Paint and Wallcoverings - US

Executive Summary

Insights and Opportunities

Inspire Insights

Market Size and Forecast

Competitive Context

Overall Segment Performance

Segment Performance—Interior Paint

Segment Performance—Exterior Paint

Retail Channels

Market Drivers

Leading Companies

Brand Qualities

Innovation and Innovators

Advertising and Promotion

Incidence of Painting and Other Wallcovering

Rooms Redecorated

Reasons for Redecorating

Reasons for Not Redecorating

Wallpapering

Place of Purchase

Paints and Stains: Brands

Race and Hispanic Origin

Cluster Analysis

Custom Consumer Groups

Appendix: Other Useful Consumer Tables

Appendix: Trade Associations

Paint and Wallcoverings - US - March 2010

Table of Contents

Scope and Themes

What you need to know

Definition

Data sources

Sales data

Consumer survey data

Advertising videos

Abbreviations and terms

Executive Summary

Shipments fall steadily in 2007-09, but maintenance keeps the market from contracting as much as housing overall

Further weakness expected in 2010; pent-up demand can build awhile longer

Paint/wallcovering outperforms other DIY segments in depressed home channel market

Ceramic tiles and wall paneling compete with more traditional paint and wallpaper

Shipments and trends in major segments

Home centers/lumberyards remain dominant retail channel, but see declines since 2006

Retailers compete heavily in the paint segment, show mixed results

Home ownership and real estate transactions drive painting/wallcovering activity

Ongoing need for maintenance, “cocooning” and product innovations do propel some sales

Consumer concerns with chemicals, “green” building codes and legislation all drive interest in low/no-VOC paints

Major acquisitions change global supply structure

All nine major U.S. paint suppliers post sales declines in 2009

Wallcoverings receive limited advertising compared to robust campaigns of paint companies

Major themes in TV advertising of major paint companies

Branding showcases beauty, performance, durability and innovations; includes private labels and licensing

Innovators/Innovations in “green” products and other areas

Consumer findings

Incidence of painting and other wallcovering, trended data stable

Rooms redecorated

Reasons for redecorating… or failing to do so

Wallcovering application, removal and spending

Home centers have dominant role as retailers

Brands for interior paint, exterior paint and stains

Variations seen on basis of race/Hispanic origin

Insights and Opportunities

“Value” a key area of focus in the current economic environment

Deeper investment in promoting “green” products

Showcase aspirational side of “green” living with gamut of colors and creative possibilities

Professional paint services for aging Boomers, women and Asians

“Trend-setting” multi-ethnic consumers warrant focus with designer brands, home improvement shows and fashionable wallcoverings

Inspire Insights

Customization

What’s it about?

What we’ve seen

Implications

Color-Changing Home Appliances

Changing the look of home

Gazing at the Stars in your Bedroom

You are in control

Rediscovering Arts in the Downturn

Good for you and for everyone

No Boundaries

Many Mes

Holiday as Luxury

Market Size and Forecast

Key points

Figure 1: Total manufacturer shipments of interior and exterior paint, at current prices, 2004-12

Figure 2: Total manufacturer shipments of interior and exterior paint, at inflation-adjusted prices, 2004-12

Competitive Context

Key points

Broader downturn drives declines in home channel market

Figure 3: Total home channel retail sales*, at current prices, 2003-08

Figure 4: Total home channel retail sales, at inflation-adjusted prices, 2003-08

As consumers cut back, painting and redecorating competes with other household projects

Wall paneling and ceramic tiles offer competition, especially at the high end

Figure 5: Home improvement/decorating projects undertaken by self or professional in the past two years, December 2009

Drop in ceramic tile usage in 2007-08 suggests paint offers appealing, cheaper alternative

Figure 6: Total U.S. usage of ceramic tiles, in thousands of square feet, 2003-08

Overall Segment Performance

Key points

Figure 7: Manufacturer shipments of architectural paints and coatings, by type, 2007 and 2009

Segment Performance—Interior Paint

Key points

All interior paint

Figure 8: Manufacturer shipments of interior architectural paints and coatings, 2004-12

Interior water-based paints

Figure 9: Manufacturer shipments of interior water-based architectural paints and coatings,

Interior solvent-based paints

Figure 10: Manufacturer shipments of interior solvent-based architectural paints and coatings,

Segment Performance—Exterior Paint

Key points

All exterior paint

Figure 11: Manufacturer shipments of exterior water-based architectural paints and coatings, 2004-12

Types of exterior water-based paints

Figure 12: Manufacturer shipments of exterior water-based architectural paints and coatings,

Types of exterior solvent-based paints

Figure 13: Manufacturer shipments of exterior solvent-based architectural paints and coatings, by type, 2007 and 2009

Retail Channels

Key points

Broader home channel sales by retail channel, 2006-08

Figure 14: U.S. home channel sales*, by select retail channels through which paint/wallcovering is sold, 2006-08

Trended data show significant shifts in retail choices seen

Figure 15: Trended purchase source for paint and wallcoverings project supplies, 2003-09

Home improvement stores

Figure 16: Revenues for the three largest home improvement chains, 2006-09

Department stores/mass merchandisers

Figure 17: Home improvement revenues for Sears and Walmart, 2006-08

Hardware stores

Figure 18: Membership and revenues for leading hardware buying cooperatives, 2008 and 2009

Paint and wallcovering specialty stores

Figure 19: Number of stores and annual sales for leading specialty paint/wallcovering retailers, 2006-08

Online retailing

Market Drivers

Marketing to the Green Consumer - US - April 2012 -

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Key points

Home ownership and the real estate market

Homeowners more likely to paint

Figure 20: Undertook painting, wallcovering or installed siding in the last 12 months, April 2008-June 2009

Moving into a new home or preparing one for purchase motivates painting/redecorating

Figure 21: Reasons for undertaking home improvement/redecorating projects, by age, December 2009

Housing market falls from 2006-09

Figure 22: Sales of existing and new single-family homes, 2001-09

Ongoing need for maintenance in aging housing stock and foreclosed properties

Figure 23: Foreclosure filings, by percentage of U.S. housing units, 2006-09

“Cocooning” offers an upside to the downturn

Innovative products, new colors and designs also boost demand for paint and wallcovering

Green movement, DIY stores and shows, building standards and legislation drive demand for low-VOC paints

Consumer concern with the environment in general and chemicals in the home in particular

Figure 24: Influence of green factors in purchasing of green varnish/paint, 2008 and November 2009

“Green” buildings and products showcased in stores and in DIY programs

New building standards and green certification programs drive demand for low-VOC paints

Legislation also supports demand for low-VOC paints

Innovations also improve quality and reduce cost of eco-friendly paint options

Leading Companies

Key points

Leading global suppliers of paint and coatings

Figure 25: Annual coatings sales revenues for top 15 largest global coating suppliers, 2006 and 2008

Profiles of leading suppliers with significant presence in U.S. paint market

AkzoNobel

PPG Industries

Sherwin-Williams

RPM

Valspar

Masco

Benjamin Moore

Dunn-Edwards

Kelly-Moore

Wallcovering Companies

Blue Mountain Wallcoverings

Blonder Home

York Wallcoverings

Brand Qualities

Key points

AkzoNobel’s Revamped Glidden brand emphasizes inspiring confidence and helping launch projects

PPG’s brands (Olympic, Pittsburgh Paints, Porter) showcase tradition, durability and eco-friendliness

Sherwin-Williams combines retro label with modern looks, user-friendly tools

RPM’s brands (Rust-Oleum, Zinsser, NanoShield) highlight quality, innovation and functionality

Valspar’s brands range from a nostalgic and traditional to hip and carefree

Masco showcases performance and innovation with Behr brand

Benjamin Moore offers long tradition and eco-friendly identity

Kelly-Moore showcases expertise, hands-on approach and personal service

Innovation and Innovators

Key points

Innovators in green products, practices and promotion

Benjamin Moore offers patented system to bring range of colors to no-VOC paints

Kelly-Moore boasts “green business” designation, recycled and low-VOC paints

Sherwin-Williams offers GreenSure designation and expanded green paint selection

PPG showcases green products with dedicated website, “ecological” logo and sponsorships

Other areas of innovation in paint, primers and coating products

Low-VOC self-priming paints with wide color range in premium lines

Products that help reduce household odors and block stains

Paints with reduced drying time

Paints formulated to work on a range of surfaces

Paint offering greater coverage and thus higher value

Innovations in branding and marketing strategies

AkzoNobel undertakes major overhaul of Glidden consumer brand and launches Glidden Professional brand

Benjamin Moore offers iPhone application for matching color and finding stores

In wallcoverings, York Company spearheads innovation in design, licensing and appliqués

Advertising and Promotion

Overview and key points

Olympic showcases value of home and family

Figure 26: Olympic, 2009

Glidden hones in on independent, single women

Figure 27: Glidden, 2009

Valspar and Benjamin Moore highlight beauty and color with artistic ads

Figure 28: Valspar, 2009

Figure 29: Benjamin Moore, 2009

Behr showcases qualities of new, innovative product line

Figure 30: Behr, 2009

Sherwin-Williams addresses a variety of consumer needs

Figure 31: Sherwin-Williams, 2009

Private label brands

Licensed brands

Websites of major paint and wallcovering suppliers

Incidence of Painting and Other Wallcovering

Key points

Interior wall-painting most popular DIY project

Figure 32: Home improvement/decorating projects undertaken by self or professional in the past two years, December 2009

DIY painting and decorating activity highest among those aged 18-44

Figure 33: Home improvement/decorating projects undertaken by self in the past two years, by age, December 2009

In hiring professional help, more parity seen across age brackets

Figure 34: Home improvement/decorating projects undertaken by hired professional in the past two years, by age, December 2009

Income drives painting and decorating activity

Figure 35: Home improvement/decorating projects undertaken by self in the past two years, by household income, December 2009

Trended data show no significant drop in painting from 2007-09

Figure 36: Trended incidence of interior and exterior painting, 2003-09

Rooms Redecorated

Key points

Younger DIYers more active, paint and paper more rooms

Figure 37: Rooms decorated, by age, December 2009

Income drives number of spaces that are painted or redecorated

Figure 38: Rooms decorated, by household income, December 2009

Reasons for Redecorating

Key points

Replacing old paint/paper is prime reason, though 18-44s also seek new looks and style

Figure 39: Reasons for undertaking home improvement/redecorating projects, by age, December 2009

With increased income, seeking new looks and using DIY shows for ideas increases

Figure 40: Reasons for undertaking home improvement/redecorating projects, by household income, December 2009

Reasons for Not Redecorating

Key points

Figure 41: Reasons for not undertaking painting/wallcovering, by gender, December 2009

Wallpapering

Key points

Figure 42: Wallpapering application and preparation, December 2009

Place of Purchase

Key points

Home centers are dominant retailers for supplies

Figure 43: Retailers used for painting/wallcovering products, by gender, December 2009

18-44s shop at greater range and number of retailers

Figure 44: Retailers used for painting/wallcovering products, by age, December 2009

Upper-income HHs show highest use of specialty paint stores and remodeling stores

Figure 45: Retailers used for painting/wallcovering products, by household income, December 2009

Paints and Stains: Brands

Key points

Interior paint brands

Figure 46: Brand of interior paint used for those who painted in the last 12 months, April 2008-June 2009

Exterior paint brands

Figure 47: Brand of exterior paint used for those who painted in the last 12 months, April 2008-June 2009

Brands of staining products

Figure 48: Brand of stain used for those who did interior/exterior staining in the last 12 months, April 2008-June 2009

Race and Hispanic Origin

Key points

Blacks undertake the least painting/decorating, Hispanics the most

Figure 49: Home improvement/decorating projects undertaken by self in the past two years, by race/Hispanic origin, December 2009

Asians show strongest use of professional services

Figure 50: Home improvement/decorating projects undertaken with hired help in the past two years, by race/Hispanic origin, December 2009

Blacks and Hispanics show higher interest in matching furniture/décor and in ideas from DIY shows

Figure 51: Reasons for undertaking home improvement/redecorating projects, by race/Hispanic origin, December 2009

Hispanics use the greatest range and number of retailers

Figure 52: Retailers used for painting/wallcovering products, by race/Hispanic origin, December 2009

Cluster Analysis

DIY Remodelers

Who they are

Opportunity

Remodelers Who Hire

Who they are

Opportunity

Savers

Who they are

Opportunity

Cluster characteristics

Figure 53: Paint and wallcoverings clusters, December 2009

Figure 54: Home improvement/decorating projects undertaken (self or other person in household) in the past two years, by paint and wallcoverings clusters, December 2009

Figure 55: Home improvement/decorating projects undertaken (hired someone to do it) in the past two years, by paint and wallcoverings clusters, December 2009

Figure 56: Rooms decorated, by paint and wallcoverings clusters, December 2009

Figure 57: Self-designated identity of consumers who have undertaken home improvement/decorating, by paint and wallcoverings clusters, December 2009

Figure 58: Reasons for undertaking home improvement/redecorating projects, by paint and wallcoverings clusters, December 2009

Cluster demographics

Figure 59: Paint and wallcoverings clusters, by gender, December 2009

Figure 60: Paint and wallcoverings clusters, by age, December 2009

Figure 61: Paint and wallcoverings clusters, by income, December 2009

Figure 62: Paint and wallcoverings clusters, by race, December 2009

Figure 63: Paint and wallcoverings clusters, by Hispanic origin, December 2009

Cluster methodology

Custom Consumer Groups

Key points

Self-designated groups have different demographic profiles

Figure 64: Self-designated identity of consumers who have undertaken home improvement/decorating, December 2009

Expert DIYers and trendsetters show the highest painting/decorating levels

Figure 65: Home improvement/decorating projects undertaken in the past two years, by self-designated identity, December 2009

Figure 66: Rooms decorated, by self-designated identity, December 2009

Figure 67: Reasons for undertaking home improvement/redecorating projects, by self-designated identity, December 2009

Figure 68: Reasons for undertaking home improvement/redecorating projects, by self-designated identity, December 2009

Appendix: Other Useful Consumer Tables

Use of professional help highest for those with HH income of $75K+

Figure 69: Home improvement/decorating projects undertaken with hired help in the past two years, by household income, December 2009

Men more likely to find inspiration in DIY TV shows

Figure 70: Reasons for undertaking home improvement/redecorating projects, by gender, December 2009

Over-65s least likely to perceive need to paint

Figure 71: Reasons for not undertaking painting/wallcovering, by age, December 2009

Cost and not being allowed to paint are significant barriers to redecorating for lower-income HHs

Figure 72: Reasons for not undertaking painting/wallcovering, by household income, December 2009

Amount spent on wallpapering

Figure 73: Amount spent on wallpapering, by those who wallpapered in the last 12 months, April 2008-June 2009

Simmons data on painting/wallcovering and the types of paint used for specific tasks

Figure 74: Undertook painting, wallcovering or installed siding in the last 12 months, April 2008-June 2009

Interior painting

Figure 75: Type of interior paint used by those who painted in the last 12 months, April 2008-June 2009

Exterior painting

Figure 76: Type of exterior paint used by those who painted in the last 12 months, April 2008-June 2009

Staining

Figure 77: Type of staining used in the last 12 months, April 2008-June 2009

Demographic profiles of self-designated groups

Value-conscious consumers

Figure 78: Profile of value-conscious consumers, December 2009

Environmentally-conscious consumers

Figure 79: Profile of environmentally conscious consumers, December 2009

Home entertainers

Figure 80: Profile of at-home entertainers, December 2009

Expert or very active home remodelers

Figure 81: Profile of expert or very active home remodelers, December 2009

Trendsetters

Figure 82: Profile of trendsetters, December 2009