by the numbers
So, let’s first get our bearings on the market these contractors play in. The U.S. remodeling market (repair, replace, remodel … and I like to add reimagine) provides approximately $350 billion in revenue. Over 460,000 businesses, with average revenues of $760,000 per business, employ nearly 700,000 people (two thirds of whom are self-employed). The average remodeling project comes in at just over $6,200, and there are more than 55 million projects completed each year. That’s a lot of home improvement and renovations. While 55% of homeowners try to tackle a job themselves rather than calling a professional, only about 30% state those projects were successfully completed — hence the need for quality contractors.
When is remodeling at its strongest? Typically, when there is a strong housing market (both new and/or existing), the remodeling market will also see growth. However, over the past several years, the remodeling market has seen growth rates of 5.5-7% — well over those in new construction (1.5-2.5%). There are a few reasons for this: one, of course, is the pandemic. People are spending more time at home and subsequently seeing more importance in their home environment. Additionally, people are staying in their homes longer; now 9-10 years versus the historical average of 6-7 years. As a result, homeowners continue to make improvements to their home aesthetics, creating nicer and more functionally livable spaces. The other impact is that more people are looking to buy homes (new and existing). Consequently, the market will continue to see slow and steady growth. The millennial population currently accounts for 38% of home buyers, and this is expected to continue to grow over the next several years. With new home buyers, studies show they will spend an average of $9,000 on home improvement projects in the first 9 months.
where remodelers buy
Remodeling and home improvement products are purchased at numerous places, depending on the product category and project type. A significant portion of home improvement product is purchased through large home centers/big boxes, where the annual revenue of The Home Depot ($110B), Lowe’s ($72B) and Menards ($10B) collectively reach just over $192 billion. Assuming 10% of these sales are new construction-centric, their total remodeling/home improvement sales (at 90%) are around $173 billion — nearly half of total ($350B) remodeling revenues. The balance of the other half is spread between companies like Walmart/Costco/Sam’s Club, Amazon/D2C marketplaces, pro lumber dealers, hardware stores, specialty dealers, and one-step distributors (especially for specialty contractors). As a side note, it's estimated that over $25 billion (or 7+%) of remodeling/home improvement sales are through online retailers.
Contractors typically have two or more places they shop. This is due to a few factors: First, proximity to the job site is important so their crews don’t lose time driving way across town to pick up supplies. Second, they like to have credit at a handful of different places. This helps them make sure they can pay for the supplies on their current jobs, even if they're still waiting for payment on recently completed ones.
what they do
Contractors don’t all do the same types of projects. As a baseline, the technical definition of the remodeling market is working in the remodel and renovation of interiors and exteriors of residential buildings (i.e., single-family homes and multi-family building units). “Remodeling” includes additions, alterations, reconstruction, maintenance, replacement and repair work. Some contractors do vast types of projects inside and outside the home (from additions to kitchens to decks); these are true remodelers. Also, a high percentage specialize in certain categories (roofing, siding, decking, flooring, garage doors and windows to name a few); these are specialty contractors. Some contractors call themselves dealers (i.e., window and garage door) and some of them have showrooms. The above explanation is primarily residential, including multi-family. However, some contractors focus solely on commercial remodeling, which is not reflected in these numbers.
finding the contractors
Contractors aren’t easy to find, nor are they easy to define. They don’t subscribe to any single association or governing body, per se. The only two true national associations dedicated to the remodeling industry are NAHB (National Association of Home Builders) with nearly 50,000 members “involved in remodeling” (which includes some builders), and NARI (National Association of the Remodeling Industry), with 6,000 members nationwide within 51 local chapters.
A good way to find them can be through these associations. Also, many contractors spend time on social platforms, and if you have valuable information, they will find you. If you have a trial product process, they will trial your product. They don’t necessarily respond to a lot of junk email, so if you are doing a campaign to them, make sure it’s relevant to them or you too will get placed in their junk mail folder.
what they value
Contractors want to maximize the profit dollars they bring in, clear and simple. There are many ways to do this, and price isn’t the most important thing to most of them. However, price is where they will focus if you haven’t done a good job demonstrating the value proposition of your brand and the products you provide.
The contractor’s reputation is their livelihood. Over 50% of their leads come from referrals, so it’s important for them to have quality products that perform and crews that are trained to install your products. Contractors don’t necessarily need more leads from manufacturers; the good contractors have so many leads, they might have to pass on some or push the dates way out. They have enough complexity in their business, so they value things like products/solutions that help with productivity and convenience. They want simplicity.
Since their biggest issue is not leads, but labor, anything that can cut time or labor on a job is golden. So, if your product or service can reduce time and get their crew to the next job more quickly, they will definitely listen. They also value uniqueness. How can you help differentiate them from their competition? The more they are differentiated, the less they have to play the price game with the homeowner. They also value information: understanding market data/trends more deeply, different innovations they can utilize with their clients, comparative data to use in their selling process, or new ways to sell and estimate. Ultimately, they want value that will help them close more sales, more quickly and more profitably.
Contractors are also big into learning and innovative products. They are always looking for new ways to do things as well as new ideas to bring to their clients to help differentiate their work from others. They have taken a strong hold on social platforms and love to share their projects as well as feedback (good and bad) on products they use. They watch all sorts of videos on the next new product or different ways other contractors are completing their jobs, both from an aesthetic standpoint as well as from a structural/performance one. If you add value on social (and you have a uniquely relevant or great product), you can gain some hype and awareness on the social channels these contractors frequent.
the final word
No matter how you define a contractor — and no matter the product categories they install — contractors are a unique and important group to our industry ... and to your success. They are highly loyal to brands that show they understand them: brands that provide relevant information, brands that continually innovate and help differentiate, and brands that provide products that make their projects easier. (Notice I didn’t say anything about price!) Their brand is more important than yours. However, they will leverage your brand (assuming you have strong brand awareness) in their selling process. If you add value to help their business grow, and reasonably take care of issues they encounter with your products, they will be loyal to you.