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An Inside Look at How COVID Has Impacted the Home Improvement Space
A lot of things have changed in the past year, including the way Canadians spend, save, borrow, and manage their money. But contrary to what a lot of people think, the changes haven’t been all bad, especially when it comes to the home improvement industry.
Consumer Confidence in Canada
Consumer confidence is a measurement of how optimistic consumers feel about current economic conditions. The Consumer Confidence Index (CCI) is a score derived from a five-question survey among 5,000 households. Participants are asked to answer each question as “positive”, “negative”, or “neutral”. Using a specific calculation based on values assigned to each question, the answers are averaged together to end up with a final number. It’s the direction of that score that matters most—the premise of the CCI is that if the score increases, it means consumers feel good about what’s happening in the economy and their expected financial situation. As a result, they’re more likely to spend and help support a thriving economy. But if the score drops, it means they feel pessimistic about the economy and their lack of spending could further impact the situation.
When the COVID-19 pandemic first hit a little over a year ago, consumer confidence dipped, dropping 73 points over the course of two months to hit a record low of 47.6 in April 2020. No one was really surprised, given the lockdown measures, physical distancing guidelines, and high unemployment rates seen across the country. For the rest of 2020 and even into 2021, the numbers have bounced up and down.
The Impact on the Home Improvement Sector
At the start of the pandemic, the home improvement industry seemed to follow the same trajectory as the CCI. When customer confidence was at its lowest, we also saw a lull in business with a dip in new loan applications. In the first four months of 2020, loan applications were 23% lower than the 2019 volume. However, despite the fluctuations in consumer confidence, we’ve since been seeing nothing but upward trends with regards to loan applications. We actually saw an uptick in numbers with record-breaking investments in the home improvement sector. Here’s how 2020 ended up shaping out:
- In 2020, we actually recorded a 20% increase in loan applications compared to 2019. In fact, we had more loan applications in 2020 than in the previous three years.
- Although we saw numbers drop in Q1 of 2020, loan application volume from May to December was 38% higher than the same period in 2019.
- In 2020, we loaned Canadians 24% more money than we did in 2019.
This trend has carried on into 2021. In Q1 of this year, we received 32.8% more loan application submissions compared to Q1 2020. Our Residential New Construction business has also seen a jump with a 47% increase year-over-year as builders recover from the pandemic and continue to ramp up on construction to make up for delays in 2020.
For the remainder of 2021, we’re expecting a continued increase in home improvement spending. A recent survey by HomeStars, Canada’s largest network of verified and reviewed home service professionals, found that 74% of Canadians have plans to improve their homes this year through repairs, improving functionality, or just updating and upgrading. When it comes to anticipated spending, 46% of respondents plan on doing jobs for up to $10,000, while 24% are planning for jobs up to $25,000.
What Does All of This Mean for You and Your Business?
The fact of the matter is that Canadians are willing to invest in their homes, now more than ever. Given the rolling lockdown measures across Canada, people are spending less time (and money) on the road and on travelling, and more time at home. And as a result, they’re becoming more acutely aware of what needs to be fixed or upgraded in their home and are more likely to redirect funds accordingly.
But for many homeowners, their disposable income may not be as readily available as they were pre-pandemic, thanks to closed businesses and changes in employment. This is where financing comes into play. Our unique financing programs, like the 240-month amortization option, are specifically designed to help your customers get the home improvements they want without having to sacrifice on quality. For you, this means being able to sell more at the kitchen table. By leveraging the option of financing, you’ll be able to increase your average ticket and successfully close more sales.
All things considered, the upcoming year looks promising for the home improvement industry, which means your business is uniquely positioned to thrive. And as always, we’re to help. We’ll continue to provide you with the tools, resources, and dealer promotions you need to continue offering your customers the industry-leading financial solutions they want.
For a more in-depth look at our market trends, industry insights, or for more information on our dealer promotions, get in touch with your Business Development Manager!
