The North American Hardware and Paint Association (NHPA), in partnership with The Farnsworth Group, has released results from the Q4 2022 Independent Retailer Index, a quarterly survey that measures key performance indicators in the independent home improvement channel.
In a survey of 53 independent retailers, respondents were asked to report how several operating metrics had changed year over year from Q4 2021 to Q4 2022, including total sales; transaction count; inventory investment; cost of goods and gross profit margins. Additionally, retailers were asked about expectations for Q1 2023 and their investment plans in inventory, staff, property, plant and equipment in Q2 2023.
Retailers Report Increases in Sales and Inventory Investment, Cost of Goods Remain High
In Q4, many independent retailers saw increases in total sales and inventory investment.
However, transaction count was mixed, with slightly more retailers seeing a decrease in Q4 (40%). Most retailers saw profit margin stay the same (60%) though some saw a decrease (23%). Nearly all retailers saw increases in their cost of goods, with 40% saying it “greatly increased.”
Anticipated performance for Q1 was mixed with some retailers expecting decreases and some expecting increases. Gross profit margin (64%) and cost of goods (53%) are expected to stay the same by the majority of retailers through Q1.
About 53% of retailers are expecting to make an investment in inventory in the second quarter, while 43% plan to make no additional investment. Over 50% of retailers are expecting to make investments in technology solutions in Q2 2023.
Overall, it is a mixed bag for independent retailers. Some saw increased growth and investment and some saw less, and most are seeing the same as the previous quarter. Inflation is taking its toll with significant increases in the costs of goods. For some, inflation was a big reason for higher profits, but this was not the case for most.
Next Survey to Launch in May
The next installment of the quarterly NHPA Independent Retailer Index survey will be available for retailer responses in early May. The survey will ask about performance across the same operating metrics comparing year-over-year changes in Q1 2022 to Q1 2023. Sign up to be notified when the survey is live at YourNHPA.org/subscribe.