SIC 5231
PAINT, GLASS, AND WALLPAPER STORES



This industry consists of establishments engaged in selling primarily paint, glass, and wallpaper, or any combination of these lines, to the general public. While these establishments may sell primarily to construction contractors, they are known as retail in the trade. Establishments that do not sell to the general public or are known in the trade as wholesale are classified in the wholesale trade industries.

NAICS Code(s)

422950 (Paint, Varnish, and Supplies Wholesalers)

444190 (Other Building Materials Dealers)

444120 (Paint and Wallpaper Stores)

Industry Snapshot

In 2000, some 8,400 paint and wallpaper retail outlets were in operation in the United States and generated $1.2 billion in revenues, according to the U.S. Census Bureau's Statistical Abstract of the United States. Traditional paint, wallpaper, and glass stores have faced increasing competition from big-box homes centers and discounters, but they continue to maintain a market niche by offering superior selection and service to customers. Of all exterior paint purchases made in 2001, latex was the most popular, garnering 72 percent of all paint sales. Oil-based paint totaled 14 percent of sales; enamel, 9 percent; and two or more types, 6 percent. Latex was also the category leader for interior paint purchases, with 79 percent of the market.

Organization and Structure

There were two types of retail outlets for paints, glass, and wallpaper. The first was the independently operated store, which purchased products from manufacturers that operated distribution centers and warehouses. The second was the manufacturer-operated store, which offered factory direct products and generally used its own distribution center. Both types of stores ran centralized operations from their headquarters.

Paint, glass, and wallpaper stores were also distinguished as either warehouse stores, also called discount houses, or small retail outlets. Typically, the warehouse stores purchased large quantities of products from manufacturers and sold them at discount prices. The small retail stores, many of which were owned by manufacturers, emphasized service and personalized attention. Many stores in this industry also hired contractors to provide glass installation services for customers. Small, independently run stores occasionally offered painting services.

Background and Development

By the early 1900s, establishments in this industry were emerging on a small scale. These establishments grew steadily though as the country's population increased. In the early 1930s, many stores were adversely affected by the Great Depression. Public works projects, however, helped to boost paint and glass sales for these small companies. World War II saw another decline in home sales that affected the industry. The growth of suburban America during the 1950s and 1960s, however, created a period of tremendous growth for establishments in the industry. Many small companies expanded into chain stores, and manufacturers entered the retail market. An economic recession in the 1970s caused a decrease in new home construction and a slump in paint, glass, and wallpaper sales. During the 1980s, the industry experienced another boom period in sales, engendered by an active real estate market and home renovations. The industry was projected to grow at only 1 to 2 percent per year through 2000.

The major product sold by this industry was paint. Other products sold by companies in the industry were paint supplies; wallpaper; wallpaper adhesives and supplies; varnishes for wood, anti—rust coatings for metal, glass, glass sealants; and hardware tools. Many stores in this industry also offered services ranging from decorating advice to glass window and door installation. With a greater emphasis placed on the do-it-yourself market in the late 1980s, paint, glass, and wallpaper stores offered painting clinics that taught customers how to paint professionally. Standard Brand stores, for instance, also had test walls for customers to see how certain paint looked on a wall.

The paint, glass, and wallpaper retail industry was characterized by strong brand loyalty among its customers. Most independent retail outlets relied on the manufacturers' advertising to promote their products. In response to a sales slump in the late 1980s, industry leaders started advertising campaigns to give products high visibility.

Environmental legislation affected manufacturer—owned retail outlets through hazardous waste restrictions for paint factories, which increased the cost of materials and factory produced items. In 1993, the Environmental Protection Agency (EPA) sued Sherwin Williams for failure to obtain a hazardous waste permit. This action followed a two-year investigation by the EPA.

An economic recession in the late 1980s and early 1990s put an end to eight years of consecutive growth in the paint, glass, and wallpaper retail industry. This trend was primarily caused by a decline in new home construction.

Retailers shifted from selling to industries and the architectural market toward the do-it-yourself market. While the market for new home construction dropped during the recession, the industry experienced an increase in sales as a result of property renovations and rehabilitations.

From 1990 to 1992 competition intensified greatly in the industry because of higher raw material prices and the money spent by manufacturers on research and development to comply with vital organic compound (VOC) restrictions, which dramatically reduced profit margins for many small companies. In the mid-1990s, companies in the industry suffered increased competition from mass retailers, such as Sears, Home Depot, and Wal-Mart, which operated paint and wallpaper departments. Paint manufacturers were using mass retailers instead of small paint retail chains as a way of cutting distribution costs. The giant retailers' purchasing power and ability to control prices increased sharply in the late 1990s. As a result they expected manufacturers to provide low prices and to help control inventory.

Current Conditions

Despite the onslaught of competition from big-box home improvement centers and discount retailers, paint specialty stores held their own during the first years of the twenty-first century. Paint and home decor have been trouble areas for general hardware and home improvement stores as sales margins and sales-per-square-foot have declined. According to the National Retail Hardware Association in 2002, paint and home decor products account for 10 percent of floor space in home improvement stores but just 8 percent of sales. Hardware stores fared about the same, with 15 percent of floor space generating 11 percent of sales. Paint and home decor stores offer a wider selection, stock more available products, and emphasize customer service.

Another trend in the industry is the recent recognition of women as important decision makers in the do-it-yourself (DIY) market, altering the way the industry does business. Both Lowe's and Home Depot reported in 2001 that over 50 percent of their customer base was female. With an influx of women shoppers into the DIY market, home improvement and specialty stores alike are working hard to organize their stores to be bright, open, and attractive to women. New offerings include in-store design centers, more designer paint brands, and more extensive paint color samples. For example, Benjamin Moore & Co. offers approximately 3,200 colors of paint and can match almost any color using its Color Preview System.

Industry Leaders

The industry's giant is the Sherwin-Williams Co., recording over $5.2 billion in wholesale and retail sales in 2002 by selling paint, finishes, coatings, applicators and varnishes. Net income in 2002 was $128 million. The company's products are geared toward the DIY market, but because of the acquisition of Cook Paint and Varnish Company in 1990, Sherwin-Williams also targets industrial customers. (Sherwin-Williams was founded by Henry A. Sherwin, a retail paint dealer in Cleveland and was incorporated in 1884.) The company also owned 12 paint plants in the United States and U.S. territories and had subsidiaries in Brazil, Mexico, Canada, Jamaica, and the Virgin Islands. In 2003, the company owned 2,650 stores in North America and 140 in Brazil, Chile, Mexico, and Jamaica.

Benjamin Moore & Co. markets its paints through a dealer network of 3,200 stores. In 2002, the company, which became a subsidiary of Warren Buffet's Berkshire Hathaway in 2000, reported revenues of $800 million and employed 2,500. Kelly-Moore Paint Company operates 160 stores in 11 states, primarily in the western and southwestern regions of the United States. The company produces 20 million gallons of paint each year. Revenues for 2002 were $350 million; 15 percent of that total was generated by retail sales.

Workforce

In 2001, the industry employed 60,780 workers, according to the U.S. Department of Labor, Bureau of Labor Statistics. Of this total, 53 percent of jobs were related to sales. Sales associates totaled one-third the entire work force and earned a mean annual salary of $22,410. Managers, sales representatives, and cashiers made up most of the remainder of the sales category. Office and administrative support positions totaled 14 percent and had a mean annual salary of $23,330. Management occupations accounted for 6 percent of all jobs and had a mean annual salary of $55,150.

Sales staff was usually given special training in working with paints and other chemical-based products, along with training in customer service. Generally, people with backgrounds in design, professional painting, or construction work are preferred.

America and the World

The United States maintained a favorable trade balance in paints and coatings, but glass and wallpaper had little overseas activity. In the early 1990s, American exports of paints and coatings increased 19.2 percent to $675 million in wholesale prices. Roughly 75 percent of these paints went to American owned retail outlets. Strong export growth was predicted for this industry into the mid-1990s.

Research and Technology

In the early 1990s, the leading areas of research and technology emanated from paint and coatings manufacturing areas, such as research in waterborne, high solids, powder, and radiation-cured coatings. These types of coatings were geared toward increasing sales in automotive and appliance coatings and furniture finishes. Developments also were underway for new products to be sold by retailers in this industry. Titanium dioxide, which was used as a paint pigment with great covering power and durability, was being developed for the commercial market.

As a result of environmental legislation, research continued on waste management from these products, both for manufacturers and wholesalers. Another technological development for this industry intended to help protect the environment was products with no volatile organic compounds. These products were in demand because, in addition to being easier on the environment during production, they did not emit fumes when being applied to walls. In 1998 the U.S. Environmental Protection Agency announced national VOC limits for automotive refinished and architectural and industrial maintenance coatings, effective as of 1999. Eventually, these products were expected to help paint sales.

Like other retail businesses, establishments in this industry continued to increase their reliance on computers, simplifying many routine buying functions and improving the efficiency of in store sales staff. The larger paint, glass, and wallpaper retailers were relying less on sales staff for inventory counts and more on point of sales computer terminals, which provided up to date inventory and sales information.

Computerized inventory controls greatly increased the efficiency of ordering merchandise. Some systems monitored inventory levels, automatically reordered selected merchandise, connected chain stores to one centralized system, and calculated turnover by product, store, and sales area. For sales staff, point of sales computer systems were useful in calculating discounts, approving credit, and scheduling deliveries.

A significant development in the distribution of paints and wallpaper was the use of electronic ordering and inventory control systems, known as electronic data interchange (EDI). Replacing the use of the postal service, EDI systems enabled retailers to order paints through a computer linked directly to manufacturers and independent distributors. This facilitated quicker ordering and more accurate inventory controls.

Further Reading

Company Profiles . Hoover's Inc., 2003. Available from http://www.hoovers.com .

Cowley, Geoffrey. "Getting the Lead Out." Newsweek, 17 February 2003, 54.

Greissel, Mike. "2003 Finishing Market Survey: Taming the Bear." Industrial Paint & Powder, January 2003, 18-23.

Graff, Gordon. "Outlook Brightens." Purchasing, 10 October 2002, 32-35.

"Incidence of Paint and Sundries Purchases." Do-It-Yourself Retailing, February 2003, 44.

Lerner, Ivan. "Paint Additives Growth Steady." Chemical Market Reporter, 17 March 2003, 16.

U.S. Census Bureau. Statistical Abstract of the United States, 2002, 2002. Available from http://www.census.gov .

U.S. Department of Labor, Bureau of Labor Statistics. 2001 National Industry-Specific Occupational Employment and Wage Estimates, 2001. Available from http://www.bls.gov .



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