Are things getting better for "independents" in the window and door business?

John G. Swanson
November 14, 2007


The Talk, Page 2...

Survey Results for 11/14/2007:

Are things getting better for "independents" in the window and door business?

No—the big guys continue to make it tougher every day.





Yes, but it's a temporary reprieve due to weak market conditions.





Yes—there's a real shift in customer attitudes.





No, but we've never felt threatened by them in our business.





 Last week, I mentioned an observation from Greg Brooks, a consultant to the lumber and building materials field, who spoke at the recent AMD convention and exhibition. While he was hesitant to make a specific prediction on when it would happen, his general topic was what the recovery will look like for the building products field when it eventually comes.

Brooks suggested when the recovery does come, the environment may be better for “independents.” To offer a few more details, he explained the economies of scale have not added up for big companies to a huge advantage. On the new construction side, he pointed to smaller production builders who found they could do things just as efficiently as the nation’s biggest builders could. On the remodeling and replacement side, he pointed to the fact that in most markets, locals are effectively competing with Home Depot on price.

That was the basis for last week’s poll question. I wanted to see if you saw any similar threads within the window and door business. And the results, I have to say, are unequivocal. More than three quarters of our respondents see the big guys of our industry making it tougher for the independent every day.

One reader, a window and door dealer, even shared his thoughts on the topic and pointed to power of the “bigger stick” wielded to drive both pricing and exclusivity deals. “We are currently a window ‘supermarket,’” he reports. “Do we feel pressure from Home Depot’s relationship with Andersen? You bet. And although the closest Menard’s is a couple hours away, does that affect Jeld-Wen business? Of course.”

Our dealer sees the big box store doing better with the “impulse buyer,” either homeowner or contractor. “We compete best when we can talk to the customer face to face and show them options,” he wrote. “In a perfect world, that would happen all the time, but all too often we don’t get that opportunity.”

He sees the situation becoming tougher in the near future, as larger manufacturers “start to draw pretty stark lines in the sand” as to which customers and channels they will favor. “They are increasingly discovering that the closer relationships they build with fewer committed dealers far outstrip benefits with many dabblers in a line. Will one or more of the companies we currently sell come to us in the near future and require us to drop a competitor and make a stronger commitment to their product? Yes, they will is the answer. Since these companies are so large and diverse today, they can in essence offer a complete line of products from low-end to high-end custom. And if we, the independent, don’t make those kinds of commitments, then either a big player will, or worse yet, another independent will come to our market making that strong product commitment.”

Our reader does see big manufacturers becoming a bit more wary of commitments to the big boxes, however, pointing to examples of companies that have turned around and found they no longer have that business. In other words, it may not be easy for any size company these days.

“Ultimately, there will be a place for the large pro dealers, big boxes and independents to coexist, but we have a lot of shake out left on both sides of the equation before there is a true equilibrium,” he notes. “Economies of scale are all well and good, but at the end of the day it still takes great selling skills and product knowledge to really close the deal with the discerning customer, which is where, hopefully, the independents will always have the edge.”

I thought it was interesting that he closed on an optimistic note. Despite this week’s poll results, I think smaller (and even mid-sized) companies in our business share that optimism. As evidence, I’ll point to data from our recently concluded 2008 Industry Pulse study, to be featured in January’s Window & Door.

Asked about the outlook for their company’s business in 2008, more than half the distributors and dealers with sales of less than $100 million foresee their sales increasing next year. About 40 percent of the dealers and distributors with sales of more than $100 million foresee increases in their business.

The same pattern is evident among window and door manufacturers. More than 60 percent of the manufacturers with annual sales of less than $100 million foresee growing sales next year. Only 50 percent of the manufacturers with annual sales of more than $100 million say they expect their company sales to grow next year.

In other words, the small and “not so big” within our industry are more optimistic than the big boys. No one expects things will get any easier for independents, but it’s clear to me they still see plenty of opportunities.

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