OpenBrand

TraQline Tracks the Trends in Average Price Paid During the Pandemic

Between the pandemic, supply chain challenges, and changes in consumer demand, it feels like prices everywhere have been increasing. Even with manufacturers and retailers trying to absorb some of the rising costs, costs incurred by buyers have been going up. In fact, TraQline has seen a 13% increase in average price paid between Spring 2019 and Spring 2022 across all categories. What does that mean for the brands and retailers selling in the Home Improvement Industry? Here’s a look at how the market has been affected.

Which categories of products saw the highest rate of change for Average Price Paid?

Certain categories have faced much higher pressure over the past few years. Perhaps unsurprisingly, many of these products rely on lumber costs to determine the price consumers will ultimately pay. The categories in TraQline that saw the highest rate of change include:

• Windows & Doors (36% increase between the average price pre and post pandemic)
• Kitchen Cabinets & Countertops (34%)
• Building Materials (32%)
• Flooring (25%)

What factors contributed to these stark increases in average price paid?

Building materials were significantly affected by the challenges created by the global Covid-19 pandemic. This category includes products such as drywall and gypsum, lumber and plywood, insulation, roofing, and gutters. Among these products, roofing and composite decking materials represented the two categories with the highest average price paid. However, the products that saw the largest rate of change in this category are lumber and plywood. Costs had been holding steady in 2018-2019, but Q1 2020 signaled the beginning of an increase in average prices. This increase in lumber costs reverberated throughout the home improvement industry. According to the IMF: “Truck drivers and ship crews couldn’t cross borders because of public health restrictions. Pent-up demand from huge stimulus programs during extended lockdowns overwhelmed the capacity of supply chains. Besides causing delays in getting goods to customers, the cost of getting them there surged.”  In addition, tariffs on lumber from Canada complicated an already challenging manufacturing environment for companies manufacturing wood-based products.

For kitchen cabinets and countertops, the price consumers paid initially fell during the height of the pandemic in 2020. However, by Q1 2021, product prices were back on the rise. The kitchen cabinet and countertop industry faced the same challenges as other home improvement industries, including labor shortages, increased transportation costs, and lumber tariffs. The increased demand left mills unable to cope, driving the cost to consumers higher than ever.

Even though the flooring industry has seen a 25% increase in average price paid, demand for new flooring has been on an uptick among consumers who are eager to remodel their homes after having been stuck in them for the better part of two years. As with other categories dependent on lumber, hardwood flooring has seen the most volatile price changes over the course of the pandemic. There are also increases, although less remarkable, in prices paid for laminate, vinyl, and ceramic flooring. However, laminate and vinyl may see future costs start to fall as manufacturers have been investing in US factories for these products.

How have these prices affected consumer shopping behavior?

For the windows and doors market, the most notable – but expected – change has been in the number of buyers looking at other, smaller outlets rather than big box retailers such as Home Depot or making purchases through contractors. This change extends not only to purchases, but also to how consumers shop. While it may seem counterintuitive, consumers were more willing to shop around (online or in store) at two or more stores during the pandemic in order to find product in stock. As restrictions have eased and supply has started to return to pre-pandemic levels, consumers are shopping around less.

In the kitchen cabinets and countertop category, despite the average price paid in 2022 being 34% higher than it was in 2019, TraQline data does not show any real upheaval in how consumers shop. They’re going to the same places at the same rates and aren’t shopping any more stores than they did pre-pandemic.

Flooring retailers with a smaller percentage of the overall market (such as Menards, Walmart, Amazon, and Costco) saw a boost in their flooring sales during the pandemic.  However, TraQline data shows that consumers went to the same number of stores as they did pre-pandemic.

Top building materials retailers, such as Home Depot and Lowe’s, have retained their positions despite the challenges that the pandemic has presented. However, purchases made through a contractor have had a lift since 2020. It’s likely that this is due to two reasons:

1. Homeowners have been bullish on remodeling. In that case, it would be prudent to make orders through contractors since they’re doing the work already.
2. There have been long lead times and limited availability of products such as 2x4s and plywood. Some pros indicate that their timelines are long, and will continue to be so since lockdown restrictions have lifted and as homeowners feel more at ease letting strangers come in to work in their homes.

These products have seen some of the most extreme increases in average price paid among our available data. However, other categories are not seeing such dramatic increases.

Not all increases are equal: Categories that saw smaller price increases when comparing post-pandemic prices to pre-pandemic prices

There are TraQline categories that saw moderate average price paid changes when comparing pre- and post-pandemic prices. Some of those categories include:

• Major Appliances (7% price increase between the average price paid pre- and post-pandemic)
• Nursery (7%)
• Lawn Power Equipment (5%)
• Heating/AC (4%)

What factors contributed to these price increases?

For consumers purchasing a major appliance, there were a variety of changes to their shopping experience. While most products saw a steady increase in average price paid, many consumers noticed supply side issues leading to low stock, long lead times, and the virtual elimination of the on-sale appliance. Some of the products with the most noteworthy increases include wall ovens, refrigerators, and built-in ranges. Major appliances have been hit particularly hard by the semiconductor shortage. These products rely on chips for vital functions, whether or not they are “smart” products. The ongoing chip shortage has affected production times, which is exacerbating the long wait times consumers now face to receive their products.

Nursery and lawn power equipment have likely seen increases in demand as homeowners have invested in outdoor living due to the pandemic. With outdoor gatherings being deemed safest, many consumers have prioritized spending more money and time on their outdoor spaces, whether that’s adding new plants to a yard or buying equipment needed to care for their space.

Have these price changes affected consumer shopping behavior?

For major appliances, more than half of all buyers shop only one store. Like all products that were hard to find in stores during the height of the pandemic, major appliances were also in short supply. As a result, there was an increase in shoppers visiting three or more stores, but that has tapered off in the past year. Lowe’s and Home Depot remain in the top positions, but outlets such as Costco and Amazon have seen increases in their appliance sales over the course of the pandemic. However, as restrictions have eased and more consumers are feeling comfortable going to brick-and-mortar stores, Amazon has lost some of the share it gained in 2020 and 2021.

Major retailers such as Home Depot and Lowe’s have been able to keep their place at the top for lawn power equipment, but since the start of the pandemic, Ace Hardware has experienced significant growth. Amazon also saw a lift in 2021, but its growth rate has slowed as pandemic restrictions have eased across the country. While the majority of lawn power equipment products are purchased in retail stores, online sales saw a significant lift during the pandemic that has remained high even as more consumers are willing to go out to shop again. Despite a rise in costs, consumers don’t appear to be eager to shop around, either. Nearly 62% of consumers shopped only one store.

Which categories have seen prices increase more slowly in the post-pandemic period?

Despite most categories seeing price increases, some products have had price declines over the past two years. It is important to note that these price changes have not been equal. Categories that saw decreased average price paid include:

• Tool Accessories (10% decrease between the average price paid pre- and post-pandemic)
• Cleaning Chemicals (4%)
• Personal Comfort – a category that includes humidifiers and air purifiers (2%)

What could be contributing to this decline in costs?

Cleaning chemicals and personal comfort products saw a surge in demand during the pandemic, and companies were able to rise to the challenge. Many companies were able to shift focus to new product categories, increasing competition and filling store shelves with new products. Some highlights include distilleries that were able to convert some of their product to hand sanitizer and other disinfectants.

Have these price changes affected consumer shopping behavior?

While Walmart remained the top retailer for personal comfort products, Amazon continued to gain steady ground during the pandemic, as did retailers with smaller shares of the market, including both Costco and Best Buy. Some of Amazon’s increase may be due to the rate at which consumers switched to purchasing online. While rates have fallen some, online shopping rates are still 10 points higher than they were pre-pandemic.

Conclusion

The past few years have caused both businesses and consumers to recalibrate to a new normal. For consumers, at least, part of that new normal is higher prices. While there are a variety of causes—from supply chain issues to staffing shortages to overall inflation—consumers have largely not changed their shopping behavior, except in being more willing to purchase online. However, savvy retailers and manufacturers can keep an eye on trends that matter to consumers. For more information on the “whys behind the buys” of home improvement shoppers, contact TraQline today!

by OpenBrand

5 Key Shopping Behavior Metrics You Need to be Tracking

Understanding how consumers shop can give retailers and manufacturers valuable insight into who their customers are and what they’re looking for in a shopping experience. These shopping behavior metrics provide an edge when it comes to winning shoppers in the market. And as we've seen throughout the pandemic, tumultuous times can alter the retail landscape and be an agent of change for buyer behavior. Because the TraQline survey is specifically designed to measure the key elements of consumer behavior that are not available anywhere else, users can go beyond market share and develop a clearer image of how consumers are shopping.

1. Number of Shoppers

What It Is:

This information lets you know whether a buyer was shopping on their own or if others were part of the decision-making process.

Why It Is Important:

Why is it important to consider how many people are shopping together? How consumers band together (or not) to shop for items will influence how these products are marketed. If a product is frequently purchased with the entire family unit’s input, for example, retailers will create marketing copy to appeal to all ages. TraQline’s data reveals that, on average, two-thirds of consumer electronics (CE) purchases are made by single shoppers. This has been true historically, and we have seen consistent year-over-year significant increases. Armed with this knowledge, manufacturers and retailers both can drill into the specific demographics to further refine their messaging to their target audience.

How It's Collected:

This TraQline variable allows you to quantify not only how many people are involved in the purchase process as well as collecting demographic information about these purchasers.

What You Measure:

This TraQline variable allows you to quantify not only how many people are involved in the purchase process but also their age, PEW generation, and gender.

2. Why Behind the Buy

What It Is

“Why buy” can include many triggers for purchase. It is important to understand three critical decisions regarding a customer’s purchase journey:

• Why does a consumer buy at a specific store
• Why do consumers buy a specific brand
• Why does the consumer buy a specific product

These three questions work together to illuminate the psychology involved in the buyer journey. All three variables can influence the messaging used to target potential buyers

Why It Is Important:

These shopping behavior metrics are valuable to track. Armed with this information, retailers and manufacturers alike can pinpoint how they can best serve their ideal customers, as well as identify areas where their rivals are succeeding. For a more concrete example from “Why Buy Brand” specifically, during the height of the pandemic, there were three consecutive quarters with significant year over year decreases for competitive pricing being a main purchase driver for CE products. At the same time, there were also quarters that saw significant increases in consumers looking for specific features. There was also a minor, directional uptick in consumers who placed increased value on the product’s quality. To use TVs as an example, knowing that features and quality were highly valued during the pandemic gave manufacturers and retailers insight into how to pitch their products to consumers. Understanding their buyer’s behavior primes them for success. The data that’s highlighted in “Why Buy Store” can shed some light on other considerations. For example, another, though smaller, purchase driver for consumers has been the availability of financing. While many restrictions have lifted over the past year, the supply chain is still in a snarl, resulting in higher prices for consumers. Knowing that affordability is important can help retailers who offer financing options know how to pitch that particular offering.

How It's Collected:

Since this metric is motivation-based, the only way to collect this information is to ask buyers. They are asked each of these three questions, with some options changed to reflect the typical needs for certain purchases.

What You Measure

For each of the three purchase motivators, the percentage of each response is calculated. These questions allow you to give weight to the different reasons behind a buyer’s choice and how that is changing over time. In conjunction with other variables, these will unlock greater insight into your available shopping behavior metrics.

3. Number of Brands/Stores Shopped

What It Is:

Not everyone goes into a consumer durables purchase with a plan. TraQline’s syndicated survey reveals how many stores and brands a consumer shops. This is measured for both online and offline purchases

Why It Is Important:

Most brands would prefer to be the only brand a buyer considers during their purchase. Similarly, a retailer would prefer to be the only location buyers shop. The most loyal buyers only consider a single brand or retailer, but there are often multiple stores or brands shopped. This data can be used together with the “Why Buy Brand” and “Why Buy Outlet” data discussed previously. For example, you may also look into “First Store Shopped” to determine if it’s important to be the first store or brand the consumer considers, and what other factors will come into play to help you win the sale. As seen in available data, since it was difficult to shop around due to pandemic restrictions, consumers were more likely to get the item they needed as soon as they could find it in stock (fewer stores shopped). Alternatively, they researched beforehand so that when they went to make their purchase, they knew exactly what they needed and where it was in stock. Understanding these nuances can help either way, tracking these shopping behavior metrics shows how consumer processes were streamlined.

How It's Collected:

This question is asked of every consumer taking the TraQline survey for every product they indicate they’ve purchased.

What You Measure:

The information allows you to determine, on average, how many brands or stores consumers will shop before they make a decision and how that may be changing over time and for different categories.

4. Shop Online

What It Is:

Online shopping has taken root in nearly every consumer goods category – from groceries to consumer durables. To better understand how consumers are shopping for products, TraQline asks respondents if they shopped online for their consumer durables, regardless of whether they ultimately purchased online.

Why It Is Important:

The “Shop Online” variable is valuable both on its own and when used in conjunction with other shopping behavior metrics. The pandemic accelerated already increasing online shopping and buying behaviors. In fact, TraQline’s data can map a very clean year-over-year increase in online shopping for five quarters during the height of the pandemic. And while those numbers fell once the vaccine became widely available and restrictions were eased, the rate for online shopping is still higher than pre-pandemic.

How It's Collected:

TraQline asks all respondents if they shopped online for each product they indicate they’ve purchased.

What You Measure:

With this variable, you’re identifying how often consumers turn to the internet before buying a product (whether they ultimately make that purchase in a brick-and-mortar store or online).

5. Online Activity

What It Is:

This information is used in conjunction with “Shop Online”. It breaks down how consumers are using the internet in their search for a specific product, from doing general research to looking for sales and reviews.

Why It Is Important:

The more that consumers turn to the internet as a key component of their shopping strategy, the more important it becomes to understand how they’re using the internet. Again, combined with other shopping behavior metrics, you can get a clearer understanding of your buyers. In our CE example, we see a significant increase in searches for a website to shop at during the pandemic. Due to store closures and supply chain disruptions, consumers needed to be able to find places that were open to make a purchase in the first place.

How It's Collected:

TraQline asks this question of all respondents for each product they indicate they’ve purchased. The question allows for multiple responses so you can get a full view of how consumers are shopping online.

What You Measure:

This allows you to give specific weight to the different activities shoppers engage in when searching online for product and retailer information.

Conclusion

Understanding how to use shopping behavior metrics can open up a deeper level of insight into both your market and your buyers. Using the data found in the metrics above alone or together as part of a more refined data set will allow you to craft a better experience that’s more closely aligned to how your consumers are making decisions. If you’re ready to start looking into TraQline for more than market share, contact us today to learn how to navigate the data available at your fingertips.

by OpenBrand