The benefits of crises and catastrophes

America’s hardware industry is looking ahead to 2013 with guarded optimism. The country is still suffering in the aftermath of the 2008-09 recession, but the housing market – both new stock and existing buildings – is showing greater signs of life, which means a brighter outlook for lumber dealers, home centers and hardware stores. But the country has a number of unsolved problems which not least affect the retail sector. The unemployment rate remains at a persistently high level, nationally at 7.8 per cent and well above that number in some states or some areas. America’s “fiscal cliff”, threatening higher taxes and drastic cuts in spending, has still not been averted, and there is no long-range solution in sight. Consumers remain very cautious in their spending, given the economic uncertainty they see, hear and read about almost daily. On the other side, job creation remains very low as employers hesitate to expand, open new factories, retail stores or other businesses because of economic uncertainty. In this situation hardware stores and home centers “enjoy” about the slowest stockturns of any business, except perhaps furniture dealers or jewelers, and lumber dealers must maintain huge investments dependent upon the housing market. So exactly what might be ahead for the industry in 2013? There should be some sales growth, though it will be modest, in the estimation of industry experts. The two largest home center chains, Home Depot and Lowe’s, should benefit to some degree from the slowly improving home building market. That means primary and secondary builders and contractors will be buying. Lumber dealers, many of whom went out of business over the past several recession years, will also benefit as housing starts slowly begin to rebuild. Both chains, however, have sharply curtailed new store devel­opment and have, in a few cases, closed low-performing stores. Menards, the privately-owned third largest chain, recently indicated it would not be opening a planned new store because of economic uncertainty, though it has continued a modest ongoing expansion. Hardware stores, too, will benefit to some degree from the improved housing activity, though not as much as home centers or lumberyards. As home building improves, so does consumer confidence. Sales of existing homes have increased for eight months, and these usually result in some extra business for hardlines stores. Nearly five million such transactions were occurring on an annual basis, which is ten…