In a period where home improvement and home construction is experiencing some of the most significant demand seen recently, Walmart-owned Sam’s Club is partnering with Service Finance Company, LLC to launch a new home services program.
Called “Sam’s Club Home Install Experts™ by Service Finance,” the program “connects Sam’s Club members with highly-rated local home improvement contractors that have been vetted by Service Finance and enrolled as authorized Service Finance Dealers,” according to a joining press release from the two companies.
“We’re always looking for ways to deliver value, convenience and special experiences to our members, and our relationship with Service Finance will be a gamechanger,” claimed Sam’s Club Senior Vice President and General Merchandising Manager Kevin O’Connor.
According to the companies, the program will provide services like “HVAC, roofing, siding, window and door installation, bathroom renovations, kitchen renovations, as well as gutters and flooring products” — services which will also come in tandem with additional benefits for Sam’s Club members.
“It’s a privilege to work with Sam’s Club and help its members make intelligent decisions about investments in their homes,” said Server Finance Company President Mark Berch. “We take pride in doing the heavy lifting so that Sam’s Club members can take care of their home improvements with trusted Service Finance Dealers who can provide a financing option that works for them.”
Local contractors could benefit from partnerships with Sam’s Club as “authorized dealers”
One of the main aspects of the program is the involvement of local contractors.
Service Finance will vet and enroll home improvement contractors in the program as “authorized dealers.” Though the process was not detailed in the company’s release, it offers an intriguing prospect for contractors looking to connect to a national network while many around the country are still being affected by the COVID-19 pandemic.
In fact, the connection offered by Sam’s Club may be especially beneficial given the continued success of its business model. The company has seen positive sales growth from year to year in every fiscal year since 2017 — including 8.7% growth from 2020 to 2021.
“With access to Service Finance’s network of reputable dealers, our members can have confidence knowing they’re not only getting additional value from their membership, but they’re also getting the reassurance of a trusted provider,” claimed O’Connor.
Despite a crowded industry, demand creates an opening for Sam’s Club and Walmart
Though the home improvement industry has a strong presence from major national competitors — as well as smaller companies — high levels of demand have created room for a big box retailer like Sam’s Club to benefit.
Improving America’s Housing 2021, a report released by the Harvard Joint Center for Housing Studies, noted that “While the US economy shrank by 3.5% in 2020, spending on home improvements and repairs grew more than 3%, to nearly $420 billion, as households modified living spaces for work, school, and leisure in response to the COVID-19 pandemic.”
“Although many professional remodeling projects came to a halt when the pandemic hit, DIY home improvement renovations surged,” the report added. “The sudden flexibility of remote work also increased demand for larger homes and yards in lower-cost and less dense areas of the country.”
An analysis by Bank of America claimed that the average US household spends $3,000 on home projects each year, adding that in 2020, “US home improvement sales, including services, reached $767 billion.”
Additionally, a survey from Bank of America found that 70% of millennials began home improvement projects during 2020.
According to a June 8, 2021, Nasdaq report, Home Depot and Lowe’s — the two largest companies involved in the industry by individual market share — combined to hold close to 30% of the home improvement industry’s total market share.
Liz Suzuki, senior hardlines retail analyst at Bank of America Securities, noted that US home improvement sales and services came to approximately $767 billion during 2020 — adding that Home Depot and Lowe’s pulled in $132 billion and $90 billion during that period.
“As a result of a combination of more time at home, favorable household formation trends, and strong household balance sheets, demand for a wide range of home improvement projects has remained at elevated levels over the last year,” Suzuki said.
Supply and labor shortages may continue to impact the home improvement industry, as lumber, steel, electrical supplies remain scarce
The support of Sam’s Club parent company Walmart may turn out to be especially helpful, too, as the world is still undergoing a significant materials shortage.
Through 2020 and into 2021, lumber shortages have remained a particularly large issue nationwide amidst record levels of demand, and both steel and electrical supplies have faced significant price increases over that period.
Monty Puckett, general manager of Builders First Source in Johnson City, Tennessee, echoed these issues, saying that “This is historic. We have never seen anything like this before…Items we have had no issue getting over the last 30 years, now we are not sure when the next arrival will be.”
A recent survey from the National Multifamily Housing Council pointed to a high level of concern among builders about supply chain issues, with 40% of the survey’s respondents citing significant price increases for their most impacted materials.
National Multifamily Housing Council Vice President of Research Caitlin Walter noted that “Material shortages and cost increases will lead to development cost increases and potential project delays…longer term, these disruptions could challenge the already supply-constrained market and threaten to derail housing affordability efforts.”
Some are also concerned about a perceived lack in what some are calling “really experienced” labor, as many construction workers who were affected by the pandemic have not necessarily returned as the market has seen its rise in projects and demand.
Dr. Masaki Oishi, co-founder and chairman of private equity firm MarketSpace Capital, said that “It seems that a lot of construction workers were laid off during the pandemic and really haven’t come back yet.”
Oishi noted that, despite demand, outside issues like supply are affecting the situation, adding that perceived labor issues “could be because the number of projects going forward hasn’t come back to former levels yet.”
This is one area where the Sam’s Club program could potentially be rewarding for contractors who choose to get involved, as customers of Walmart and Sam’s Club may feel an extra level of comfort with the “vetted and authorized” nature of the system.