The 'Amazon Effect' on Home Improvement

Mar 31, 2017Reading Time: 4 min

Malls are turning into today's ghost towns and big department stores keep shutting their doors. It's called 'the Amazon Effect," and it's the result of so many online consumers skipping stores to shop for deals at home instead. But one type of store is showing strong growth and booming sales: home improvement.

The Amazon Effect

Brick-and-mortar department stores are slowly becoming a thing of the past -- and in some towns, it's not happening so slowly at all. Online sites like Amazon are getting more customers than well-established brick-and-mortar stores. In the U.S., big box department stores have lost billions in revenue over the last 10 years while online shopping has enjoyed a steady rise. Shoppers hunting for big savings and the best deals are no  longer walking from store to store, they’re getting on the internet. Now, consumers can find coupons and promo codes online to make it even easier to shop from home.

In 2017, trend watchers predict that there will be even few department stores. Meanwhile, home improvement stores and home services centers are not experiencing the Amazon Effect. In fact, they're thriving.

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Home Depot and the Housing Market

While retailers are closing their doors, Home Depot is looking at a surge in sales. The booming housing market has caused a healthy spike in sales, and market shares of Home Depot are up 1.4 percent. Sales revenues of $21 to $22 billion are estimated for 2017.

The rising home values mirror rising sales figures for Home Depot and other home improvement stores. People are investing in their homes, and many of them are getting hands-on to do it. Many shoppers are discovering their DIY spirit, and heading to brick-and-mortar businesses to make their projects a reality. Home Depot sales in the U.S. are up by 6.3 percent, a huge rise that shows the Amazon Effect is having no effect when it comes to home services and home improvement.

A Lot is Happening at Lowe's

Lowe's is also experiencing a boom in sales, and already their numbers are better than expected in 2017. Across the U.S., homebuilding was up 11.3 percent last December. Meanwhile, there was a 5.1 percent rise in comparable sales at Lowe's for the fourth quarter of 2016. Estimated sales in 2017 are at $68.27 billion, so Lowe's isn't about to slow down anytime soon.

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Many home improvement stores like Lowe's use regular deals and send out coupons to promote their products and get customers in the door, but even without offering big savings and promo codes these stores would still see customers from walk-in traffic. Customers interested in home improvement and home services are more likely to physically go to the store so they can see and touch the items they're buying, rather than trusting pictures they find on websites when they're shopping online.

Improving Home Improvement

For online shoppers, home improvement stores maintain an online presence where customers can find promo codes, coupons and other savings offers, and get an idea of the current inventory available inside the brick-and-mortar stores. Home Depot and Lowe's both offer apps to their customers so they can more easily find products they like online right in the store, and use the internet look for deals that can help them save money. This way, customers get the best of both online shopping and the experience of stepping inside the store to physically see what they're going to buy.