While many mall stores have had a rough first quarter, laying off employees or closing stores, the home improvement industry is showing signs of promise. Home Depot saw a 7.1% boost in same-store sales this quarter, as well as announcing a stock buyback program. The company reported broad growth in all categories across the country. Like many flooring retailers, the big box stores are seeing strength in housing as a driving factor, as well as impact from the Federal Reserve planning to raise interest rates.
That said, the dreaded annual tradition of taxes is here, and the National Retail Federation reported that more Americans than ever plan to save their tax refunds or pay down debt instead of shopping. Of the 66% who are expecting a refund this season, only 20.9% of consumers will spend their refunds on everyday expenses, 8.7% will use them for major purchases such as a television, furniture or a car, and 7.6 will splurge on special treats like dining out, apparel or spa visits.
The numbers are down from last year, but there’s a highlight: 8.8 % plan to use their refund on home improvements.
“Financial security continues to be top-of-mind for all Americans, and consumers are hanging on to their tax refunds tighter than ever,” said NRF president and CEO Matthew Shay. “Consumers are leveraging their tax returns to build up their savings, but that’s good news in the long run because money saved today is money that can be spent down the road, particularly during the back-to-school and holiday seasons later this year.”
Of course, tax refunds kick off a psychological battle for millions of Americans. The payout, on average about $2,800, feels like a windfall that could be spent on treats. Paying down bills or investing in a residence seems like a better move. Millennials, in particular, are mindful of how they spend their hard-earned money these days, especially when it comes to any refund they expect from their taxes, said Prosper Consumer Insights Director Pam Goodfellow. “Although Millennials and Gen X are focused on allocating their refunds to savings or reducing their debt, young adults are also apt to seize the opportunity to treat themselves to a little discretionary spending,” she said.
Thankfully, the flooring industry is aggressively hunting market share. Our first-quarter visits to industry conventions, buying group conferences and vender meetings showed product innovation, consumer research, targeted promotions and strategic plays into e-commerce (see this month’s TalkFloor column with retailer gone e-commerce entrepreneur Justin Atcheson). We can’t wait to see where the momentum is going and how our industry will ride the wave.
