With warm weather here and baseball back in swing, enjoying the outdoors is on just about everyone's mind. For many LBM dealers, enjoying the outdoors comes with a focus on decking, railing and other outdoor living products. If you're not yet fully embracing the category, here's eight reasons you should:
- Growth Potential: No product category in our business sees more new product innovation and new competitors than the decking category, along with its railing and other outdoor living siblings. Over the past 10-15 years, countless companies have created the "latest & greatest" product and instead gone away quietly within a couple years. Despite those many failures, new technologies continue to enter the market, which you don't see in doors, windows, roofing, siding or other, more mature categories. Why is that? It's because the category is expected to hit $4 billion in sales in 2015, and nearly $5 billion by 2018, according to Principia's latest research. No other category in the industry is forecasted to grow at so rapid a pace.
- Outdoor Is In: Beyond the near-term growth of the category, its long term prospects look extremely solid as well. According to Industry Edge (part of the National Hardware Show), 62% of Millennials are spending more time outdoors, versus only 24% of Baby Boomers. 85% of Millennials rated outdoor rooms as "very important" or "important" versus 74% for the Boomers. With Millennials now 25% of the US population and many at prime home-buying age, the growth in the category from these factors looks strong.
- Profitability: When considering the layout of your showroom space, consider this: according to Hardware Retailing magazine, the average annual sales per square foot for a high-profit retail lumberyard is $777; have you considered that factor when deciding what products deserve more space in your showroom? A good decking dealer can exceed that $777 number, even with the admittedly large footprint a good decking display will take up.
- Opportunity for Complimentary Sales: As you hopefully read in Bobby Park's column, the list of products that can be sold alongside decking and railing is huge — pergolas, fencing, pavers, hardscapes, plants, mulch/stone, grills, pool supplies and other outdoor living items all can be additional profit centers (with healthy margins!) for dealers like you. Of course, all those items don't make sense in every market, but give serious consideration to what does make sense, even if they don't fall under a traditional lumberyard umbrella.
- It's Steady: While some product categories are highly dependent on new construction, decking isn't. Over the past 6-8 years, it maintained or even slightly grew, while the overall market experienced the massive drops most in the building industry suffered from. Homeowners realized that, by adding a deck and enhancing their outdoor living space, they could ultimately be happier staying in their current home versus wanting to move. The "staycation" trend that began during the recession has continued, which leads to renovations and additions to the outdoor living space.
- Differentiate Yourself: No, you won't be the only dealer in town focusing on decking. In many markets, however, there's still huge opportunity to be better at helping homeowners through the process. That can start with a beautiful display that inspires, so consider having one of your deck builder customers build your display for you in exchange for you recommending them as a provider or recognizing them with a sign on the display.
- Product Improvement: The original composite decking of 15 years ago would barely recognize the beautiful, durable capped composites and PVC products dominating the market today. These products have come a long way in a short time and are getting closer to the "no maintenance" dream.
- Distribution Can Make It Easier: One downside of the customization aspect of decking is that inventory can be a nightmare, especially on the railing side, with many materials, colors, manufacturers, infill options, and more cluttering up your warehouse/showroom. If you don't have the racking space, holding enough inventory of the decking itself can be a challenge but, if you don't have product readily available, you aren't getting the sale, so what's a dealer to do? Partner with a distributor that has a strong brand, great inventory position and makes regular deliveries to take away some of that burden.
It's not too late to take advantage of the decking and outdoor living trend this year — talk to your Huttig OSR about the first steps you can take to start taking advantage!