know in January James Hardie Announces Inaugural Exterior Color of the Year Mountain Sage is a green hue that was selected based on input from industry experts, combined with data and insights uncovered from James Hardie’s comprehensive Homeowners Survey.

Houzz Predicts 2024 Home Design Trends The new year brings new styles and new design trends, and 2024 will bring back styles from the past, strong visual designs and handmade features.

FinCEN Requiring New Beneficial Ownership Reporting Rule The new rule will affect most limited liability companies, corporations and entities formed under state or tribal laws with 20 or fewer employees and $5 million or less in gross annual receipts.

To read these news stories and other news, visit PDRmag.com/news.

44 PAINT & DECORATING RETAILER | January 2024

Sherwin-Williams and PPG Report Q3 Financials Both organizations marked an increase in net sales for the third quarter of 2023 over the same quarter in 2022.

Blue Nova Picked as Benjamin Moore Color of the Year 2024 Blue Nova is an intriguing blend of blue and violet that sparks adventure, elevates and expands horizons.

EDUCATION

Explore NHPA’s Educational Offerings Visit YourNHPA.org/academy for information on our solutions for your growing business.

In Other News

65%

Federal Reserve Proposes Lower Cap on Debit Card Swipe Fees

of voters support swipe fee reform

The Federal Reserve released a proposal to lower the cap on debit card transaction fees, known as swipe fees. The Fed’s proposal would cap the amount of money large banks are allowed to charge retailers to process debit card transactions to 14.4 cents, plus an additional 1.3 cents for fraud prevention and 0.04% of the transaction amount for fraud costs.

Source: Merchants Payment Coalition Swipe Fee Reform Survey, Pierpoint Consulting & Analytics LLC

To read this news story, visit PDRmag.com/news.

“Sherwin-Williams delivered strong third-quarter results in an environment where demand remained highly variable by end market and region, and against a challenging prior year comparison.” —John G. Morikis, Sherwin-Williams chairman and CEO

Sherwin-Williams

4.4

4.6

4 2

Q3 2022

Q3 2023

Net Sales in Billions

PPG 8

8 6

6.05

6.12

Q3 2022

Q3 2023

4 2

January 2024 | PAINT & DECORATING RETAILER

L E N DAR

NETWORK

Make a Plan Visit YourNHPA.org/cal to f ind more industry events online.

This index is provided for the convenience of our advertisers and readers. The publisher assumes no liability for errors or omissions.

Armstrong-Clark .........................................................................................................................29 armclark.com

House-Hasson Winter Market January 25-27 | NASHVILLE, TN

Arroworthy ........................................................................................................................................15 arroworthy.com Benjamin Moore ........................................................................................................................ BC benjaminmoore.com

2024 Lancaster Buying Show February 2-3 | ORLANDO, FL

True Value Spring Reunion February 2-4 | NEW ORLEANS, LA

PCA EXPO February 26 - March 1 | ORLANDO, FL

NAHB International Builders’ Show February 27-29 | LAS VEGAS, NV

Kitchen & Bath Industry Show February 27-29 | LAS VEGAS, NV

Corona Brushes ..............................................................................................................................5 coronabrushes.com Fine Paints of Europe ............................................................................................................27 finepaintsofeurope.com Golden Paintworks ....................................................................................................................17 goldenpaintworks.com Lancaster ..............................................................................................................................................3 lancasterco.com NHPA Foundations of Merchandising Management Live! .........................41 YourNHPA.org/foundationslive NHPA Retail Marketplace ......................................................................................................43, 47 YourNHPA.org/marketplace

Ace Hardware Spring Convention March 12-14 | DALLAS, TX

Emery Jensen Edge March 12-13 | DALLAS, TX

The Inspired Home Show March 16-19 | CHICAGO, IL

Blish-Mize Spring Buying Market March 21-23 | OVERLAND PARK, KS

Do it Best Spring Market March 23-25 | HOUSTON, TX

National Hardware Show March 26-28 | LAS VEGAS, NV

*Events are current as of press day.

To add your event to the industry calendar, send an email to editorial@YourNHPA.org.

46 PAINT & DECORATING RETAILER | January 2024

NHPA Young Retailer of the Year .............................................................................................11 YourNHPA.org/yroty Old Masters ................................................................................................................................... IFC myoldmasters.com Olympic ............................................................................................................................................. BC olympic.com Richard’s Paint ..............................................................................................................................19 richardspaint.com Rundoo ..........................................................................................................................................12-13 getrundoo.com Tower Sealants ..............................................................................................................................21 towersealants.com UC Coatings .................................................................................................................................... 20 uccoatings.com Vibac ...................................................................................................................................................... 18 marketing.vibac.it/maskingpainting

Take Your Next Step Are you expanding your operation or looking for an exit strategy? Connect with 40,000 home improvement retailers on the NHPA Retail Marketplace.

Are you selling your business? HOME CENTER

FOR SALE

Ask us about valuation as the first step!

List your business for sale on the NHPA Retail Marketplace to reach interested and motivated home improvement retail buyers. Public and private listings are available.

Are you interested in buying stores? Ask us about small business loans

HOME CENTER

If you are currently looking to expand your business through acquisition, the NHPA Retail Marketplace can connect you with potential sellers in the industry. Public and private listings are available.

Are you hiring? Find talented, qualified people in the home improvement industry. List your open position on the NHPA Retail Marketplace to find the best personnel fit for your business.

Get started today!

YourNHPA.org/marketplace

NHPA

Retail Marketplace 1

HARDWARE RETAILING | July 2021

PROTECTION YOU CAN TRUST When you’re ready to choose the best safety products for your customers’ painting needs, we’re here to help. Honeywell has the highest quality respirators and safety equipment available in retail-ready packaging. LEARN MORE

Become a Subscriber Stay up to date on news, products, events and more when you sign up for any of our e-newsletters.

YourNHPA.org/subscribe

FINISH

ASSOCIATION

Become an Industry Beacon Want to learn more about how to become an amabassador? Reach out to Renee Changnon at rchangnon@YourNHPA.org.

STAYING FLEXIBLE N H PA A M B A S S A D O R

Dalton Meny Enjoys the Everyday Challenges of the Industry DALTON MENY Store Meny's True Value Location 3 stores, Southern Indiana

What is your proudest moment as part of the independent channel? I would say my proudest moment was being named a 2022 Young Retailer of the Year honoree and being invited to speak on a panel at the 2022 NHPA Independents Conference in Dallas. What is the best part of your job? I like the flexibility and spontaneity that comes with it. Every day is different and offers many different types of challenges that need to be solved. What is the best piece of professional advice you’ve ever been given? Be patient. Great things will come in time but don’t happen overnight. You’ll have many years to leave your mark.

AM B AS S A

D OR

How do you stay involved in the community? We try to give as much back to the community as possible through

sponsorships and fundraisers. Also, starting in 2024, I will be a board member of the Jasper Chamber of Commerce. When you were a kid, what did you want to be when you grew up? I never knew what I wanted to be when I grew up, only that I didn’t want to be part of the family business. It’s funny how that turned out. What kind of music do you like to play in the store? It changes day to day depending on who else is working. There is always a battle over what is on the radio. What do you do for fun when you’re not working? When I’m not working, I enjoy hanging out with friends, playing video games and watching movies.

About the Program The North American Hardware and Paint Association (NHPA) is excited to introduce the newly formed Ambassador Program in 2024. The program brings together a small group of NHPA members from across the industry who are passionate about the independent home improvement channel and have a deep involvement with the association. NHPA Ambassadors help connect their retailer networks to NHPA, encouraging retailers to become more involved with the association’s offerings, like online training, consulting, college-level courses and more.

48 PAINT & DECORATING RETAILER | January 2024

Trusted by Generations of Painting Pros

• Proprietary stain-release technology means stains wash clean • Unbeatable flow and leveling for professional results every time • Durable finish resists scuffing to preserve premium results

Contact your Benjamin Moore rep to learn more. To find your rep, call 1-866-708-9180, email info@benjaminmoore.com, or visit benjaminmoore.com.

WINTER IS COMING UNLIKE YOU, YOUR DECK CAN’T HIDE INSIDE.

WITH WEATHER-READY APPLICATION Apply on Damp Wood* Apply down to 35ºF Apply up to 120ºF Rain-Ready in 8 Hours ®

PROTECT YOUR OUTDOOR SPACE WITH OLYMPIC® MAXIMUM®

*See product label for application instructions The PPG Logo is a registered trademark of PPG Industries Ohio, Inc. Olympic, Olympic & Design, Maximum and Weather-Ready are registered trademarks of PPG Architectural Finishes, Inc. © 2022 PPG Industries, Inc. All Rights Reserved. OLY_HD_805214 11/23