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Housing and Home Improvement Forecasts NAHB expects single-family home starts to rise 5% in 2024, according to Chief Economist Robert Dietz. Ten-Year Treasury rates, which provide the foundation for mortgage rates, moved back into the 4.5% range for the first time since September 2022 in November. That will help bring mortgage rates close to or below 7.5%. The chronic lack of existing home inventory combined with somewhat lower and more stable mortgage rates will help boost builder confidence, which will help support construction. Lowe’s and The Home Depot remain bullish on the medium to long term outlook for the home improvement industry, citing favorable housing and demographic trends. They expect home prices to be supported by a persistent imbalance between supply and demand. At the same time, 250,000 millennial households are expected to form each year through 2025. Their parents and grandparents, the baby boomers, are increasingly preferring to age in place in their own homes, which creates increased demand for home renovations and improvements. The US now has the oldest housing stock in history, with the medium age of homes now 41 years old. Maintaining these homes will require ongoing investments in repair and remodel projects. Cyber Week Retail Sales Consumer spending rose 7.8% during Cyber Week (the five days from Thanksgiving to Cyber Monday) to $38 billion overall. There was record spending online during Thanksgiving ($5.6 billion, up 5.5%), Black Friday ($9.8 billion, up 7.5%) and over the weekend ($10.3 billion, up 7.7%). Adobe reports spending on Cyber Monday was up 9.6% from 2022 to $12.4 billion, well ahead of expectations. Season to date (Nov. 1 to Nov. 27), consumers spent $109.3 billion online, up 7.3%. Both in-store and online retail sales increased year-over-year unadjusted for inflation, according to Mastercard’s SpendingPulse insights, which noted that apparel, jewelry and restaurant categories saw considerable spikes. In-store sales jumped a little more than 1%, but shopper traffic on Black Friday was up 4.6% from 2022, even though foot traffic overall is down an average of 2.4% this year. Analysts noted this probably reflected both the social nature of holiday shopping and a desire by consumers to scour stores for deals and ideas. Most shoppers did their browsing and buying on their phones, with mobile purchases accounting for $5.3 billion in sales. Adobe expects that purchases made through smartphones this holiday season will overtake those made by desktops for the first time. Use of “buy now, pay later” (BNPL) installment payment plans that allow consumers to split their online cart total into four payments typically due several weeks apart was up 72% from the prior week, according to Adobe. While some BNPL lenders charge interest or late fees, these mini-loans can help stretch holiday budgets for major purchases or big spending days. Holiday Sales Forecasts The National Retail Federation (NRF) forecasts retail sales will grow 3% to 4% for the November-December holiday shopping period. That would bring sales to between $957.3 billion and $966.6 billion, compared to $930 billion in 2022. The online component of sales is expected to rise 7% to 9%, up from $255.8 billion last year. NRF says despite the fact that retail sales have grown for 41 consecutive months, consumers looking for ways to pinch pennies this holiday season could cause sales to end up flat or even in negative territory. Adobe expects the full holiday season (Nov. 1 to Dec. 31) will hit $221.8 billion, growing 4.8% from 2022. As ecommerce growth continues to outpace in-store shopping, Adobe expects $1 in every $5 to be spent online this holiday season. Online Price Wars According to Profitero’s seventh annual Price Wars study, Amazon and Walmart are the leaders in online pricing, and there is a growing gulf between the Big Two and the rest of the retail industry. Amazon ranked as the lowest-priced retailer for the 7th year in a row. Profitero compares the online prices of more than 14,000 products across various leading online retailers. Walmart is about 4% behind, a 2% improvement from 2022. Walmart became more competitive in ten categories, including home improvement, where products were only 5% more expensive than Amazon’s. The Home Depot and Lowe’s were among the many other retailers included. The study found that Amazon and Walmart had identical prices about 70% of the time. Only identical items available and in-stock in the same pack configuration were compared. Data was collected daily over 12 weeks (July 10 - Oct 1, 2023), with daily prices averaged over the full period for comparison. Prices for the same items were collected within 24 hours of each other to ensure validity of the comparisons. Loss Prevention Measures Frustrate Customers Retailers faced with growing problems with theft are turning to loss prevention measures that cut down on shrink but frustrate customers. Many retailers are putting everything from jeans to air fresheners behind locked doors. Walmart says it makes decisions on which merchandise to lock up on a store-by-store basis. Most customers also realize that we all pay the price for shoplifting losses, because retailers have to increase prices overall to make up for lost inventory and sales. A recent Harris Poll shows many shoppers are not happy about the restricted access and increased waiting times. Nearly three-quarters (71%) of shoppers said that anti-theft measures, including locked displays, gated exits and checkouts, and limited operating hours, made them less likely to shop in-person. Target reports that shoppers’ response to having more items behind bars has been mostly positive. Customers are grateful for the enhanced security and the fact that many more employees are available on the floor to get products and answer questions. A separate survey by the Loss Prevention Research Council found that more than 60% of consumers consider locked merchandise to be either inconvenient or very inconvenient. More than one in five said they would rather order online than have to wait for employees to unlock a case. Social media is bursting with complaints from shoppers who report abandoning their carts in frustration due to a lack of available sales associates, raising questions about whether such heavy-handed tactics are sustainable in the long term. Retail analysts caution that locking up merchandise without providing excellent on-site support staff can cause frustrated shoppers to abandon in-store shopping altogether. Robot Security Guards Amazon launched a robot designed to be used as a security guard in inventory spaces. Costing $2,349.99 and controlled via an app, Amazon's Astro robot has been touted for its ability to give businesses 24/7 security. According to research company Global Data, the global robotics market was worth $63 billion in 2022 and is expected to reach $218 billion by 2030, achieving a compound annual growth rate of 17%. Service robots, such as security robots, are likely to be the biggest catalyst for this growth. The Astro robot combines robotics and AI and has features such as smart alerts, custom patrol routes and scheduled patrols. The robot can map up to 5,000 square feet and has a live feedback camera that includes night vision. Amazon says Astro is a great solution for small businesses. Security is a headache, but traditional solutions are too expensive or too static to be useful. The Astro robot has been tested in a variety of businesses and locations and allows businesses to watch blind spots traditionally missed by static CCTV cameras. Astro has already undergone a year of beta testing by businesses, and many of the test businesses have already incorporated Astro into their security service. One business owner said having the robot on duty helps him sleep better at night, because they use industrial ovens that can start a fire if they’re not turned off properly. Astro allows him to check in via live view anytime and double-check that the ovens are off. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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