Adapt or Die
Panek isn’t waiting around for the boom times to return. He has targeted a different demographic ? those homeowners who are well off enough to pay cash ? and has entered the niche market of conservatories, a high-end product stunningly successful in the U.K. A long-time sunroom dealer, Panek went out on a limb a year ago and bought K2, a Michigan company that manufactures conservatories. “I believe that the people we appeal to are the people we never saw before,” Panek says. “Of all the areas in the sunroom industry, the only one that hasn’t dropped and will grow is the conservatory.”
Hall, of TEMO, sees a limited market for upper-end products such as conservatories, but he agrees that finding the core customer demographic ? typically “retirees who are not looking for additional living space but quality relaxation space” ? and reaching that group will keep dealers strong. What makes this group so valuable, he says, is that they’re “financially secure, they’re not looking for employment, they tend to have equity and fewer bills.”
Still searching for that sometimes elusive prospect and demographic, many sunroom manufacturers and retailers have proved adept in their struggle to keep cash flow flowing until credit loosens, the recession goes away, or both. Not long ago Rick Edwards, who operates Custom Patio Rooms, in Pittsburgh, went on eBay where he was able to sell to do-it-yourselfers the three models in the company’s showroom.
Green will order full sunrooms from his supplier, TEMO, for those customers who want to find their own installer or who are confident enough in their own installation skills to put the components together into a finished room. DIY is a new market for most dealers, and a welcome one.
Four Seasons, which has converted at least a dozen former franchises into company stores, is pitching the commercial market’s viability to its several hundred franchisees.
TEMO is set to introduce a solar roofing panel system and has already marketed a structural thermal panel suitable for use in constructing additions. And many sunroom dealers who once saw average unit sales of $30,000 are now out in the market with other related outdoor products that are less expensive and therefore appeal more widely and don’t require financing.
“Yes, it’s more difficult,” says Rob Levin, president of Statewide Remodeling, in Texas, where sales of sunrooms are down 40%. “We have a lot more interest in other products, like pergolas and patio covers.”
Lee, who has sold sunrooms for 13 years, notes that “it’s a much harder business than it was.” Customers drive a tougher bargain, and marketing in traditional sources such as newspaper inserts meets with less success than it once did. Lee, too, is focusing on an older demographic. Still, he has managed to sustain monthly sales in the six figures, half of it through self-generated leads. “In the last 12 months, we’ve written $2.6 million in good business,” he says.
Not Dead, Just Hibernating
Ask people in the sunroom industry when they expect to see the gung-ho sales of pre-2007 return and you’re sure to get a range of answers. Green believes it will be back in a year or two. Some say five years. Some say 10. Some point out that it all depends on the dealer, the product, and the market. Lee says that the sunroom business is “not dead, just hibernating.”
Edwards, who has watched the sunroom industry evolve for the last 30 years ? his father installed them ? sees the market coming back, but with different products and different customers. The four-season room, a virtual home addition, will be less attractive, he believes, both because of the price and because municipalities have toughened up their building codes. “I think the trend has to go back the other way, to the three-season room or a screen room that customers can buy for $10,000 or $15,000.”
Levin, who has been in the home improvement business since 1972, believes the sunroom market will return when credit does. Marketing expenses are far greater in relation to shriveled sales, he says, but the bigger problem is that “there’s just no money available for the higher-priced product. Until there is money available, we are all going to suffer.”
Others share that view. Levin says that he doesn’t expect to see credit widely available for 12 to 18 months. That prognosis is seconded by the Federal Reserve, which in a recent survey of bankers found most predicting a loosening of credit sometime in 2010. Reicheck is weighing whether or not to continue in the sunroom business or find something else to do. “What it all comes down to,” he says, “is that if you’re a sunroom-only dealer, you’re a dinosaur.”
?Jim Cory, editor, REPLACEMENT CONTRACTOR.
