Hardware Retailing

DEC 2017

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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December 2017 | HARDWARE RETAILING 41 Although wages have recently risen, they have not kept pace with higher inflation activities like health care, rent and medical services. Those expenses have been outpacing inflation, and wages have barely been meeting inflation. Consumer spending continues at a good sturdy rate, but it's not a breakout speed, largely because consumers continue to be very pragmatic about their spending. It still bodes well for a good start in 2018. HR: How might the economy affect small businesses in 2018? JK: Running small businesses will continue to be an ongoing balancing act of having the right pricing and the product when the customer needs it. Small business optimism is also a function of local demographics. It's not all one monolithic economy. We have much different spending paces, for example, in the Southwest compared to the Southeast. Some areas will continue to require a lot of effort and "stick-to-itiveness" to be successful. Population growth has flatlined in some parts of the U.S., which can affect small businesses, especially with aging populations. Sometimes that can be good, with people staying in their homes, but older people also delay improvements because of fixed incomes and other expenses. Medical spending, taxes and utilities could delay projects that would happen if they were 10 or 15 years younger. But I think the home improvement industry is on the front line of these aging-in-place developments. On the other side of the coin, you have to ask, "What's going on with millennials?" There has been some delayed purchasing, but now they're getting back on track, buying homes, making improvements and spending wisely, which should be a positive development in a broader sense for the industry. HR: What will consumer optimism be in 2018? JK: What you should be asking is, "Does consumer confidence translate to spending?" I haven't seen that to be the case. Consumers are asking, "Do I have a job, am I making more money, what do my retirement investments look like?" All of those seem to be on the right trajectory, which gives them the ability to spend. Their willingness to spend is a different issue. We're different than we were before the Great Recession. We're not taking out as much credit, and banks have tightened up credit requirements for consumers. Consumer spending continues at a good sturdy rate, but it's not a breakout speed, largely because consumers continue to be very pragmatic about their spending.

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