During the presentation to the press of the next edition of the International Hardware Fair-Eisenwarenmesse 2021, Wolfgang J. Kirchhoff, president of the Advisory Board of the Koelnmesse released the main figures for the first months of 2020 of the sectors represented at the fair, both in Europe and Germany.
Overall, most of the industries represented in the Eisenwarenmesse have developed positively despite the pandemic and temporary closures, particularly to the DIY and home improvement sectors. But all the data is not positive: “The pandemic is ongoing, and consequently there is great uncertainty in all industries. In addition, the Association of German Tool Manufacturers suffered significant losses in terms of export business and incoming orders, ”Kirchhoff explained.
As Kirchhoff explained, most of the 214 global members of the European DIY Retailers Association (EDRA) and the Global Home Improvement Industry (GHIN) "can look back on a record year" and are expected to this development will continue in the medium term. The main key drivers for this data are:
The industry can look back on a successful year (2020) not only globally; especially in Germany, Austria and Switzerland (DACH), retailers in the DIY and gardening sector can report positive figures. Despite the temporary store closures, the first half of the year was closed with an increase in sales and this upward trend is likely to continue into the second half of 2020.
The members of the Association of Manufacturers House & Garden e.V. report an increase in sales in the first half of 2020 despite delayed or interrupted supply chains. "However, we see a different evolution of sales in Germany and in Europe: in Germany, we are registering a year-on-year growth of sales of 9.3%," explained Chairman of the Advisory Board. The main growth drivers here were paints and coatings and related supplies, hardware and security technology, as well as building materials (with double-digit growth rates).
The evolution of the European market until the end of June was very different. Members of the Herstellerverband Haus & Garten e.V. (The Association of Manufacturers of Household and Garden Goods) were unable to reproduce the previous year's results in their sales to foreign markets and instead reported slightly lower figures.
Hardware store and PVH
Also in this sector, the year 2020 is marked by the coronavirus crisis and the temporary closure of many hardware stores during confinement. However, the hardware industry has weathered (so far) the coronavirus pandemic better than expected and has been able to sustain itself thanks to a steady sales volume in many areas. The reasons for this are as follows: In addition to the high demand for home and garden products, there is also growth in the construction industry and in skilled trades. The evolution of the production connection trade (PVH) and the retail trade of hardware articles in particular was heterogeneous. Overall, in the months following the shutdown, the home and hardware retail sector was able to offset the near-total shutdown that lasted 4 to 6 weeks (depending on location) in the summer months; ended the first half of the year with a slight growth in sales between 0.5 and 1%.
For the whole year - but especially in the second half and fourth quarter as regards the Christmas business - much will depend on the development of the coronavirus figures and the corresponding measures in the fall and winter months. The sector approaches the last months of the year with cautious optimism and can be content with what has been achieved to date.
In the field of the construction tool and hardware production connection trade (PVH), the evolution was satisfactory and stable compared to the previous year.
The year started quite respectable, and the first quarter was generally positive (also because the sector was not affected by plant closures). Thanks to backorders from the previous year in the construction and specialized trades industries, the decline in the metal and machine-building industries was cushioned at many companies in the PVH sector. The construction hardware specialty trade and manufacturing industry benefited greatly from the fact that projects continued largely in March and April and, unlike other specialty business sectors, there were hardly any closures and activity bans imposed by the state.
Under unchanged overall conditions, the construction hardware industry is quite optimistic for the further development of the 2020 business year and anticipates growth of + 0.7% for the full year.
Tool trade and industry
Regarding the specialized tool trade, two different trends are observed: on the one hand, there is a declining and difficult business climate in the metal and machine building industry. On the other hand, there is an increase in sales in the construction and finishing sectors and in the construction industry, thanks also to the existing order book. Fortunately, many specialty tool retailers were at least partially able to make up for these serious sales losses with other product ranges, especially with workplace safety and coronavirus protection items. The wide positioning of the specialized tool trade contributed significantly to the still respectable development of the first half, which can be concluded with a sales trend almost equal to that of the same period of the previous year.
In recent weeks, a slump in the summer put additional pressure on the business. Therefore, it is unlikely that the previous year's sales figures will be reached again. Although there were signs of a market revival in September and the tool trade is cautiously optimistic, an overall weaker second half and business development is on the horizon that remains challenging, with product range distortions.
Regarding the tooling industry, a recent survey by the Association of German Tool Manufacturers - FWI (January - August 2020) shows the drastic decrease in order intake by more than 10% in 51% of the German companies. The losses in the export business are even more significant: -23% for the United Kingdom and -15% for the United States. The development of the export business is also influenced by political factors in important export markets such as the United States and Great Britain, for example the punitive tariffs imposed by the United States on some basic supplies such as pliers, screwdrivers and axes, not to mention the complicated Brexit negotiations.
However, the business climate improved in the second half of the year: in August, only 26.8% of companies rated the current situation as "unsatisfactory" (-19% compared to the previous month). Additionally, the share of toolmakers with short-term work dropped from its peak of 70% (August) to around 52%.