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Closets Manufacturer Business Profile Study 2008

Closets Manufacturer Business Profile Study 2008. presents:. Conducted by Vance Research Services. Background.

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Closets Manufacturer Business Profile Study 2008

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  1. Closets Manufacturer Business Profile Study2008 presents: Conducted by Vance Research Services

  2. Background • CLOSETS magazine is a bi-monthly publication of Vance Publishing Corporation. CLOSETS magazine includes case histories of unique and innovative projects, discusses smart business practices and presents the latest in products and services to closet/garage manufacturers & suppliers, builders, architects, designers and remodelers. • For the fourth time, the management of CLOSETS magazine commissioned Vance Research Services (VRS) to conduct a survey to obtain a business profile of closet/garage/home organization system manufacturers.

  3. Research Objectives • The specific objectives of this research investigation were to survey • closet/garage/home organization manufacturers to determine: • Percentage of 2007 total business revenue generated by closet and/or garage systems/components. • Average cost and square footage of master bedroom closets built in 2007. • Typical cost per garage system installed in 2007. • Whether they have a showroom. • Number of employees. • Percentage rates for closing sales. • How they have established relationships with builders and have closet systems in builders’ model homes. • Whether 2007 total gross sales for all closet/garage/home organization projects changed compared to 2006 and 2005. • Percentage of 2007 gross sales by type of organization system. • Most popular upgrades for closet systems and garage systems. • Most effective marketing vehicles.

  4. Research Methodology – Survey Overview • Vance Research Services (VRS) handled all the field work for this project. • E-mail sent on January 14, 2008. • Net mailing to 628 Top Shelf Advisors Panel members. • A reminder e-mail was sent on January 18, 2008 to non-respondents. • By final closing date of January 26, 2008 a total of 148 panelists had responded, a 17% response. • The following report is based on this response. A total of 109 closet/garage/home organization manufacturers completed the survey.

  5. Executive Summary • 2007 Closets and Home Organization Systems Revenue Pages 9-14 • The majority of manufacturers (70%) indicate that closets and home organization systems are the primary product their company manufactures. • On average, 70% of the manufacturers’ 2007 total business revenue came from closets and garage systems. • More than half (53%) of manufacturers’ gross sales increased in 2007. • Master bedroom closets gross sales have grown the most since 2006 when compared to sales for systems in other areas of the house. • On average manufacturers spend 42% of their yearly profits on operations. • Closet and Garage Systems – 2007 Pages 15-20 • On average, manufacturers installed 382 closet and/or garage systems in 2007. • On average, manufacturers’ total gross sales for all home storage/organization systems was $1,203,050 in 2007. • The average size of an installed mater bedroom closet built in 2007 is 50 square feet. • Manufacturers charged an average $4,268 for installing a master bedroom closet system in 2007. • The typical cost for a garage system installed in 2007 is $5,354.

  6. Executive Summary • Materials Used for Closet Systems Pages 21-25 • The majority of closet systems installed are melamine. • The majority of manufacturers indicate white is the color of melamine most commonly requested. • The most popular(54%) closet hardware finish is stainless steel. • The number of companies that manufacture components in-house and those that outsource is virtually equal. • Closets and Garage Systems Upgrades Pages 26-28 • Almost two-thirds (61%) of manufacturers indicate drawers are the most popular closet upgrade. • The majority (79%) of manufacturers report cabinets as the most popular upgrade for garage organization systems. • Showrooms Pages 29-31 • More than half (54%) of the manufacturers have a showroom. • On average, manufacturers that have a showroom have one showroom. • Established Relationship with Builders Pages 32-35 • 72% of manufacturers have an established relationship with builders. • About two-thirds (65%) of manufacturers have closet/home organization systems in builders’ model homes. • Having a relationship with a builder and a closet system in their model homes increases gross sales significantly.

  7. Executive Summary • Demographics Pages 36-40 • The majority of respondents primarily manufacture closets & home organization systems. • On average, manufacturers’ designers percentage rates for closing sales is 64%. • The average number of employees is 26. • All regions of the United States are represented. • Yearly ComparisonsPages 41-42 • Sales have seen a slight decline when compared to 2006. • Marketing VehiclesPages 43-48 • Internet/Web sites (61%) and Yellow Pages (56%) are most used marketing vehicles. • Manufacturers believe the Yellow Pages (24%) is the most effective marketing vehicle. • Manufacturers and consumers view most effective marketing vehicles differently.

  8. Detailed Findings

  9. 2007 Closets and Home Organization Systems Revenue

  10. The majority of manufacturers (70%) indicate that closets and home organization systems are the primary product their company manufactures. Q: What is the primary product your company manufactures? Base = 109

  11. On average, 70% of the manufacturers’ 2007 total business revenue came from closets and garage systems. Q: What percentage of your total business revenue came from closet and/or garage systems/components in 2007? Mean = 70% Nearly one quarter of manufacturers (23%) report 100% of their total business revenue came from closets and garage systems. Base = 109

  12. More than half (53%) of manufacturers’ gross sales increased in 2007. Q: Did your 2007 total gross sales for all closet/garage/home organization systems increase, decrease or stay the same as compared to 2006 gross sales? 29% of manufacturers report that their 2007 total gross sales for closet/garage/home organization systems decreased as compared to 2006. Base = 109 Q: By what percent did your 2007 total gross sales for all closet/garage/home organization systems increase compared to 2006 total gross sales? Base = 32

  13. Master bedroom closets gross sales have grown the most since 2006 when compared to sales for systems in other areas of the house. Q: Which of the following areas has grown the most in gross sales in 2007 compared to 2006? 43% of manufacturers claim that master bedroom closets gross sales have grown the most compared to 2006. Garages (17%) home offices (17%) and kitchens (10%) follow. Base = 109

  14. On average manufacturers spend 42% of their yearly profits on operations. Q: How do you allocate this? Mean Summary Marketing (26%) and sales (20%) are the two main areas where operation funding is allocated. Base = 109

  15. Closet and Garage Systems - 2007

  16. On average, manufacturers installed 382 closet and/or garage systems in 2007. Q: How many closet/garage systems did your company build or install in 2007?(Note: If more than one was installed at a particular location, please count each system separately.) On average, manufacturers installed 382 closet/garage systems in 2007. This is a decrease of 14% when compared to 2006 when manufacturers installed an average of 446 systems. Mean = 382 Base = 109

  17. On average, manufacturers’ total gross sales for all home storage/organization systems was $1,203,050 in 2007. Q: To your best estimate, what was your company’s total gross sales for all home storage/organization systems for 2007? On average, manufacturers’ total gross sales for all home storage/organization systems was $1,203,050 in 2007. Base = 109

  18. The average size of an installed master bedroom closet built in 2007 is 50 square feet. Q: What is the average square footage per master bedroom closet that your company installed in 2007? The average size of master bedroom closets built by these manufacturers in 2007 is 50 square feet. Slightly less than one-third (29%) of manufacturers indicate the square footage per master bedroom closet increased in 2007 compared to 2006. Mean = 50 sq. ft. Q: Is the square footage for your typical master bedroom closet installations more, less or about the same in 2007 versus 2006? Base = 109

  19. Manufacturers charged an average $4,268 for a master bedroom closet system in 2007. Q: What is the typical cost to the customer per master bedroom closet that your company installed in 2007? Mean Total = $4,268 Manufacturers charged an average $4,268 for a master bedroom closet in 2007. This is slightly down from 2006, when manufacturers charged an average $4,368 for a master bedroom closet. Base = 143

  20. The typical cost for a garage system installed in 2007 is $5,354. Q: What is the typical cost to the customer per garage system that your company installed in 2007? Manufacturers charged an average $5,354 for a garage system in 2007. This is slightly down from 2006 when manufacturers charged an average $5,874 for a garage system. Mean Total = $5,354 Base = 109

  21. Materials Used for Closet Systems

  22. The majority of closet systems installed are melamine. Q: What percentage of your closet systems are: Mean Summary On average, more two-thirds (72%) of these manufacturers closet systems are melamine.

  23. The majority of manufacturers indicate white is the color of melamine most commonly requested*. Q: Please rank the following colors with 1=most common and 4=least common requested colors for melamine systems? * Based on those who manufacture melamine closet systems Mean Summary Base = 109 23 © Property of Vance Publishing Corporation. Report may not be duplicated without expressed written consent.

  24. The majority (54%) of closet hardware finishes are stainless steel. Q: What percentage of your closet hardware finishes are: Mean Summary Oiled bronze (10%) is the second most popular closet hardware finish among manufacturers.

  25. The number of companies that manufacture components in-house and those that outsource is virtually equal. Q: What percent of your components are: Mean Summary Base = 109

  26. Closet and Garage Systems Upgrades

  27. Almost two-thirds (61%) of manufacturers indicate drawers are the most popular closet upgrade. Q: Please indicate the five most popular upgrades for closet or home organization products. Manufacturers report that drawers (61%) are the most popular upgrade for closets, followed by valet rods (58%), tie/belt racks (54%) and jewelry tray inserts (53%). Base = 109

  28. The majority (79%) of manufacturers report cabinets as the most popular upgrade for garage organization systems. Q: Please indicate the 5 most popular upgrades for garages. Manufacturers report that cabinets (79%) are the most popular upgrade for garage organization systems, followed by workbenches (68%) and shelves (66%). Base = 109

  29. Showrooms

  30. More than half (54%) of the manufacturers have a showroom. Q: Do you have a showroom? 54% of the manufacturers have a showroom. Those manufacturers with a showroom experienced significantly higher gross sales in 2007 than those who do not have a showroom - - an average 61% higher. 2007 Mean Total Gross Sales Base = 109

  31. On average, manufacturers that have a showroom have one showroom. Q: How many showrooms do you have? The average number of showrooms for manufacturers is 1.3, with an average size of 1,613 sq. ft. Nearly two-thirds (53%) of the manufacturers have remodeled a showroom in the past 12 months, with the average cost of this remodel being $5,096. Of the 14% who added a retail showroom in the past 12 months, they spent on average $24,999. Of the 14% who added a showroom to their manufacturing facility in the past 12 months, they spent on average $21,874. * Based on those who indicated having a showroom Mean = 1.3 Q: Have you added a showroom, expanded an existing showroom or remodeled a showroom within the past 12 months? Base = 59

  32. Established Relationship with Builders

  33. 72% of manufacturers have an established relationship with builders. Q: Do you have an established relationship with one or more builders to provide closet and/or garage systems in their homes? 72% of these manufacturers have an established relationship with one or more builders to provide closet and/or garage systems in their homes. This is up from 2006 when 62% of manufacturers indicated they had an established relationship with one or more builders. The majority (72%) of those with an established builder relationship began the relationship more than 12 months ago. Base = 109 Q: Did this relationship begin within the past 12 months? Base = 78

  34. About two-thirds (65%) of manufacturers have closet/home organization systems in builders’ model homes. Q: Do you have any closet/home organization systems in any builders’ model homes? 65% of manufacturers that have an established relationship with one or more builders have closet/home organization systems in their model homes. More than two-thirds (71%) charge the builder for the system at a discounted rate. Base = 78 Q: Is the closet/home organization system that is included in the builders’ model home comped or do you charge them for it? Base = 51

  35. Having a relationship with a builder and a closet system in their model homes increases gross sales significantly. 2007 Mean Gross Sales Manufacturers who have an established relationship with builders experienced higher 2007 gross sales than those who do not have a builder relationship - - an average 17% higher.

  36. Demographics

  37. The majority of respondents primarily manufacture closets & home organization systems. Q: What is the primary product that your company manufacturers? 70% of respondents primarily manufacture closets & home organization systems. Base = 109

  38. On average, manufacturers’ designers percentage rates for closing sales is 64%. Q: On average, what are your designer’s percentage rates for closing sales? Mean = 64% Nearly one quarter of manufacturers (23%) report 100% of their total business revenue came from closets and garage systems. Base = 109

  39. The average number of employees is 26. Mean = 26 Base = 109

  40. Midwest South West Northeast All regions of the United States are represented 17% 25% 16% 35% No Response = 7% Base = 109

  41. Yearly Comparisons

  42. Sales have seen a slight decline when compared to 2006. Though gross sales are down 18% when compared to 2003, all other areas have seen an increase since then. This is especially the case when examining the average cost to customer per master bedroom closet system, which is up 21% from 2003.

  43. Marketing Vehicles

  44. Internet/Web sites (61%) and Yellow Pages (56%) are the most used marketing vehicles. Q: Which of the following marketing vehicles do you use? Slightly more than one-third (31%) use postcards/brochure mailers to residences and one-third (30%) advertise in magazines. Base = 109

  45. Manufacturers believe the Yellow Pages (24%) is the most effective marketing vehicle. Q: Which of the following marketing vehicles do you think is most effective? Internet/web sites (18%) are perceived as the next most effective vehicle. Base = 109

  46. Manufacturers and consumers view most effective marketing vehicles differently. 24% of manufacturers believe the Yellow Pages is the most effective marketing tool, however, only 5% of consumers found the company they used in the Yellow Pages. Magazine Ads (58%), displays in retail store (55%) and TV commercials (33%) are most effective marketing vehicles, according to consumers.

  47. Q: Please share with us the most difficult/humorous customer story that you have encountered! • “A recently divorced woman was so thrilled with her master closet, she called to tell me that she and few of her friends where sitting in the closet having champagne and trying on clothes.” ~Closets & home organization systems • “We had a customer that wanted a stage built in his garage with a dancing pole in the middle of it. He wanted the stage to fold up into a cabinet like a Murphy bed. He also requested patterns in the Epoxy floor we installed but only wanted them to show up when the black lights were on. Job completed, satisfied customer.” • ~Garage cabinets and/or systems • “Installed a wall bed in the wrong unit of a complex, and therefore, the client loved it and one sale turned into two, by accident.” • ~Closets & home organization systems

  48. Q: What is the greatest challenge you are facing? • “Educating builders on the value of our service and increasing the allowance of the home. It is easy to show a customer the value of a well designed closet. It a good value as compared to buying free standing furniture for the bedroom. • ~Closets & home organization systems • “Getting customers to pull to trigger. They want to buy but take a little longer to place the order.” ~Closets & home organization systems • “Downturn in the economy.” ~Closets & home organization systems • “In our area declining home sales, inflated condo prices are the biggest challenges. We also have trouble making our builders realize that by adding at the very least double hang shelving in a closet they will enhance their closets at a very minimal cost.” • ~Closets & home organization systems

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