Accessorizing with M&A in Home Décor

Economic expansion. Rising consumer confidence. A healthy labor market. All portend growth in consumer spending in 2018. Consumer confidence has recently hit the highest level in 17 years. Unemployment is at a 17-year low. The economic recovery has persisted; The Conference Board is projecting 2.9 percent growth in the economy in 2018.

“We’re in the middle innings of the recovery,” said Craig Menear, CEO of The Home Depot, to analysts in the company’s investor presentation last September, citing the uneven recovery in the housing cycle and low private fixed residential investment relative to historical norms. “We feel good about the general dynamics of the market.”

Trends in the housing market, notably growth in housing starts, healthy housing turnover, appreciation in home values, and low interest rates, suggest a favorable outlook in 2018 and point to continued momentum in remodeling spending. Add to that changing demographics, with more millennials becoming new home buyers, and the foundation is set for growth in home furnishings and décor.

Home Décor Shines

The Home Décor market remains a bright spot, according to findings in the 2016 Universe Study, a biennial market analysis published by Home Accents Today. The $65 billion Home Accent market expanded 2.3 percent in 2016, with all major product groups showing growth. Area Rugs saw the largest gains, with sales growth of 4.1 percent. Decorative Accessories and Accent Furniture, the two largest categories, grew 2.0 percent and 2.6 percent, respectively.

Home Décor Growing Online

According to The NPD Group, online sales of home improvement products gained 41 percent in the 12 months ending March 2017, with virtually all categories seeing double-digit growth. NPD sizes the eCommerce home improvement market at $10.9 billion and includes home décor among the product groups in the broader industry, which spans plumbing and hardware to light fixtures and storage. Home décor, light fixtures and lamps, and area rugs were among the categories with the largest online sales gains. “Without a doubt, eCommerce will continue to gain importance for the home improvement industry,” said Joe Derochowski, executive director and home industry analyst at The NPD Group.

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