New • COVID-19 Report

Home improvement & the surge in DIY

Tuesday, May 19, 2020 • 1:00 PM EST

Key Takeaways:

1. Home improvement retailers are experiencing a surge in consumer demand, as appetites for DIY projects have increased during the pandemic.
2. While The Home Depot and Lowe's continue to dominate the space, smaller players such as Menards and Ace Hardware have outpaced them in terms of recent growth.
3. All four brands are adding new customers at a much higher rate than before. The majority of these new customers are women.
4. Expect to see the effects of this increased spend in Q2 results.

There has been much chatter about the rise of DIY ("do it yourself") during the pandemic. The New York Times recently declared that "for many homeowners across the country, the coronavirus-imposed quarantine has presented an opportunity to head over to the local hardware store and launch a few DIY projects around the house". This peaked our curiosity, so we decided to look for notable shifts in consumer spending at the biggest home improvement retailers in the country.


We were not disappointed. There has been a rapid rise in home improvement spending since March. In recent weeks, consumers are spending 2-2.5x as much money on home improvement vs earlier in the year. This increase appears across all the top national retailers, though Menards and Ace Hardware have grown disproportionately.

GMV Trend - Weekly

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It's worth noting that home improvement spending is subject to seasonality, as warmer spring weather usually signals the start of the spending season for the category. However, the magnitude of the increased spending that's taking place this year is notably larger than the seasonal effects that would normally occur. April sales were ~42% higher YoY, with Ace Hardware and Menards having grown 90% and 82% YoY respectively. Lowe's and The Home Depot, trailed their smaller counterparts with 50% and 34% YoY growth.

YoY Growth (monthly)

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YoY Growth (monthly)

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YoY Growth (monthly)

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YoY Growth (monthly)

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The lion's share of this increased spend is coming from existing customers, who accounted for 91% of all spending in April.

Weekly GMV - New vs Existing Customers

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These consumers are spending more per order, and ordering more often per month. Both average order value (AOV) and purchase frequency increased by ~15% since the start of the pandemic. Both of these figures fall well above the expected effects of seasonality, though it's worth nothing that the AOV increase is likely impacted by the decrease in in-store purchases which usually consist of smaller basket sizes (vs online orders that typically have a larger basket size to offset any shipping costs).

AVG Basket Trend - weekly

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Purchase Frequency By Month

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While these patterns are observed across the nation, some states have outpaced others in terms of growth. Texas and Illinois are the biggest outliers. We were unable to pin down the driving forces behind these discrepancies.

Purchase Frequency By Month

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Though new customers only accounted for ~9% of total spending since March, their numbers have increased dramatically over the past couple of months. Combined, the four companies are acquiring ~53% more first-time buyers since the start of the pandemic (March & April vs January & February). This figure falls well above any seasonal adjustments as the 2019 "spring surge" increased the customer acquisition rate of the companies by ~36%.

Purchase Frequency By Month

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Note: A "new customer" is defined as any customer that spends at a home improvement retailer for the first time in 12 months.

The disproportionate growth of some of the smaller brands in this category has resulted in a marketshare shift at the expense of The Home Depot. While the category leader continues to capture more than half of the spending , its share of the pie has dropped 4.3% in recent months as consumers have disproportionately increased their spending with the competition.

Age Mix - Pre COVID-19

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Age Mix - Post COVID-19

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The make-up of new customers hasn't changed too much, though there has been a slight shift towards females who now account for 55% of all new customers at the four retailers.

Gender Mix - Pre COVID-19

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Gender Mix - Post COVID-19

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Age Mix - Pre COVID-19

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Age Mix - Post COVID-19

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Our expectation is that these trends will continue well into the summer months, which is usually when the category peaks from a sales perspective. If this proves to be correct, Lowe's and The Home Depot may be looking at stellar Q2 earnings.