Product Development Is the Way to Get Ahead in the Home Improvement Industry

The home improvement industry in the US is both booming and rapidly evolving. This lucrative but crowded space is expected to be valued at over $600 billion by 2027 and has multiple companies with market capitalization at $150 billion or more along with local and regional brands as well as new entrants taking an increasing share of the home improvement market.

As with everything in consumer products, online sales are taking an ever-increasing share of the market from brick-and-mortar retail outlets, but product development is also factoring into the level of success in the market.

The biggest brands in the market such as Lowe’s and Home Depot are largely retail sellers of other brands. The world’s largest home improvement retailer, Home Depot, has an average of 35,000 SKU in its retail stores, while over a million are available through its ecommerce site. Lowe’s has similar numbers at 40,000 SKU in store and over 2 million online.

While these brands are traditional retailers and resellers, their growing competition is coming from retailers selling their own branded or owned product brands as seen in Harbor Freight and Vevor. Both companies put a focus on affordability but have notable differences in their business models.

Harbor Freight was founded in 1977 and has over $8 billion in annual sales generated by its 28,000 employees at over 1,500 stores across the US. Though there is no Harbor Freight-branded products, the company actually owns many of the dozens of brands it sells in its stores including Bauer, Icon, Hecules, and more. Harbor Freight puts a focus on tools and therefore carries 7,500 products, significantly lower than Home Depot and Lowe’s.

Closing in on Harbor Freight’s market share is Vevor, which is both a brand and an online retailer that sells home improvement products through its website as well as third-party sites, including Amazon, eBay, Walmart and Lowe’s. Vevor was founded in 2007 and entered the US market in the same year. Similar to Harbor Freight, Vevor focuses on providing “affordable and reliable” home improvement products.

According to the company, Vevor generated over US$ 1.3 billion in revenue by 2023. With a much broader range of offerings compared to its tools-focused competitors, Vevor sells over 20,000 products through its direct-to-consumer platform from home improvement, tools, home and garden, DIY, automotive and more.

A company spokesperson noted how Vevor is growing so rapidly around the world largely through its unique product development that has multiple teams collecting and analyzing commercial data to produce responsive, data-driven product design, manufacturing, pricing, and logistics. Customer satisfaction surveys, product ratings and reviews, sales figures, returns, and more all factor into this data feedback loop that helps develop products with a high cost-performance ratio while quickly launching in-demand products based on market conditions to maximize returns.

Unlike some competitors focused on exclusive or high-end home improvement products, Vevor is more like Walmart with a business approach that sells a higher quantity of goods at low profit margins.

In a tight market with increasingly price sensitive consumers, expect to see brands with unique product development models that allow for lower prices, such as Harbor Freight and Vevor, to continue gaining a share of that $600 billion pie.

SEE ALSO: Douyin’s Zhu Hao Jia Home Improvement Business Suspended Amid Adjustments

Report