Feasibility of Super Centre for Home Renovating Building Materials

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There are pockets of commercial activity in North America that are expanding enough to justify a new major mall complex project built around the theme of Home Improvement materials and services. We are all familiar with indoor trade shows where companies launch new products or advertise services in demonstration booths for several weeks or months.

A new corporation is forming that will take that concept farther, into a year-round operation. Products that sell twelve months a year are rare, but the home renovation sector with all its related materials and tools fills the role nicely, as there is a wide enough variety of suppliers to fill the booths full-time.

It will be competing against the big box stores for the home renovation dollar and allow small business owners to network. Like a shopping mall, there will be food courts and coffee shops where customers can relax between credit card swipes.

Gigantic warehouse stores are considered synonymous with the U.S. but the Canadian residential renovation market has the decided edge in feasibility for such a project. A report by senior Bank of Nova Scotia economist Adrienne Warren states: "The $44 billion renovation industry now accounts for a record share of housing investment - roughly 40 per cent - and overall GDP (of) 2.8 per cent."

Renovations may be a $300 billion industry in the U.S. compared to $44 billion in Canada but with the population ratio being 10 to 1 the American figure should be $440 billion. Therefore Canada's overall figure is one-third higher proportionately. More importantly is the average cost per project according to the National Association of Home Builders: $3,000 in the U.S. compared to $11,000 - $15,000 in Canada, showing that there is more money available for renovation shopping.

The American housing situation became a disaster in 2008 due to the mortgage crisis brought about by the toxic mortgage-backed derivatives fiasco. In the most up-to-date study by Harvard University's Joint Center for Housing Studies, there was only a slight rebound in the housing market in the second half of 2009, however there were less than 500,000 new single family housing starts in 2009, the first time since record-keeping began in 1959.

In 2011 Privately-owned housing starts in February were at a seasonally adjusted annual rate of 479,000 according to a joint press release by the U.S. Census Bureau and the Department of Housing and Urban Development.

As with every new operation, there are established competitors to be dealt with who have deep roots in the renovation market sector. Super-sized retail warehouses and department stores have made it nearly impossible for small businesses to compete; the goal of IMPROVE, the home improvement and home renovation centre is to cater to these companies. They can lease or purchase booth space and take advantage of the pedestrian traffic, many of whom will buy extra items they didn't think they needed.

The big box stores won't disappear of course. Home Depot Canada has 180 stores operating in all 10 provinces, with online ordering available in the Yukon, Northwest Territories, and Nunavut. They employ 35,000 people nationwide. RONA, a Big Box chain of stores operating out of Boucherville Quebec has 700 stores across Canada, with 30,000 employees.

The lower employee number stems from the fact that RONA's stores are considerably smaller than the Home Depot warehouse model. RONA has been around since 1939 and has about 16 million square metres, with annual retail sales of $6 billion.

For the home investor, in addition to the major cost components of construction costs and acquisition costs (sales tax, land development fees, record processing fees and premiums for mortgage insurance, home renovations products and services constitute an important investment in the overall value of a house.

Modifications such as extra rooms, new plumbing, central air, new windows, landscaping, roofing, flooring, etc. are often done by the homeowner. Those who are not handy with tools or measurements will call in tradesmen or a home renovation contractor. Professional tradesmen are a wise choice in the three renovation areas since they provide the highest payback potential for homeowners - bathroom, kitchen, and interior/exterior painting.

The indoor trade show booth concept of IMPROVE promises to be of companies such as wholesale plumbing supplies, paint, lumber, electrical supplies, etc. that are featured. The urge to shop hands-on for power tools, lamps, wiring, bolts, screws, nuts, etc. at different booths will allow buys to feel like they are getting more of an adventurous shopping experience for their money.

They will likely have a tendency to buy more items since they can rest at a food court and wander inside leisurely instead of being trapped in one huge store, impatient to get through the checkout lines out into the sunshine.

Author Pat Boardman writes this in reference to IMPROVE, a company developing a giant Toronto home improvement centre consisting of trade show booths open year round in their Toronto home improvement mall for rooging, plumbing, CCTV security, to home revovations and all Greater Toronto Area home improvement industry related companies.

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