Hardware Retailing The Industry's Source for Insights and Information
By Steve Payne, Editor-in-Chief, Hardlines Inc.
The health of the retail hardware and home improvement industry in Canada had its ups and downs both during and following the COVID-19 pandemic. In 2023, industry sales declined by 3.7%, and in 2024 sales dropped a further 2.3%. The Canadian industry ended up at C$57.317 billion in 2024—still up 14.2% from the last pre-pandemic year of 2019, but a far cry from the giant 21.2% leap that Canadian retailers in this industry took during the pandemic.
Now, Canada’s retail home improvement industry is experiencing two challenges. Inflation is a common problem both in Canada and the U.S. The pandemic brought to both countries government-stimulated economies that ended up being inherently inflationary. Canada went from 0.7% inflation in the first year of the pandemic to a high of 6.8% in 2022. Canada’s current rates of inflation are now running closer to 2%.
Tariffs are also having an impact. Canada exports 77% of its goods and services to the U.S., while only 18% of U.S. exports go to Canada. In particular, sizable American tariffs on car parts, aluminum and steel have damaged the economy of Ontario, 38% of the Canadian economy.
Fortunately, an estimated 90% of this industry’s products still cross the border tariff-free, thanks to the U.S.-Canada-Mexico Agreement (USCMA). However, the USCMA deal is up for renegotiation in 2026.
In this industry, the 2.3% drop in retailer revenues in 2024 was not felt by all the types of stores that Hardlines measures, of course. Canada’s 3,179 building centers, still running on from the COVID-era construction boom—and added by building materials inflation—posted a 0.6% shrink. They did better than other types of retail measured in our industry. Home goods retailer Canadian Tire, a category unto itself in Canada, posted a decline in revenues of 2.8% in 2024. (Hardlines measures only the home improvement side of Canadian Tire’s diversified retail sales from 502 Canadian Tire stores).
Canada’s 293 big boxes suffered largely from a consumer confidence deficit, as they continue to do in the U.S. We measure them losing 4.2% in sales in 2024. Finally, hardware stores shrank the most, with a negative 5.4% in sales from their 896 units across the country in 2024.
Looking ahead, hardware stores, with their convenience aspect and their connection to small communities and urban neighbourhoods, are expected to remain destinations for cautious consumers. They do, however, face tough competition from discount chains and dollar stores.
Building centers will be the most sensitive to the slowdown in housing and resales. Big boxes, and Home Depot Canada in particular, are expected to make gains next year after slower growth in 2025.
One of the big trends all home improvement retailers must adapt to is the changing consumer. As demographics evolve, product assortments must change as well. The ageing Baby Boomer consumer has fueled the growth in safety and convenience products. These can include grips inside showers and even walk-in tubs.
Younger consumers, representing a generation that is not comfortable fixing and repairing, require dealers to provide convenience LBM assortments, time-saving products and space-saving ideas.
While the Bank of Canada is forecasting GDP to grow as much as 2.5% in 2025, the major banks are being more cautious, setting target growth at 1.5 to 1.8%. Meanwhile, affordability remains an issue, meaning demand will ease, compounded by a slowdown in immigration. In addition, unemployment rates have climbed through the middle of 2025, hovering at almost 7% this year, the highest it’s been since 2016. Our target for growth in 2025 is flat to 1.4% and slightly stronger in 2026, in anticipation of an easing of tariff concerns.
