Retail: European Championship finals and lots of sun – that’s what the hardware stores are dreaming of in 2024

Retail: European Championship finals and lots of sun – that’s what the hardware stores are dreaming of in 2024

Consumers have recently been thrifty when shopping in specialist stores. The hardware store industry is now counting on an upturn in sentiment for 2024. What does the European Football Championship have to do with it?

The hopes lie with national coach Julian Nagelsmann and his team. If the hardware store industry had two wishes for 2024, then it would probably be these: the national team reaching the final of the European Football Championship in their own country and good summer and barbecue weather.

Both together would be favorable conditions. Because many people in Germany spend time in their own garden in the summer and their mood increases. And by the way, also for a successful year for the DIY and garden stores.

Retail can make good use of this. The industry has had a difficult, even “dramatic” year. Representatives of the trade association for DIY, building and gardening (BHB) in Cologne openly admitted this. Despite increased prices, sales fell by 3.1 percent in 2023, or even by around 9 percent when adjusted for inflation – and thus significantly more than in retail as a whole.

Inflation, rain and heating law

Many consumers also used the Corona period to beautify their own four walls, implement renovations and also bring them forward. Recently, however, due to high inflation, they have often foregone unnecessary purchases and larger projects for their house and home. In addition to the furniture industry, hardware stores were also severely affected.

In addition to thrift and a bad mood among many customers, other factors made matters worse: due to the long winter and a lot of rain, the spring business, which is so important for the markets, went poorly. Supply chain problems and the slump in new construction also had a negative impact – the fewer new apartments, the fewer orders for initial equipment. According to its own statements, the dispute over the heating law has also damaged the hardware store industry. Accordingly, sales in the areas of sanitary installation and heating collapsed after the law was passed.

Fierce competition from discounters, Amazon and Temu

Looking ahead to 2024, retailers are at best cautiously optimistic. It is hoped that the falling inflation rate and the often high wage agreements will give a boost to consumption. Confidently something else is also true. “People particularly value their homes in times of crisis and uncertainty. We offer everything we can to preserve, beautify and expand them,” says BHB Managing Director Peter Wüst.

The association also believes that the high utilization and increased prices of professional craft businesses will drive people to the markets to carry out work themselves. “Building it yourself and doing it yourself is cheaper” – that’s the industry motto. However, prices remain one of the biggest challenges: specialist retailers will have to focus more on entry-level ranges in the future because it is still expected that customers will make tight calculations and rely on cheap products. Here, of all places, the markets have to assert themselves in a difficult competition – against the non-food ranges of discounters, against Amazon and Asian trading platforms such as Temu.

“Hardware stores will continue to have to manage the balancing act of positioning themselves as competent problem solvers for larger projects, but also offering an attractive range in the entry-level price segment,” says Kai Hudetz from the Cologne retail research institute IFH. He assumes that the situation will ease somewhat in the medium term. “We will see catch-up effects in the home and garden sector in the next few years, because many investments can only be postponed to a limited extent. This will certainly help the industry as a whole.”

Football can help more quickly under certain circumstances. The European Championship in Germany, which begins in three and a half months, is a potential mood booster for hardware store business – especially if the national team does well. Trade representatives agree on this. But, just like the weather, it will not be possible to influence it. The football magic could end quickly. In two of the last three major tournaments, Germany was eliminated in the preliminary round.

Source: Stern

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