SHUTTER MARKET REVIEW
How
Big Is Big?
The industry's billion-dollar baby keeps growing.
by Howard Shingle & Kathleen Stoehr
The window
coverings industry has seen this sort of thing before: a product
surges to popularity and everybody wants to jump on the bandwagon.
Perhaps that’s why dealers and fabricators today are more cautious.
They have questions: How big? How much? How far will it go? What
do I need to know?
For this year’s Shutter Market Review Draperies & Window
Coverings asked these questions of top shutter manufacturers and
suppliers, and their answers indicate this product hasn’t peaked
yet.
THE BIG QUESTION
Just how big is the U.S. shutter market? That’s the question
everyone wants answered, but few are willing to venture putting
an actual dollar figure on it—at least not publicly. Industry
sources have estimated shutters at about 14 percent of the total
window coverings market. So then that depends on how much you think
the total market is worth. Again, industry sources have put the
total market at anywhere between $5.5 billion and $7 billion.
The problem is that this industry is so segmented between manufacturers,
fabricators, wholesalers, dealers and those that do all or some
of each—and the same goes for any segment of it. “The
[shutter] industry continues to be a ‘cottage industry,’
which makes it difficult to get accurate data on total volume or
revenues for U.S. and imported sales,” says Arthur K. White,
Kennedy-White Shutter Corp., Bonita Springs, FL. “Estimates
tend to run in the $650 million to $750 million range,” he
adds.
Another, and perhaps more interesting, way to look at it is, what
is this segment worth at the retail level? Quite a lot. “Combining
the wood, vinyl and composite segments of the shutter industry,
we estimate the shutter market at over a billion dollars in retail
sales a year,” says Christine Kane, brand manager for Heritance®
hardwood shutters from Hunter Douglas, Upper Saddle River, NJ.
WHERE AND WHY?
With a market that size, the next question, inevitably, is, where
is it going? Simply put: “The market is growing. Shutters are
very popular,” says Lori Underdahl, Pinecrest, Minneapolis,
MN. Without exception, our industry leaders agree.
“Sales are increasing with new customers—people are on
board that were not selling shutters before,” says Amir Moradi,
brand manager for Hunter Douglas’ Palm Beach™ Custom Shutters.
“Every product has a bell curve and shutters have not peaked
yet. Awareness of shutters is growing and the options and colors
are increasing. There are more manufacturers and distributors and
more people involved.”
“Within the last two years, Hunter Douglas has helped set up
15 manufacturing locations across the United States to build our
custom Heritance® hardwood shutters,” adds Kane. “Independent
and company-owned Hunter Douglas fabricators have made significant
investments precisely because of the continued and exceptional growth
that is occurring in this segment of the window coverings industry.”
Even better, shutters seem to have broken out of any regional boundaries
where they might have enjoyed particular popularity. “As we
predicted earlier this year,” says Peter Wattiker, director
of new business development, ITA. Inc., Saint Augustine, FL, “shutters
continue to expand beyond traditional Sunbelt boundaries to markets
throughout the country.”
The reason for this, Wattiker adds, is that shutters’ popularity
is driven by several factors:
• Shutters open another avenue of individual expression for
decorators and consumers, offering a unique design element that
helps make a personal style statement.
• New shutter materials and technologies offer greater affordability,
more diversified design options and versatile light control.
• New technologies have also enabled great strides in product
quality, stimulating wider acceptance and appeal of composite shutters.
• There is also much greater consumer awareness of shutters,
due to intensive marketing efforts by the industry. “The appearance
of shutters in even the small, regional trade shows is a relatively
new phenomenon that shows how much shutters have caught on at the
grass-roots level,” Wattiker says.
In a classic case of quid pro quo, the shutter market grows as more
products become available, which creates even more demand. “The
consumer demand is a direct response to the wide variety of competitively
priced products out there today,” says Shane Brunell, shutter
product manager, Woodwinds® Plantation Shutters and Specialty
Shapes, Comfortex Window Fashions, Maplewood, NY. “Current
design trends have also generated a renewed interest in shutters.”
Brant O’Hair, O’Hair Shutters, Lubbock, TX, echoes that
assessment. “The shutter market continues to grow with greater
availability of products and the interest generated through promotion
of those products. In spite of much new competition, retail prices
are generally holding. This is encouraging when compared to the
price cycles experienced in horizontal blinds.”
In some cases, Arthur White says, specific product styles are still
going strong adding to the longevity of shutters. “I feel the
‘new’ plantation shutters with the larger louver sizes
are in the early second stage of its product cycle. The timeless
look and the casual feel shutters provide make it desirable to many
of today’s homebuyers. It is a product that will not clash
with any style of decorating a homeowner may have or change to.”
It’s not all good news, however, if increased product availability
serves to drive down prices. “With the insurgence of suppliers
and new products entering the shutter market, many of them dragging
pricing downward, shutters—which were primarily a premium-priced
product—have increasingly become a low-cost window covering
product that more and more consumers are finding themselves able
to afford,” says Kane.
“While the size of the shutter market is increasing, dealers
are seeing their profits shrinking. Lower prices make it difficult
for dealers to maintain the same profit dollars and meet their customer’s
needs for quality and service. Carrying a solid brand name, and
maximizing the reputation the brand affords, will help protect margins
and keep dealers and designers in business for years to come,”
she says.
Tom Connell, executive vice president, Gulf Coast Window Covering,
Houston, TX, calls the growth in the shutter market “explosive.”
But he adds that consumers are becoming more demanding. “Today’s
very knowledgeable and informed consumers are demanding a product
that not only provides a comfort level for their homes but also
justifies the added expense of custom-built shutters,” he says.
“Consumers are also willing to pay more for any added features
that a shutter may offer. Because the purchase of shutters is an
investment in their homes, consumers are looking closely at the
details of shutter production such as the quality of the shutter
materials, how the product is joined together, they are looking
beyond the surface of the finish, the professionalism of both the
dealer and the installer, and turnaround time,” he says.
Homeowners, apparently, are still willing to make the investment.
“The market for shutters in general and ShutterSmart in particular
is certainly growing, as more consumers are upgrading their homes
with higher-end window coverings,” says Viken Ohanesian, ShutterSmart,
a division of US Polymers Inc., Commerce, CA.
MAKING THE INVESTMENT
Will this trend continue? Home-owners these days face myriad options
for where to spend their disposable incomes, are they still willing
to invest in upgrading their homes? Apparently so.
“There is significant growth in the affluent middle-class population,”
says Ohanesian “and these homeowners are upgrading to quality
high-end.”
The shutter industry, says Connell, has been aided by a favorable
market. “The healthy economy and manageable interest rates
will continue to spur housing and remodeling, thus making family
budgets more manageable and able to purchase these upgrade products
for their home.”
Increasingly, consumers are seeing both aesthetic and financial
benefits to shutters. “Many homeowners are willing to invest
in interior shutters since shutter panels are permanent architectural
accents which help define the structure and layout of the room,”
says Brunell.
“This product is a long-term investment in the décor
of any home.” says Moradi. “Shutters were being used mainly
in family rooms, but now with the increased popularity we see them
being used in bedrooms, living rooms and dining rooms—basically
throughout the house. Shutters are a multi-faceted product. They
have superb functionality and are room-darkening as well.
“Most window covering products have a three- to four-year cycle
and then they are replaced; they tend to be color and trend oriented.
Shutters have a 10- to15-year cycle,” he adds.
The trend to upgrade interiors using shutters fits the overall tendency
of homeowners to add higher-end products to their homes during remodeling.
Hunter Douglas’ Kane says this pattern has led to a number
of product innovations.
“The last several years have seen the demand for French doors
increase as many homeowners are opting to install French doors rather
than the usual sliding glass patio doors,” she says. “These
doors often feature lever-type handles that typically interfere
with standard shutter panel installation. Hunter Douglas has been
keeping abreast of these trends and offers a new French door cut-out
that makes it easier to order and operate shutters on these popular
doors. Additionally, the new TruView™ Rear Tilt system . .
. offers a discreet operating method that blends into the rear of
the product.”
For consumers, the result is increased value. “Homeowners are
recognizing more and more the impact of interior shutters on home
appraisals,” notes Brant O’Hair. “The lasting value
of a proper custom shutter installation should be and is being recognized
as a ‘blue chip’ investment. Homeowners, however, need
to be very cautious about the longevity of the specific shutters
being considered.”
Arthur White of Kennedy-White says many homeowners are replacing
or adding additional shutters to their homes because they are a
product “that an appraiser would include when valuing a home,
which provides a real return on investment for the purchaser.”
Pinecrest’s Underdahl agrees: “I have even seen that they
are putting their [shutter] quotations into their mortgages.”
But ITA’s Peter Wattiker adds that well-made shutters aren’t
necessarily a large investment anymore. “Thanks to lower prices
made possible by today’s manufacturing efficiencies, the investment
required is not a major one,” he says. “ITA’s LaPlaya
Shutters were engineered from the beginning to allow easy, high-efficiency
production. They require no sanding or painting, and can be quickly
produced using only standard shutter fabrication equipment, with
low inventory levels, less waste and short production times. These
cost-efficiencies enable low prices to be passed directly on to
consumers.”
WHAT TO WATCH FOR
So is it full speed ahead, then, for the shutters market? Not necessarily.
There are serious issues to be faced. “Price and quality,”
says Underdahl.
And this is nothing new, adds White. “Continued growth of the
composite, price-driven segment of the market will continue to erode
wood purchases. With new entrants into the market almost weekly,
buyers and retailers are going to have to scrutinize products very
carefully. Some will not be around very long, while others will
become service/warrantee issues in the future.
“Secondly, how long customers are willing to wait for the product
to be delivered will always be an issue. While almost all products
can be delivered in a few weeks, shutters continue to take substantially
longer.”
“We’ve seen lead time as a significant issue,” agrees
Ohanesian, “and ShutterSmart has focused its energies on delivering
high-quality vinyl-clad wood shutters in under two weeks.”
Comfortex’s Brunell sees three things affecting the shutter
market in 2005: 1) The attractiveness of pricing to consumers; 2)
The presence of imported shutters alongside domestic shutters in
the marketplace; 3) Evolving design trends.
“The key issue is the influx of low-priced, low-quality products,”
says Moradi. “As these products are strictly price-driven it
deteriorates the market and makes educating the customer more challenging.
The customer needs to do more research before investing in shutters
and find out if the brand they want to buy will still be there 10
years from now.”
It doesn’t really matter where low-priced and price-driven
products come from, but for most in this market it’s a reference
to products coming from offshore, which typically are seen as offering
lower prices, lower margins and lower service levels. “It’s
important that dealers and designers focus on what they can provide
that other import products sacrifice for their low-cost positioning,”
advises Kane. “This is the platform on which independent dealers
and designers can most effectively compete.”
Continued success, O’Hair adds, is up to dealers. “Custom
shutters have always generated the most difficult and challenging
work in window treatments. The development and success of qualified
retailers specializing in custom shutter work has thus been the
watershed factor in the growth of the interior shutter market. This
will continue as an issue inherent to the industry.”
SOLUTIONS
As one might expect, our industry leaders have plans addressing
these problems — starting with the delivery issue.
“We have taken steps to provide the products that the consumer
is asking for, and have had great success with our LaPlaya brand
composite shutter. We are currently shipping LaPlaya in one week
and our wood shutters in two, and we anticipate by January of ’05
having processes in place to ship both products in three days from
day of order,” says Arthur White of Kennedy-White Shutter.
“ShutterSmart has focused on making both vinyl-clad wood and
traditional wood shutters in two weeks. To keep our focus on quality
and selection, we also carry over 14 frame types among our wood
and shutter lines,” says Ohanesian.
“A key competitive issue in the future will be a company’s
ability to shorten time-to-market for a product such as shutters,
which will continue to experience major growth in mass appeal,”
says Peter Wattiker. “ITA’s efficient production techniques,
far-reaching, rapid-response delivery capabilities and dedicated
customer support ensure smooth operations for fabricators, shorter
lead times and reliable product availability for designers and retailers.
“ITA continues to meet the pricing challenge by introducing
new, high-efficiency production methods, materials and plant management
techniques. Complete turnkey manufacturing and marketing support
from ITA will enable fabricators to quickly enter and begin profiting
from this growing market.
“Ultimately,” he adds, “we’re confident that
superior products will always be able to stand up to competition
through our continuous innovations in design and engineering.”
Another way to meet the challenges ahead is to offer product variety.
“We have been in business for 50 years. We have the largest
array of designs available to the market,” says Pinecrest’s
Underdahl.
“Comfortex is currently developing new ways to expand the Woodwinds
Shutter line to embrace the latest interior fashions,” says
Brunell. “Woodwinds Plantation Shutters are a high-quality,
yet competitively priced alternative to more expensive shutter varieties.
Woodwinds Shutters are proudly made in the United States, which
allows for quicker delivery.”
Another line of defense is customer support. “The success of
O’Hair Shutters, Ltd. will depend on our ability to properly
support our clientele, custom shutter specialists,” says Brant
O’Hair. “Many new product line additions are being developed
to enhance the range and capacities of our customers. Many new marketing
programs are coming on line to specifically assist customers in
their marketing. The centerpiece of these new programs is the Homeowners
Transferable Limited Warranty™. To our knowledge, it is the
first consumer warranty on any window covering to be transferable
from one homeowner to the next. By its introduction, we are challenging
the competition, especially the faux wood shutter producers, to
‘get real’ on their warranties. Many consumers are spending
significant dollars on products that are questionable in longevity.
We intend to press this issue in the marketplace.”
“Today, more and more consumers are recognizing the value in
purchasing a brand name product that they know and trust. Hunter
Douglas has one of the strongest brand names in the business and
takes prides in ensuring that all of its customers have a thoroughly
satisfying experience with their products. The company is committed
to this promise and is recognized as offering the most comprehensive
Lifetime Limited Warranty in the industry—and they honor that
promise. Heritance hardwood shutters from Hunter Douglas offer a
premium hardwood shutter with the shortest lead times in the industry
and are focused on ensuring success for our select group of authorized
dealers,” says Kane.
“The best way to counter the competition in shutters is with
quality and value and not to compromise on price,” says Moradi.
“The Palm Beach shutter is all about quality. Constructed from
an outdoor grade poly satin vinyl compound, it is available in two
styles: Lantana™ with a patented gear design that eliminates
the tilt bar and Palmetto™ with the traditional tilt bar. We
keep improving and adding value to this product line. With two new
enhancements this year Palm Beach is better than ever: an exclusive,
new No-Magnet Locking System that eliminates the use of magnets
and a new Concealed Louver Cap for a very aesthetically pleasing
appearance.
“Customers have to spend a little more for this excellent product
and there is always the temptation to go with the low-end, low-price
item. But when it comes to shutters, let’s ask ourselves what
is the price of quality? It is obvious you will pay a lot more over
the 10 to 15 years when you have to replace the low-end item that
does not function anymore, while the Palm Beach Shutter will still
look and perform beautifully 10 years from now. The long-term cost
of the low-end item is much higher. Educate your customer to compare
the value and features when investing in shutters.”
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