Home Innovation Insights

What will be the right product mix for your market following the COVID-19 crisis?

Ed Hudson, MBA
May 1, 2020

Post-COVID-19 Market Environment for Construction Products

Returning to Full Capacity, but With the Same Product Mix?

While in most states home construction has been considered “essential” in our COVID-19-restricted economy, that doesn’t mean that all things have been “business-as-usual.” Quite the contrary. Builders and contractors are reporting that social distancing measures and shut downs in other sectors of the economy have slowed sales, lengthened construction times, and reduced the reliability and flexibility of their workforce. As states begin allowing limited re-opening of more businesses, construction companies are focusing on how to handle a surge in demand. But will the building product industry, with its own COVID-19 curtailments, be able to sufficiently supply a robust rebound of the residential construction industry? And, just as importantly, what product mix will satisfy the needs of the new industry environment?

In our Mid-April survey of building product manufacturers and service companies, we asked companies about how their operations were disrupted, including supply chain and manufacturing or service operations. We found that 42 percent stated their business was affected Very Much by COVID-19.

How Much is COVID-19 Affecting Your Company's Business?

Source: Home Innovation Research Labs' April 2020 Survey of Building Product Manufacturers

Further, about half of respondents said they have had to either restrict or shut down operations, leaving us to wonder how quickly they would be able to restore lost capacity in the event of a boom at the end of COVID-19 restrictions.

Have Any of Your Company's Manufacturing or Service Operations Been Restricted or Shut Down?

Source: Home Innovation Research Labs' April 2020 Survey of Building Product Manufacturers

When asked about their supply chain, nearly 70 percent of respondents reported a disruption due to COVID-19. Fortunately, only 5% said they had a major disruption.

Is Your Company Experiencing Distruptions in its Supply Chain?

Source: Home Innovation Research Labs' April 2020 Survey of Building Product Manufacturers

The main challenge for building product companies post-COVID-19 may not lie in the production and shipping of product. Instead, it may be knowing what product mix will be needed and marketable in the new building business environment. Major disruptions throughout all aspects of society will result in changes in the way everyone views and uses housing. Following the Great Recession, for example, single-family houses got smaller and product choice, overall, favored the lower end of the spectrum. In remodeling, discretionary projects were delayed, and necessary replacements took a decided turn to lower-end products, as well. However, the COVID-19 crisis may have the opposite effect as people have been spending much more time at home and may have noticed many more areas they want to improve; and those who’ve been able to continue working may have more discretionary funds since they have not been traveling, eating out, or shopping at their regular rates.

Already evident is the boost in do-it-yourself home improvement projects since COVID-19 stay-at-home orders began; product types and purchase channels can be very different for DIYers versus the professional remodeler side of the industry. Also challenging will be knowing what types of remodeling projects will be favored under the “new normal” – will it be upgrades to indoor or outdoor living areas? additions or conversions to new living space? some combination of those?

In new home purchases, will new homeowners be more style-driven or more pragmatic in their preferred new home specs? Will preferences for home location be the same as before, or will they become more rural … or more urban? Answers to all these questions will dictate the type and mix of products manufacturers need to have available in the market.

Home Innovation Research Labs has deep experience investigating markets to ascertain evolving pro and consumer preferences. If you find yourself unsure what the future holds for your company’s products and services in the wake of these dramatic cultural and business shifts, and whether you are offering the right mix for the new industry environment, reach out to us to discuss how we can gather intelligence and insight into your customers’ thinking.

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