Q3 Index - Home Goods and Improvement Sector

We’re continuing our Q3 Retail Index with something that really hits home, the Home Goods & Improvement sector that is. Did this quarter deliver results after a strong spring season? We dove into foot traffic data to see. 

Most Improved

In Q2 only two of the ten companies analyzed experienced a drop in traffic from the previous quarter - Bed, Bath & Beyond and IKEA. This round, things didn’t look as good for the Home Goods chains, as only half of the retailers saw growth in Q3 compared to Q2. This speaks less to a wider problem and likely indicates the hype around Home Improvement products that surge in the spring, though many of these same brands also saw decreases Year-over-Year.

On the flip side, Bed, Bath & Beyond and IKEA showed the highest quarter over quarter growth of 31.2% and 30.4% respectively, followed by HomeGoods with 13.5% growth. The average quarter over quarter growth of the entire sector was 4.27%. The numbers for Bed, Bath & Beyond are particularly interesting considering the negative sentiment that abounded earlier this year.

Coming Back For More 

We also looked at customer loyalty, or visits per visitor, for each retailer. When it came to this metric, The Home Depot (2.63) and, surprisingly, Menards (2.54) had the highest values, meaning that customers come back on average almost once a month. Lowe’s too was in the top three, with 2.35 visits per visitor. The average of the rest of the group was only 1.47,  meaning one less visit per customer this quarter. At scale, this results in a huge impact on total traffic. When it comes to basic, ongoing Home Improvement needs, The Home Depot, Lowe’s and Menards have clearly been better established as top-of-mind, go-to destinations.

IKEA was on the lower end, with 1.47 visits per visitor on average, but it’s important to note the length of stay per visitor here. Just like in Q2, customers stay in IKEA for 80 minutes on average, which is twice as much as the group average. This shows that IKEA is strongest when it comes to providing visitors with an end-to-end shopping experience. 

Top Two

When it comes to market share, The Home Depot and Lowe’s continue to dominate, holding 65.7% of total market share for the sector. Home Depot takes 38% of the Home Improvement cake while Lowe’s has 27.7% market share. HomeGoods and Menards are far behind at 7.9% and 7%, leaving the two leaders far ahead of the pack. Even with the recent struggles of Home Depot, this metric clearly underlines the strong position from which the brand is making its adjustments.

Takeaways

While The Home Depot and Lowe’s are the clear Home Improvement sector kings, IKEA continues to hold the throne when it comes to visit duration. How will IKEA’s urban expansion pan out in 2020? What will happen with Bed, Bath & Beyond’s brand family? And will the giants slay the holiday season? Check back in at the Placer.ai blog.