Contacts:
Raina Grossman/Kurt Rossler
M Booth & Associates
212.481.7000 Exts. 545/534

Desiree Fish
American Express
212.640.4761

FOR IMMEDIATE RELEASE

HOME IMPROVERS INTEND TO SET NEW SPENDING RECORDS THIS SPRING - ACCORDING TO AMERICAN EXPRESS HOME IMPROVEMENT INDEX

Rewards, Entrepreneurial Approach Lead Consumers to Cast
A Wider Net for Home Design Ideas, Financing

NEW YORK, April 8, 2003 - Americans expect to invest more in home improvements this spring and are using a directed, entrepreneurial approach, as well as special incentives, to get the work done, according to the 2003 American Express Home Improvement Index, a national survey of heads of households planning on home improvements this year.

The survey suggests that, on average, home improvement budgets will rise to $3,796 this year, up 31% from $2,888 in 2000, and 42% from $2,660 in 1997, the year the survey launched. Half of home improvers will spend more than $2,000, up from 39% three years ago. In addition, households with income of $50,000 or more will spend $4,267 this year, up 12% from $3,800 in 2000.

The Index provides new evidence that consumers are shifting spending to home improvement retailers, which bring products from traditional venues, such as lumberyards and hardware stores, together under one roof. The vast majority will shop at home improvement stores this spring (73%, up from 65% in 2000); fewer will shop at hardware stores (8%, down from 19% in 2000), home decorating/furnishing stores (7%, down from 16%), lumberyards (4%, down from 11%), and gardening/nursery stores (3.3%, down from 13% in 2000).

"The home improvement industry is growing by finding more ways to provide consumers with assistance for projects from the smallest to the most complex," said Ronald Shultz, Vice President, Retail Industries, American Express. "Home improvers have a voracious appetite for rewards programs, incentives, ideas, information, and discounts, and the marketplace has done a great job of satisfying these needs."

Consumers are making plans for all sorts of changes around the house this year. The survey says that 44% of home improvers will tackle interior decorating projects, on par with 2000, followed by remodeling (41%, up from 35% in 2000), landscaping (31%), mandatory maintenance work such as plumbing (26%), gardening (26%), refurnishing a room (22%), exterior decorating (19%), restoration (16%), expansion, including adding a room (16%), and building outdoor living space (14%).

More than ever, consumers are planning to divert discretionary spending to home improvements. More named home improvements(44%, up from 33% in 2000) as their #1 spending priority from discretionary budgets vs. vacation travel (20%) or dining and entertainment (15%, down from 21%).

When it comes to home improvement spending, consumers are looking to maximize their budgets, according to the Index. In selecting a home improvement store, most consumers cite price as the most important characteristic (69%). Other traits that draw consumers are merchandise selection (67%), knowledgeable and friendly customer service (61%), location (56%), ease of return (42%), delivery (31%), and rewards or incentives (24%). Three out of four consumers will bargain hunt to stay within their budgets (74%).

Most survey respondents agree that deep discounts on a particular item will persuade them to buy (77%). Also popular are retailer-based programs such as how-to workshops and seminars offered in home improvement stores (20%), special in-house design services (16%), and programs that award extra points or rewards for home improvement purchases (13%).

Reward Points Score Big with Home Improvers

To cover larger-ticket projects, consumers will explore a wide range of funding sources. Most will draw from their savings (76%), while others will use tax refunds (17%), home improvement loans (9%), a company bonus (7%), gift money or gift certificates (7%), mortgage refinancing (6%), and sales of stock or other assets (2%). To pay for home improvement projects, consumers will use cash (74%), credit cards (44%), checks (42%), ATM or debit cards (19%), gift cards (8%), store cards (6%), and credit card rewards (4%).

The Index found that consumers are motivated by earning rewards or points for home improvement projects. More than one in five (22%) say it's "very important" or "important" to shop where they can earn rewards, points or mileage when making home improvement purchases.

Nearly half of consumers will use credit or charge cards to earn points for their purchases (45%), and more than half enrolled in credit card reward programs say it shapes their purchasing decisions (52%). Many keep track of their points (17%) and some will only use a credit card that earns rewards (16%). Others will go out of their way to shop where they can earn rewards (13%), and almost as many "tend to spend and charge more to their card in order to accumulate points" (12%).

"Americans increasingly equate spending with earning rewards for both their everyday purchases and home improvement needs," Shultz said. "They're using rewards to increase their purchasing power."

The Urge to Hammer or Paint

In addition to getting more value for their home improvement dollars, many consumers are willing to take the time to do the work themselves. Most portray themselves as "Do-It-Yourselfers," planning to do all or most of the work (72%, on par with 2000). The majority will work on weekends (55%), while others will work on weekdays during the daytime (29%) or evenings (20%). Few will work during a vacation (9%). Nearly one in five Do-It-Yourselfers (17%) plan to hire outside contractor/professionals, including a builder, landscaper and/or an interior designer for some assistance with the project.

The kind of work they will take on includes interior or exterior finishing such as painting or wallpapering (63%), landscaping or gardening (54%), interior decorating (51%), carpentry (43%), window treatments (34%), and construction work (33%). Only 15% of Do-It-Yourselfers will tackle heating or air conditioning jobs.

While three out of four men are Do-It-Yourselfers (76%), women will take on home improvement jobs as well (67%). As a matter of fact, more women than men will be painting or wallpapering this spring (68% vs. 60%). And, more women than men (29% vs. 18%) will take on the project because they report they "can do it better and cheaper than using a professional."

To get the help they need, consumers, whether they are Do-It-Yourselfers or they hire help (28% made up of a combination of "Buy-It-Yourselfers" (14%) and those who contract all the work out 14%) are casting a wider net for tips and advice. Nearly half say they will tune in to home improvement shows on television (47%, up from 38% in 2000), and nearly two in five (38%) say they rely on neighbors, family or friends for advice. One third rely on retailers' displays, showrooms, and workshops (33%, up from 20%), and nearly one out of five consumers get information online (19%, up from 9%). Thirty percent will "try to figure it out as (they) go along."

More than half will come up with their own home improvement ideas (53%), while slightly fewer will find ideas in magazines or newspapers (49%), and nearly a quarter get them from catalogs mailed to their home (24%), or take the advice and guidance of sales help in home improvement stores (22%).

Home Improvement, American Style

Which rooms will get the most attention? For those refurnishing or redecorating, it will be the master bedroom (39% vs. 27% in 2000), followed by the living room (34% vs. 46%), bathrooms (31%, the same as in 2000), the kitchen (26% vs. 31% in 2000) and dining rooms (6% vs. 16%). For renovators, kitchens top the list (24% vs. 38% in 2000), followed by bathrooms (22% vs. 36%), and living rooms (21% vs. 17%).

Home improvers want to create an "uncluttered, organized and calm environment" (44%), "bring the outdoors in and the indoors out" (15%), or create a child-oriented home with durable furnishings, play spaces and an easy-to-clean kitchen and family room (13%).

Most consumers will begin their home improvement projects in June (23% vs. 18% in 2000), followed by May (19% vs. 17%). Also, this year more consumers will take longer-two to six months-to complete their project (31% vs. 28% in 2000).

Many (43%, equally split between women and men) plan to visit a local home improvement store weekly or at least biweekly, while 10% will shop or browse as often as 10 times per month; 9% will visit a retailer five to nine times per month. Men (11%) compared to women (9%) enjoy the most frequent visits of 10 or more times a month.

Will improvements be worth the investment? Overwhelmingly, home improvers hope their home improvements will "increase the value" of their home (89%), and they believe that they should recoup the costs once they sell (80%).

The 2003 American Express Home Improvement Index was conducted by telephone between February 26 and March 2, 2003, as part of an omnibus study and surveyed 341 heads of households, age 18 and older, planning to make some form of home improvement this year. The Index looked at spending, buying attitudes, shopping trends, and preferences among the general consuming public. The margin of error is +/- 5.3%.

American Express Company is a diversified worldwide travel and financial services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, investment products, insurance and international and online banking. For more information on American Express, visit our Web site at www.americanexpress.com.

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