DECKS: YEAR OF STAYCATION A deck improves neither the functionality nor the look of a home. It’s purely a leisure item. So you might imagine that in a sharp recession, demand for decks would be way down. Think again. Those who want them and can afford them will have them. “We’re kind of one of the last shining spots,” says Michael Beaudry, of the North American Deck and Railing Association (NADRA). A recent study from The Freedonia Group suggests that the market for building materials used to construct decks would grow 2.2% between 2006 and 2011.
Consider Prince William Home Improvement, in Woodbridge, Va. The window and siding company entered the deck business just five years ago. Last year it sold 414 decks, making decks by far its leading product, producing more than half its sales. Most are sold to new-home buyers. With people traveling less, general sales manager Greg Sliger says, salespeople ask homeowners: Why not spend that vacation money on a staycation and enjoy your deck?
Prince William Home Improvement has tapped into what Beaudry says is one of two big potential markets for decks. The first is those thousands of new homes built during the housing boom, many with a ledger board on the back wall but, as yet, no deck. “We haven’t really tapped into that yet,” he says. The second market, according to Beaudry, consists of a portion of what NADRA estimates are the 40 million decks constructed more than 20 years ago that are now in need of updating or replacing. Not only are many unsafe, but they were built when pressure-treated wood was just about the only material to use. Today homeowners can choose from composite and PVC products that outlast most wood species. Deck remodeling and/or replacement will grow, Beaudry says, especially as existing homes begin to turn in greater numbers because sellers will realize that the deck, like the roof or bathroom, is going to get the attention of the home inspector.
All this explains why The Freedonia Group projects the market share of pressure-treated wood in decking to erode, at the expense of composites and PVC. In 2011, wood will make up 73% of the deck market, composites 23%, vinyl 4%. Fast forward to 2016 when composites are 32% of all decking materials.
END OF THE TUNNEL So when do things get better? When housing does. “In my opinion, there’s still an awful lot of foreclosure volume out there, of housing inventory, so you’re still going to see some wobbling,” says Shober, of Ducker Worldwide. Baker, of the Harvard Joint Center, says that housing sales should begin to go up in the middle of 2010.
Housing sales, says Molony of the NAR, “have traditionally lead the nation out of recession.” And though he concedes that home buyers today are holding back on big-ticket purchases, he also points out that those buyers are owner-occupants, not speculators, and suggests that a reinvigorated housing market will see corresponding growth in home improvement sales, much of it driven by pent-up demand from the time when flat was the new growth.
Even roofing, the home improvement product that every homeowner has to have, isn’t recession-proof. Last October, a client — fresh from visiting a list of addresses supplied by S&K Roofing, Siding and Windows — said he’d seen a shingle in a color he liked and sent the company a deposit. Then three big national banks failed, and the client called back to postpone the job. “He said: ‘Can you make my house watertight for the winter?’” Don Katzenberger recalls. “I said we’d send a crew over to patch it for $300. We have a lot [of prospects] willing to put off [work for] another year.”
HAVE CONFIDENCE
In today’s market, the two biggest problems home improvement companies face are generating enough leads and converting those leads to sales. Consumer confidence hit a 41-year low last October, fed by news of the Dow Jones industrial average dropping, banks going under, and waves of corporate layoffs. In January, consumer confidence plunged again.
A new frugality took hold as households began limiting their spending and paying down debt. Even companies that had managed to hit sales targets through spring and summer felt the chill in the fall. “People are doing just enough to get by,” observes Jarred Murray, owner of Weatherguard Systems, in New London, Wis.
Home improvement companies have found it more difficult to both collect and to arrange financing. But getting additional business remains the No. 1 challenge. Lloyd Gillman, president of The Window Guys, in Chicago, recalls that it wasn’t so long ago that he would pick up the Chicago Sun-Times and see pages of home improvement ads, including his own. Now, he says, “you have to go out and get the customer, not wait for him to come to you.” So companies such as The Window Guys focus on canvassing, shows, events, and in-store demonstrators, which provide opportunities to get face-to-face with potential customers.
Companies have also increasingly turned to outbound calling. Shane Schuckman, co-owner of Renewal by Andersen of Las Vegas and Phoenix, says that calling unsold customers and partials provided a solid month’s worth of leads at the end of last summer in two markets that were among the first to feel the pain when housing prices fell.
Many companies will travel a lot farther for an appointment or to install a job. S&K Roofing, Siding and Windows, which operates in the Washington/Baltimore area, sent a crew to central Virginia this fall and another to Ocean City, Md., 170 miles away. “Luckily, we have crews that are willing to do that,” owner Don Katzenberger says.
But even if you have leads, salespeople find it tougher to close. “When money’s tighter, the expectations go up,” says John Dunbar, sales manager at Jancewicz & Son, in Bellows Falls, Vt. That means that to help themselves get ahead of the recession, companies selling home improvement products will need to pay far more attention to servicing the customer than some may be used to.
The contractors who survive deep recessions, says Bill Good, of the National Roofing Contractors Association, are the ones that sell value and service rather than price. “We’re seeing the smarter contractors now selling relationships and service or maintenance,” he says, as well as energy efficiency, reflectivity, and green building. “Those differentiators have become real important in this economy.”
