Consumer Trends

Market research recently conducted by The NPD Group shows consumers are buying more from specialty retailers, including outdoor power equipment dealers. This finding comes at a time when business is slow for mass merchandisers who also sell products listed under NPD's home improvement category.

Lawn and garden products experienced double-digit growth over the past two years, according to the study. The NPD Group, Port Washington, N.Y. studies several industries, and has for more than 40 years. Research is conducted by polling consumers or by compiling register sales through participating retailers. The home improvement industry, as tracked by NPD, includes outdoor power equipment as well as hand and power tools, plumbing, lighting and electrical products.

The group's research revealed that the home improvement industry in general grew 2% in the 12 months ending September 2011 vs. 2010. However, the industry is still down 7% compared to the same time period in 2009. Despite the slow growth overall and the fact that sales results are below what they were two years ago, specialty retailers are making significant gains on the national big box chains.

Kevin Gilbert,
Director of The NPD Group

"Since the start of the economic downturn we've entered a new mindset as consumers," says Kevin Gilbert, director, NPD. "People are getting back to their roots and putting an emphasis on supporting local, homegrown businesses. The specialty retailers are capitalizing on that."

As a result, specialty retailers have grown 7% in home improvement dollar sales, and by double-digits in unit sales volume versus 2009. This channel now represents 12% share of dollar sales and 14% of unit sales across NPD's home improvement categories.

Hardware stores also gained sales momentum, increasing 6% on a dollar basis, compared to the 12 months ending September 2009. While other channels, like warehouse home centers and warehouse clubs showed modest growth in the 12 months ending September 2011, it wasn't enough to keep up with specialty and hardware store growth.

According to NPD's consumer tracking service, while price continues to be the top factor in selecting a retailer, a quarter of home improvement consumers tell NPD their primary reason for shopping at a particular store is that it's close to home. Gilbert says demographics are also showing that as the "population ages, consumers don't like shopping in big 220,000 sq. ft. stores. The aging population is also becoming disinterested in traveling outside their hometown due to rising gas prices."

According to NPD, the top five home improvement retailers still command more than 65% of the unit sales recorded, but the smaller, more specialized retailers are gaining momentum.

In addition to location, consumers shopping in specialty stores do so because of selection and availability. "It's clear that consumers are looking for more convenience. If specialty stores can continue to offer the price and selection consumers are looking for, they will continue to get the consumers' attention and their spending dollars," says Gilbert.

Gilbert — a rural lifestyler living in Connecticut — says "we're seeing that consumers are seeking a simpler, and more personal shopping experience in smaller stores. Regardless of the focus mass retailers place on educating employees on the products, consumers are finding value in knowing their questions are being answered by experts on a personal level."

For salespeople at a specialty store, the selling process is not just about products: it's people and their unique situations. "Not every customer is the same," says Gilbert. "Sales personal need to learn what a customer's pain point is, or what their objectives were in coming into the store. If you learn that first, you can sell solutions and not products."

Still, it's the product that they've gone to an equipment dealership to acquire in the first place. NPD's research reveals that the Internet is an increasingly large part of the shopping experience.

"For equipment such as riding mowers and snow blowers, consumers are utilizing the Internet at almost a 50% level to find product information before they go to a store, and even use it to decide which store to visit," he says. "One of the things that rural consumer dealers should take to heart is ensure they just don't have a website, but one that is useable and gives consumers the product knowledge they're seeking."