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 FEATURED IN:
CE Pro, September 1999
by: Kurt Scherf, Parks Associates
If the installing dealer can be successful in creating and maintaining a solid working
relationship with builders or manufacturers of home systems, the benefits can flow both
ways. As was indicated in the May 1999 issue of CE Pro, the rapid growth of the structured
wiring industry is likely to create more opportunities for the dealer to work with such
big name companies as FutureSmart Networks Inc., IBM Corp., Lucent Technologies Inc., OnQ
Technologies Inc., and others. And although the new housing market can be lucrative for
the integrator who can work successfully with the manufacturer and builder, the remodeling
contractor can also become an important partner, a new study indicates.
The study from the Joint Center for Housing Studies at Harvard University - Improving
America's Housing indicates that the residential remodeling market is a $150 billion
industry, accounting for 2% of the nation's gross domestic product (GDP). Because these
figures don't take into account the additional revenue generated by home remodeling - the
purchase of home furnishings, major appliances, and lawn and garden products, the report
says that the remodeling industry "now rivals home building in size." This
industry is expected to maintain its strong growth for a number of reasons, including:
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An aging housing stock (the report indicates that the median age of both owner- and
renter-occupied homes in the US is now approaching 30 years).
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A growing "special needs" population that primarily consists of the elderly
and persons with physical disabilities.
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The aging of the "baby boom" generation seeking to stay in their current homes
while increasing their home's comfort and safety.
The Opportunity for the Installing Dealer
Improving America's Housing projects that the average growth in remodeling
expenditures will grow 2% between 1995 and 2010. Although do-it-yourself (DIY) remodeling
will remain popular with many home owners (Figure 1), the report indicates that the market
for professionally installed systems will grow faster than that for the DIY market (Figure
2).
Figure 1
Figure 2
The growth of the professional remodeling market is likely to create some new
partnerships for the general remodeling contractor (and subsequently the systems
integrator). According to the Joint Center's report, general remodeling contractors are
now beginning to forge alliances with retailers to perform installations. Consumers, the
report notes, are becoming increasingly "brand conscious" when it comes to home
projects, and are therefore more likely to go to a lumberyard or a home center to identify
a contractor.
Already, there are signs that more general contractors are forging partnerships with
retailers. It is likely, the report indicated, that more high-end general remodeling
contractors and those "serving the vast middle market will come under increasing
pressure to work through retailers' installed sales programs." In a similar light,
more manufacturers are providing training and certification to contractors. This may well
present another opportunity for the systems integrator. "Such certification
programs," the report concluded, "may grow in popularity as distributors
pressure their suppliers to ensure that the installation is done by qualified
contractors."
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