We all put a high value on our home because we see it as our haven, not only from all the elements but as our refuge where we feel loved and safe together with the people we love. We spend a great deal of our time within the four corners of our home especially when the elements are raging and when night time falls, it is why most homeowners don’t stop improving their homes once they are built. Maintenance services will be necessary as well.
From the moment the house is up, there are various ways it can still be improved. Various home accessories and fixtures are added and even the lawn can be beautified to make it more appealing to the eyes of the public. Aside from that, home improvement also increases your home’s value for when the time comes you decide to sell it. Homeowners all over the country often tap on contractors to do the job for them but they can also do certain additions or minor home renovations on their own if they have prior knowledge or perhaps are skilled enough to do the job.
On Thursday, shares of Home Depot Inc (HD) and Lowe’s Companies, Inc. (LOW) were hit on news of Sears Corporation (SHLD) moving its Kenmore brand toAmazon.com, Inc. (AMZN) . On Friday, that weakness continued for Home Depot, with shares falling about 0.3%. The stock is down about 4.5% over the past two days.
Home Depot is becoming reminiscent of Costco Wholesale Corporation (COST) when Amazon acquired Whole Foods Market (WFM) for $13.2 billion. At least, that’s according to TheStreet’s founder Jim Cramer, who also manages the Action Alerts PLUS charitable trust portfolio.
Speaking on CNBC’s “Stop Trading” segment Friday, Cramer said analysts were quick to defend Costco despite the Amazon news with Whole Foods. Analysts are now doing the same thing by defending Home Depot.
The real concern may go beyond Amazon and Sears. Cramer cited comments from Sherwin-Williams (SHW) management that said there seems to be some softness in do-it-yourself work.
For many years, homeowners and contractors alike have relied on big home improvement stores like Home Depot Inc. and Lowe’s even Sears for their home improvement needs but we all know how things have changed over the past years. Technology has overtaken the marker and certain mega-companies are eliminating the competition by buying them off. This is certainly the case with Amazon’s rumored takeover of certain home improvement stores. Over the years, Amazon has grown to considerable heights from its humble beginnings as an online bookstore. It’s the reason why smaller retailers are quite shaken by this news.
But as Amazon extends into industries from social networks to grocery delivery, the deal with Sears is raising questions about the extent to which home-improvement stores can withstand competition from the ecommerce giant.
Home Depot, the largest home-improvement store in the US, is down by more than 4% at 11:09 a.m. ET, while Lowe’s is down 5%. Whirlpool and Best Buy also fell.
Home-improvement stores have largely weathered the downturn that has hit department stores which traditionally staked sales on store visits. They’ve also benefitted from strong demand for housing and rising prices, which can be lifted even more when renovations are done before listing.
That’s not to say that Home Depot is suddenly vulnerable; Oppenheimer described the share-price reaction as “overblown,” according to Bloomberg. Home Depot’s online sales rose 23% year-on-year in the first quarter. By fulfilling online orders from local stores, Home Depot is able to quicken its delivery times for web orders.
Home Depot and similar stores hold another key advantage over Amazon: some shoppers still prefer to physically inspect renovation supplies like paint, bathroom fixtures, and flooring instead of buying online.
It is true that the threat is there and one should not underestimate the clout of this major e-commerce giant but it is not the end yet for other major home improvement stores like Home Depot. While there are certain products that people feel confidently ordering online, most homeowners prefer to see and personally purchase home fixtures and accessories rather than buying them online unlike gadgets and home appliances. It is not totally a hopeless case despite the drop in shares. There is still a market and they will remain for a while although it should be a warning to major home improvement retailers with physical stores that competition is tighter than ever and they should find ways to ensure their survival even if the Amazon take-over really pushes through.