Lumberyards and specialty dealers control the largest portion of the residential windows and patio doors market. Together, they sold 28.5 million units, or more than half of the total market demand in 2014. Home centers have gradually increased their share of this market, particularly the replacement segment.
Approximately one-third of homeowners recently surveyed by Principia indicated that they went to the website of a home center and/ or visited a home center to place an order. One quarter of them also indicated that they purchased installation services as part of the transaction.
Lumberyards have traditionally offered limited installation services. However, these services have been increasing. The primary reason for this trend is to compete more effectively with specialty retailers and home centers who offer similar services to both the homeowner and new construction segments. Additionally, lumberyard customers, specifically builders, lean toward sourcing window and door installation to reduce labor and liability.
Brands play such a critical role among builders and homeowners that the effect is seen across the whole value chain in the residential windows market. Homeowner research shows that selecting a branded window and/ or patio door offers comfort in their decision, yet close to one-third of homeowners could not recall the brand selected when asked to remember.
In contrast, builders and contractors are brand loyal. Contractors and installers mention brand availability as the number one consideration when doing business with lumberyards and others. More than 70% reported that they would purchase from another dealer if their preferred brands were not available with their primary dealers. In fact, most contractors indicated that they would prefer to convince a homeowner to wait rather than suggest other brands.
Similar research conducted with builders and contractors also indicates that these customers are not price-sensitive, and do not purchase strictly based on the best price. In fact, it turns out that price actually does not appear among the top five considerations, but relationships matter and are highly valued. An important aspect of this relationship is the expectation that lumberyards will have technically-competent sales and customer service staff so that business transactions proceed more smoothly, particularly as the trend for online ordering continues to increase.
Building pros also expect that dealers will make their lives easier by having products in stock when they need them, deliver to the job site on time at no charge, and offer them incentives for continuing to do business. The top five areas cited for dealer improvement by builders and contractors (in rank order of stated importance):
1. Apps for easy online ordering
2. Online visualization tool for window and hardware design
3. Loyalty programs, including better program rewards
4. Extended credit
5. More training on product installation
Contractors and builders expect pro dealers to improve their business operations and bring a high level of professionalism and better technology (e.g., ease of ordering, visibility regarding delivery, etc.). These customers continue to operate in an uneven housing market and expect that pro dealers will help them provide ways to lower their cost of doing business. The challenge for pro dealers is to balance brand with service to create value in the customer relationship.