Top 500 unearths boundless opportunity

Home Channel News, May 24, 1999 by Don Longo

These are truly remarkable times in the home improvement and building supply industry, and NHCN's annual report on the industry, including its exclusive Top 500 listing of leading retailers, provides the most accurate and comprehensive look at this expanding business. Combined with our Pro Dealer Top 350 (coming June 7) and our Distributor Scoreboard (June 21), this three issue package is the ultimate accounting of retail, professional and wholesale sales in the industry. Business trends, merchandise category productivity and the performance of specific companies all come under the intense scrutiny of the largest and most experienced staff of editors and reporters among all publications covering this trading sector.

On page 50 we explain the exhaustive steps the NHCN staff and its CSG Information Services division go through to ensure the integrity of the data in this issue. The large number of privately-held companies in the industry means that we must call, call and then call again to get the numbers right.

Suffice to say, four and a half months of research and fact-checking results in what has become the industry's most-often quoted and generally accepted ranking of companies and the "Bible" on the overall health of the market.

And healthy is an understatement when it comes to the 1998 Top 500. The industry's 500 largest home improvement retailers increased their revenues 11 percent last year. Sales of home improvement products from all retail outlets grew to $171.6 billion, an increase of 9 percent in 1998, surpassing the robust 7.2 percent gain the industry achieved in 1997. Even subtracting the respective 25 percent and 21 percent sales gains of the industry's two giant power dealers Home Depot and Lowe's - the rest of the industry achieved a solid 5.5 percent revenue increase last year, mirroring the 1998 sales gain achieved by all U.S. (total retail, excluding auto) retailers.

And by at least one account, the industry covered by this news magazine may even be larger than that $171.6 billion. A recent advanced report by the U.S. Census Bureau appears to indicate that under the new North American Industrial Classification System (NAICS) being implemented to replace the traditional SIC (Standard Industrial Code), building material and garden equipment and supplies dealers recorded in excess of $230 billion in sales last year. That figure, though, includes approximately $76.4 billion in sales by lumber, building material, electrical, hardware, plumbing, farm goods, garden and paint wholesalers that were sold "by the retail method." That constitutes an acknowledgment by the federal government that wholesalers that sell direct to end-users are blurring the once clearly defined line between retailers and wholesalers. NHCN will be exploring the evolving nature of what constitutes a retailer, wholesaler and manufacturer in today's dynamic market in our June21 issue.

In his message to stockholders, customers and associates in this year's annual report, Home Depot CEO Arthur Blank said, "The U.S. home improvement industry continues to grow as new and existing home sales reach record levels, home ownership rates increase and existing houses and their owners age. In addition, the quality of home life has become more important to many homeowners, prompting them to make improvements or enhancements to kitchens, bathrooms and other frequently used rooms. All of these things spell opportunity for The Home Depot."

All of these things, and more, also spell opportunity for every company on the NHCN Top 500.