Building Materials, Garden Supplies
& Mobile Homes

This segment of retail trade includes building material and hardware stores, garden supplies stores, paint and wallpaper stores, flooring stores, and mobile home dealers. The category is dominated building materials and supply stores, which account for half of all sales, and hardware stores, which account for an additional quarter of sales. Mobile home dealers account for only a small fraction of this category.

Building materials and supply stores sell to both professional and do-it-yourself builders. In general, younger homeowners tend to do more work themselves (i.e., "do-it-yourself"), while older homeowners contract with professional builders. Both types of home remodeling result in retail sales at building supply stores. However, contractors have different requirements than homeowners. Building supply stores face the challenge of continuing their core business while increasing their appeal to these professional customers.

Remodeling construction has been growing as a portion of total spending for residential construction. Many forecasters maintain that this trend moderate in the near future as the pent-up demand for remodeling and home improvements falls away.

With respect to supply conditions, stores in this category fall into one of two types: major chains with "big-box" stores, such as Home Depot, Eagles, and Home Base; and small stores. Although chains’ market share has grown no one chain has more than a small portion of sales for this industry. For instance, Home Depot—building materials and supply’s largest chain—reported revenues of $30.2 billion in 1998 with total industry sales of $165.3 billion. Average sales volume per store is considerably lower than in store types like general merchandising and food retailing, where chains take a larger share of the market.

Small stores still retain a larger share of building materials and supply market than in other retail categories, evidenced for example by the decline of small grocery stores as a share of food retailing. One difference is the existence of marketing agreements and cooperatives that allow independent retailers—like Ace Hardware and TrueValue Hardware stores—to enjoy the advantages of national purchasing and marketing, while maintaining financial independence. Chain stores, however, will continue to move aggressively in consolidation.

Figure 1

Annual Sales in Building Materials & Supply Stores, U.S. 1986-1998
(Billions of 1998 dollars)
Source: U.S. Bureau of the Census

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Note: Other building materials includes retail nurseries and garden supply stores and mobile home dealers.

Building materials and supply is typically very cyclical. During the 1990 recession for instance, sales declined by over seven percent in real terms. Such a drop in sales is typical of the response of this retail category to a recession.

Current Conditions

Building materials and supplies category in Washington consists of five three-digit SIC sub-categories: lumber and other building materials (SIC 521); paint, glass and wallpaper (SIC 523); hardware stores (SIC 525); retail nurseries and garden stores (SIC 526); and mobile home dealers (SIC 527). In 1998, 1,350 building materials and supplies establishments employed 21,320 workers statewide. Of the eight retail trade major categories (SIC 2-digit), building materials and supply stores employs the fewest workers in Washington; approximately 5 percent of the total 460,670 retail trade workers are in building materials and supply stores. From the latest economic census (1997), building materials & supply stores account for about 10 percent of total Washington State retail sales.

Figure 2

Composition of Retail Sales in Washington State, 1997
Source: U.S. Bureau of Census, 1997 Economic Census, Retail Trade, Washington State

For more detail of above graphic

Notes: Based on the new North American Industry Classification System (NAICS); among the changes, eating and drinking places were re-classified to the accommodation & foodservices sector.

Total 1997 retail sales in Washington was $52.473 billion.

The largest sub-category is lumber and other building materials, representing about one-third of all establishments and three-fifths of all employment. In general, the number of establishments in building materials and supplies is in decline. The number of hardware stores have fallen the most during the 1981-1998 period, affected by "big-box" building material retailers.

Figure 3

Number of Establishments in Washington Building Materials and Supply Stores, 1981-1998
Source: Washington Employment Security Department

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In contrast to establishment numbers, building materials and supply store employment increased by two-thirds over the 1981-1998 period. Employment in lumber and other building materials nearly tripled; retail nurseries employment more than doubled, while hardware stores employment decreased by a third.

Figure 4

Washington Building Materials and Supply Store Workers, 1981-1998
Source: Employment Security Department

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Building materials and supply stores in Washington are largely composed of small companies that sell various building material and supply goods. About 50 percent of all building materials and supply store workers are found in establishments with 100 or more employees, compared with 51 percent of all retail trade workers and 60 percent of all state nonfarm workers.

Figure 5

Size of Establishments of Washington Building Materials & Supply Store Workers, 1998
Source: Washington Employment Security Department

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In 1998, average covered wages for building materials and supply store workers was $24,227, compared with $17,908 for all retail trade workers and $33,922 for all nonfarm workers in Washington. Building materials and supply store workers rank second in wages and salaries among all retail trade workers behind auto dealers and gasoline service stations. Building materials and supply store workers have lost ground in real wage growth (i.e., without inflation) between 1981 and 1998.

Table 1

Real Average Wages for Washington Covered Building Materials & Supply Store Workers, 1981-1998 (1998 dollars)
Sources: Washington Employment Security Department,
U.S. Bureau of Economic Analysis

The distribution of hourly wages for building materials and supply store workers is dissimilar to the state, with a pronounced disposition toward lower hourly wages. Sixty percent of all workers in building materials and supply stores earn $12 or less per hour, compared with 41 percent of all nonfarm workers in the state.

Figure 6

Hourly Wages for Washington Building Material & Supply Store Workers, 1997
Source: Washington Employment Security Department

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The labor force in building materials and supply stores are dominated by sales workers, clerical workers, and laborers. Sales clerks and cashiers are the most common occupations within building materials and supply stores.

Table 2

Occupational Profile of Building Material & Supply Store Workers in Washington, 1998 and 2008
Source: Washington Employment Security Department

Outlook

The impressive sales gains in building materials and supplies have been driven by a strong housing market, low interest rates and a robust economy. It is expected that the market for building materials and supplies will continue to steadily increase over the next five years. This continual uptick in sales is translated into new hires. In Washington State, employment in building materials and supply stores are projected to increase by one-sixth to 26,130 workers by 2020.

Figure 7

Washington Building Materials and Supply Store Wage & Salary Employment Forecast, 2000-2020
Sources: Washington Office of Financial Management, Washington Employment Security Department

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Note: Other includes retail nurseries and mobile home dealers.

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