One generation has emerged as a growing force for change in the home improvement industry: millennials. Born between 1981 and 1996, these individuals stand to reshape the industry with their preferences, spending habits, and unique challenges.
Companies like Home Depot (HD -0.29%) must adapt to these evolving trends, and by understanding many of the key motivators for millennials, the home improvement chain's efforts to cater to this demographic could make its stock an attractive choice for investors.
A growing impact on the homebuying market
Millennials continue entering the housing market in significant numbers. According to the National Association of Realtors 2022 Generational Trends report, 43% of all homebuyers in that year were millennials, exerting a substantial influence on the real estate market.
A survey conducted by Home Depot in partnership with business intelligence company Morning Consult shows the challenges millennials face as they enter the housing market. It indicates that 53% of millennials worry about purchasing their first home, ranking it among the top three stressors alongside starting a family and career advancement. Home maintenance and home improvement projects emerged as the most stressful aspects of homeownership for millennials.
Recognizing all this, Home Depot has tried to be proactive in tailoring its business to cater to these buyers. In August, chain launched its New Homeowners Hub, a digital resource designed to equip first-time homeowners, many of whom are millennials, with valuable tools and information.
DIY helps navigate challenges
Despite their concerns, millennials exhibit a strong interest in DIY projects. Over 80% of millennials and Gen Zers express interest in such projects, according to the survey. However, a gap exists between interest and confidence. Survey results show fewer feel "very confident" about taking on a home improvement project.
This data underscores the importance of guidance and resources for millennials. The survey also indicates that most young people would turn to online platforms, such as YouTube or other videos, to learn how to tackle DIY projects. An overwhelming 90% of millennials and 92% of Gen Z respondents expressed the need for a centralized resource to provide guidance for those new to home repair.
Home Depot's digital solutions
Addressing these demands, Home Depot launched a digital platform with a wide range of resources with relocation checklists and project guides. It also has virtual workshops to provide expert step-by-step instructions on various home improvement projects. Essential home maintenance is addressed as well. Homeowners can access both live and on-demand content, making it convenient and cost-effective.
Catering to millennial homebuyers offers more than convenience: It's a strategic move that can drive long-term growth. As millennials become a dominant force in the housing market, their preferences and needs will likely significantly influence the home improvement industry. Home Depot's proactive approach to providing resources is aimed at addressing these trends.
Challenges to Home Depot's efforts
Home Depot's role in addressing this gap in skills and confidence with accessible digital resources offers a pivotal advantage. In supporting millennials, it is trying to position itself as a trusted partner in their homeownership journey.
But investors should remain aware of continued competition in the home improvement industry, including brick-and-mortar peers like Lowe's and e-commerce giants including Amazon. While Home Depot's digital solutions offer promise, they must keep evolving to meet the ever-changing demands of tech-savvy millennials and stay ahead of these competitors.
Is this the ticket?
From an investment perspective, Home Depot's focus on millennials presents an intriguing opportunity. This demographic will likely continue as a significant driver in the housing market, and the retail chain's proactive approach could position it well for potential long-term growth.
Although Home Depot's digital resources align with the preferences of millennials, making it an attractive potential investment, investors should carefully monitor the company's ability to adapt to evolving market dynamics and competition from companies that are likely to court the same shoppers.
