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Inflation Is Delaying Some Home Projects, But for Savvy Brands & Retailers Opportunities Still Exist

Today’s con­sumers are fac­ing harsh finan­cial real­i­ties due to infla­tion. But not all con­sumers have been impact­ed equal­ly, nor are they react­ing in the same way. In Numerator’s lat­est home improve­ment report, we exam­ined inflation’s influ­ence on home improve­ment pur­chase behav­ior and future inten­tions across five core finan­cial seg­ments pre­vi­ous­ly iden­ti­fied in our New Real­i­ties cus­tom seg­men­ta­tion study.

New Realities Consumer Segments

Our analy­sis shows that, while ris­ing prices appear to be delay­ing con­sumers from pur­su­ing home projects broad­ly, there remains oppor­tu­ni­ty among spe­cif­ic con­sumer seg­ments and project types in the sec­ond half of 2022 for brands and retail­ers that know where to look.

Consumers Across All Segments Are Pulling Back

Shop­pers are ner­vous about their finan­cial future, and their behav­ior is shift­ing accord­ing­ly. Near­ly all house­holds are tak­ing some mea­sures to com­bat ris­ing prices, with approx­i­mate­ly half (49%) plan­ning to decrease spend­ing on non-essen­tial items in the next few months. A small­er num­ber (18%) will also pause major finan­cial com­mit­ments— like home ren­o­va­tions. But there is a sil­ver lin­ing: con­sumers who intend to cut back non-essen­tial spend­ing are more like­ly to do so on din­ing expens­es and recre­ation­al activ­i­ties than home improve­ment projects.

Expected Non-essential Spending Cuts

Con­sumers’ stat­ed inten­tions to pull back is in line with shifts we’ve observed in pur­chase behav­ior. Com­pared to 2021, most con­sumers this year have spent less on non-essen­tials in gen­er­al, includ­ing home improve­ment. Review­ing pur­chase data from Numerator’s GM Sta­t­ic Pan­el— which is com­prised of 225K house­holds upload­ing receipts dai­ly — we see that, through the first five months of 2022, pro­ject­ed sales and trips are down ver­sus YA across key home improve­ment cat­e­gories in the home improve­ment channel.

Shopping Behavior by Home Improvement Cateogry

But There’s Still Opportunity in the Second Half of the Year

When asked if infla­tion had impact­ed their plans for home projects this year, near­ly 80% of shop­pers replied that it had. Still, rough­ly 42% of house­holds plan to pur­sue home projects in the sec­ond half of the year, whether on their own or with a pro, and an addi­tion­al 37% would do so if prices fall.

Intentions for Home Improvement Projects 2022

Across all seg­ments, con­sumers appear most like­ly to take on paint or yard projects in the com­ing months. How­ev­er, key oppor­tu­ni­ties with­in spe­cif­ic cat­e­gories can be uncov­ered by exam­in­ing project intent by con­sumer finan­cial seg­ment. Div­ing deep­er, we see that shop­pers in the Com­fort­ably Retired seg­ment are more like­ly to start a kitchen or bath remod­el, while Strug­gling + High PP house­holds will focus on patio & yard projects. Strug­gling + Low PP house­holds are least like­ly to start projects this year, but if they do are more like­ly to take on a kitchen/​bath remod­el or replace appli­ances than con­sumers as a whole.

Intentions for Home Improvement Projects by Project Type

Why it Matters

What does this mean for Home Improve­ment brands and retail­ers hop­ing to suc­cess­ful­ly nav­i­gate through the uncer­tain­ty? Infla­tion is impact­ing con­sumers’ plans for home projects across the board, but the demand hasn’t dis­ap­peared— it’s sim­ply been delayed. The way shop­pers respond will dif­fer based on their finan­cial health, and not nec­es­sar­i­ly in ways that are intu­itive. Hav­ing a nuanced under­stand­ing of dif­fer­ent con­sumer seg­ments will be cru­cial, as a household’s gen­er­al demo­graph­ic pro­file or income lev­el isn’t nec­es­sar­i­ly indica­tive of their finan­cial well­ness or will­ing­ness to take on home projects. Savvy brands and retail­ers will find suc­cess by bring­ing tar­get­ed mes­sag­ing to each seg­ment based on their top home improve­ment pri­or­i­ties, and in a way that is mind­ful of those fac­ing finan­cial hard­ship.

Numer­a­tor can help you reach a deep­er under­stand­ing of cus­tom con­sumer seg­ments along with oth­er key home improve­ment shop­per groups, like PRO­sumers & DIY­ers or Home­own­ers & Renters, so you can engage with them more effec­tive­ly. Get in touch to find out more.

There’s More to Know. 

To learn more about the impact of infla­tion on home improve­ment shop­pers, down­load the full report from Numer­a­tor.

Numer­a­tor is the Plat­inum spon­sor for HIRI’s 2022 Insights Sum­mit. Join us for HIRI’s 2022 Insights Sum­mit in Chica­go on Sep­tem­ber 20 – 21. Go to www​.hirisum​mit​.com to reg­is­ter either in-per­son or virtually.

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