2021 has come to a close. A year which may go down in history as the year in which we fought back against Covid-19 with the global vaccination effort. And now, we must look forward to 2022. What can we predict will happen to the global economy, and more specifically in the DIY and home improvement sector? How will the housing market change in 2022? And what potential challenges will have to be overcome in 2022?
Looking forward to 2022 for the DIY sector
For many, 2021 was a year of rebound and recovery. The strict lockdowns seen in 2020 were generally not seen again, and international travel was possible but limited. In 2022 we may see economic growth in moderation. The vaccination effort continues, and countries around the world are opening up their economic drivers again.
Looking towards the home improvement industry, the BHB Home Improvement Association in Germany predict that overall, the industry is “currently on a very good path”. According to them, the Covid-19 pandemic has significantly accelerated the sector’s preparedness for the future. Furthermore, people now have a “high affinity for home improvement,” both of which create a favourable climate for the sector.
Another retailer, Wickes, the DIY retailer in the UK, has raised its profit forecast “supported by continued strong sales, which will benefit the first half of FY2022”. In addition to this Marvin Ellison, the CEO of Lowe’s, recently said they “will benefit from a favourable backdrop, too, including more money in consumers’ savings accounts, historically low interest rates, rising home values and an aging inventory of U.S. homes.”
How much will housing prices rise in 2022?
Prices are expected to increase across the board. Zillow, the American online real estate marketplace, predict an “11% home value growth in 2022”. Whereas in the UK predictions are for a more moderate 3% growth by the end of 2022.
What will happen to interest rates in 2022?
In regard to interest rates in 2022, expect the 10-year yield to rise to 2.1% or more by the end of 2022.
Potential issues which could affect the DIY Sector in 2022
2022 will also be a year of challenges. We can expect possible additional covid-19 blockages associated with a backlog of deliveries. Supply chains will remain under pressure in 2022, which may well lead to an increase in short distance sourcing, which will alleviate pressure and avoid long distance supply chains.
Another consideration is the rise in electricity prices again in Europe, due to strong demand and low wind power production. This is of course going to have a knock-on effect on both retailers and suppliers, who may have to increase prices due to increasing bills. Also of key consideration is customers’ purchasing power. We may well see a loss of purchasing power, at least until 2023, with many families having to make horrible choice between eating and heating.
One unpredictable factor is the possibility and spread of further covid-19 variants. The Omicron variant has triggered reinfections and led to a dramatic rise in Covid-19 cases across the world. Unfortunately, we are unable to predict what further mutations of Covid-19 may bring and what impacts these could have on society. However, there are some positives to be considered. The World Health Organisation (WHO) Europe director, Dr. Hans Henri P. Kluge, recently stated that the region could be headed towards the end of the pandemic after Omicron.
How to ensure 2022 is a successful year
Despite the challenges that emerged in the last two years, one thing is clear. The Covid-19 pandemic has demonstrated that the DIY and home improvement sector is essential and can adapt quickly. This agility and ability to rapidly adapt, both for large and small companies and chains, is vital. Despite the fact that traditionally it was believed to be easier for smaller companies to adapt, the last two years have shown that larger companies can also adapt to market pressures and changes quickly.
How 2022 will affect the home improvement sector
In whichever way 2022 affects the home improvement sector, lifelong learning will always remain key. International Congresses, such as The Global DIY Summit, offer a perfect opportunity for the industry to meet again physically and exchange their thoughts and theories for the future. The possibility to gain perspective from other business leaders and other parts of the world also brings benefits in the short, medium, and long term.
2022 is a difficult year to make predictions, but some home improvement retailers are showing optimism, and rightly so given the new prominence that home improvement has taken on in recent years.
What is certain is that in 2022 there will also be challenges to overcome, and the key to overcoming these challenges successfully will be remaining agile and lifelong learner. Furthermore, learning and considering the perspective of other business leaders can help build more resilient models of retailing.