WINDOW OF OPPORTUNITY Three things happened in the window replacement market last year. Manufacturers closed plants (among them Milgard and Silver Line Windows) or went out of business (Kensington Windows). Producers of other home improvement products entered the window business as homeowners grew wary of buying high-ticket items. And retail window companies found themselves changing marketing and sales tactics to stay profitable.
Replacement windows are the second largest home improvement category, after roofing. Demand for windows peaked in 2005, with 66.7 million units shipped, and now hovers above the 50 million unit mark, according to Ducker Worldwide, a research company based in Troy, Mich. Scott Shober of Ducker says that puts window sales about where they were a decade ago. Much of that drop came from declining new-construction demand.
But even as manufacturers and retail companies left the business, others stepped forward to take their place. In August, Four Seasons, the sunroom manufacturer with headquarters on Long Island, announced it was entering the window business, offering its dealers a vinyl window line with four different glass recipes that company spokesman Jim Ruppel says is aimed at high-end buyers, especially previous Four Seasons customers.
In September, Ohio manufacturer Owens Corning introduced Solace — a line of fiberglass-reinforced vinyl windows — mainly, company officials said, to give OC’s network of basement finishing franchisees something new to sell.
With more sellers in the market and consumers in wallet lock-down, many window replacement companies have reevaluated the way they market and sell. In Chicago, The Window Guys now seeks leads at malls and through a canvassing program rather than the Chicago Sun-Times. “You have to be more involved in getting the customer versus waiting for them to come to you,” president Lloyd Gillman says. Nor is the company choosey about the size of jobs. It now has what Gillman calls “a one-window minimum.”
Window jobs may be fewer, but they’re still out there. Dealers say that interest in energy savings remains strong, whatever happens with home heating prices. “Windows are a necessity when the cold air’s blowing through the curtain and the fuel bills are going up,” says Pat Moran, owner of five Window World locations in Pennsylvania, Ohio, and Michigan.
Still, when stories about layoffs hit the media daily, affordability is a prime concern for wallet-watching homeowners. Moran, whose sales in past years grew in double digits, found 2008 to be, overall, flat. So he scaled back a planned 30% increase in media advertising and plans no marketing budget increase for 2009, though he does plan to open three more Window World dealerships. In a “very, very tough” business environment, Moran says that many dealers he knows feel that “if your sales are even, you’re doing great.”
Even those whose sales are holding steady say it’s more difficult than ever to get those sales. “In 25 years, this is the hardest I’ve ever worked,” says John Aurgemma, co-owner of Rhode Island Home Improvement, in Cranston. Aurgemma says that he’s now working far more closely with the company’s salesforce, which means frequent ride-alongs. He notes that prospects are impressed when the company owner shows up at a sales call.
Doug Cook, president of Feldco, a window company in Chicago, was pleased after experiencing “our best October ever.” Cook says that the company’s investment of time, money, and energy in banner advertising on newspaper, radio, and television Web sites paid off in “robust” lead counts. But, “average deals are off, and people are harder to close. More people are showing up, but when they do, they’re tougher to convert, and when they do it’s not as much.”
Those who specialize in tracking it say that, overall, the window replacement industry’s worst days might be over. In a study it just published, business research company The Freedonia Group projects 3.7% annual growth in window sales between now and 2012 “due to increasing interest in energy efficiency.” And Jeff Lowinski, vice president of the American Architectural Manufacturers Association, notes that the recently passed economic stimulus bill will reward homeowners for buying energy-saving home improvements, such as windows.
And even within the recent decline in overall demand, there are bright spots. The Freedonia Group cites increased demand for storm-resistant windows in coastal areas and what spokeswoman Corinne Gangloff calls “solid growth” for fiberglass products.
NEW FAÇADE: TOUGH SELL IN SLOW ECONOMY Homeowners often regard siding as a way to change the look of the house. “Siding, to most people, is a luxury item,” says Eric Folsom, sales manager at Weather Tight Corp., a Milwaukee home improvement company selling roofing, windows, and sunrooms as well as vinyl siding. What you’re buying, he says, is “a new house at the same address.”
Siding leads are off at Weather Tight this year, as they are at many companies. Up the road, for instance, at Weatherguard Systems, in New London, Wis., owner Jared Murray estimates that leads on siding jobs his company installs for Sears and The Home Depot are down 30%. “A lot of people we’ve done work for, they’ll replace the windows but they won’t touch the siding,” Murray notes.
According to a study published in July by The Freedonia Group, “total siding demand in 2007 was barely above 2002 levels.” It fell for one reason: the drop in single-family home building. That same study projects that siding sales will rise an average of 1.6% annually between now and 2012, driven by a reinvigorated new-home market. As sales pick up, vinyl will continue to be the leading material, with fiber cement steadily adding market share.
Getting homeowners to sign on the dotted line for a siding job may involve convincing them that it’s more than cosmetic. Companies such as Weatherguard Systems emphasize the enhanced R-value that comes with backing materials. Green is a bigger theme, since, Murray says, three customers have asked him about which of the siding products he installs can be recycled. That, and more stable pricing in the face of steady increases in the cost of vinyl, has made fiber cement a much bigger part of his siding business, which is 35% of Weatherguard Systems’ sales.
Demand for a product that makes the home more snug was one reason why American Siding & Window, in Des Moines, Iowa, started carrying a foam-backed vinyl siding this past July. Vice president Pat Pagano says that the challenge at a multiproduct company like his is that “salespeople often prefer to sell windows over siding because there’s more talk about. There’s the heat lamp, the BTU meter, the ice cube test on the spacer system. People have become a lot more conscious of energy costs in the last three or four years. Showing homeowners how much money they can save in the time they’re in the home makes it a lot easier to generate sales.”
To help reps explain that, American Siding & Window of Des Moines put together a “component case” of siding parts and pieces: vinyl, starter trim, J-channel, corner post.
And at Weather Tight Corp., where siding leads were down in 2008, siding sales were up. The company generated $1.1 million in siding sales last year, compared with $855,000 in 2007. Folsom says that’s for one reason: The company has one dedicated siding salesperson — others sell multiple products, including siding — and management worked one-on-one with her to improve her presentation and raise her close rate.
