Demand for hand tools is expected to grow at a rate of 3.3% annually to reach USD 14.8 billion by the end of 2015. Resurgence in the US housing sector, coupled with sustained growth in emerging economies is expected to fuel the demand for hand tools.
Hand tools are facing stiff competition from power tools, as the latter offers ease of use and mobility. However, hand tools have the price advantage, a key factor stoking the demand in emerging economies.
DIY Trend & Price Concerns Expected to Present Growth Opportunities
In industrialised countries, power tools are expected to account for the bulk of the demand from professionals. However, rising DIY trend is expected to create demand for hand tools, but manufacturers will have to scout for growth avenues in emerging nations, where shoestring construction budgets are a challenge for adoption of power tools.
China, India, and Middle East have remained lucrative markets for hand tools companies. Although the pace of growth has slowed down a bit, demand for hand tools is expected to remain steady in these economies. Low cost, long operational life, and lesser risk of injuries are unique selling propositions of hand tools vis-à-vis power tools.
The housing market in emerging economies is in stark contrast with developed markets, considering the percentage of population who are yet to buy their first home. The pace of construction in emerging economies is expected to remain steady in the near future, providing opportunities for demand generation.
North America is Still a Lucrative Market for Hand Tools
North America is still the most lucrative market for hand tools; however, adoption of power tools is higher than that of hand tools. Demand for power tools is expected to grow at over 4.5% annually. By 2020, the market for power tools is expected to be twice that of hand tools in North America.
The agriculture sector is also expected to create substantial demand for hand tools. Plows, pitchforks, soil dragger, lever, sickle, etc. are some of the commonly used tools in the agriculture sector. Though industrialised countries have switched to automatic machines, farmers in a majority of countries depend on hand tools.
The hand tools industry is fiercely competitive and profit margins are shrinking as a number of independent players have entered the market. Due to this, the demand for branded products is witnessing a decline.
Innovation remains the key to growth of hand tools in the near future. As power tools gain traction, hand tool manufacturers will need to market their products to niche segments, where DIY and price sensibility drive buying decisions.
Companies that manufacture both power tools and hand tools, such as Bosch, have the option of streamlining their manufacturing process with the corresponding demand. However, companies that rely on hand tools for majority of revenues, innovation and foraying into emerging markets can be crucial to sustain.
Related Market Research Report:
Power Tools Market: Global Industry Analysis and Opportunity Assessment 2015 - 2025
Hand Tools Market: Global Industry Analysis and Opportunity Assessment 2015 - 2025
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