The biggest ongoing trend in the decking market has been the replacement of wood components with manufactured alternatives. Manufacturers continue to introduce new products and to add technological enhancements to existing ones.
Pick up any building trade magazine, ProSales included, and you likely will see at least one new decking or railing product. Recent introductions include tougher substrate materials, composites with fire-resistant caps, and even a new fiber cement decking. But are buyers as enthusiastic about these developments as editors seem to be? And if so, how can dealers take advantage?
That these new products are appearing shouldn’t come as a surprise. Consumer demand for decking is strong, and deck builders are busy. “We’re rocking,” says Michael Beaudry, executive VP at the North American Deck and Railing Association (NADRA), which represents manufacturers and deck builders nationwide. “For most of our members, business volume is back to where it was five years ago.” He says that product sales are up in all categories, including wood and composite decking.
As little as three years ago, wood looked like the stronger competitor. The 2013 Residential Decking and Railing study from Principia reported that, on a volume basis, market share of synthetic decking and railing declined slightly, from 16% in 2010 to 15% in 2012.
One explanation for those numbers may have been consumer dissatisfaction with early composites. Charlie Jourdain, president of the California Redwood Association, says that a lot of West Coast contractors have been replacing failed first-generation composites with natural wood. He also says that buyers want the look of real wood and are attracted its environmental benefits. “Ultimately, composites come from oil.”
Of course, high-quality wood decking—whether American species like redwood or tropical hardwoods like ipe—will always find willing buyers. But their taking of share from composites seems to have been short lived. Principia’s most recent publication, the 2015 Residential Decking and Railing study, reported that while wood decking still commands a 71% share of the U.S. market, composites are taking back their lost portion.
Principia’s researchers analyzed sales trends and interviewed thousands of contractors and homeowners, according to Lou Rossi, the company’s principal. What they heard was a renewed and growing interest in composite decking. As a result, they are forecasting a 5% compounded annual growth rate through 2017 in that category, compared to an average growth of 3% for all types of decking.
Rossi believes that as more buyers ask specifically for composites, dealers might want to consider adjusting the mix of decking products they keep in stock.
Another finding of the 2015 research is that most composite growth is happening at the top of the price scale. Rossi says that the mid-range of the decking materials market is not growing, leaving a more polarized market, with treated lumber at one end and high-end composite decking at the other.
The research also found composites taking market share from PVC decking, a shift Rossi attributes to improvements in composite technology in general and capstock in particular. The latest capped composites match PVC in looks and performance—but for less cost. If this trend continues, PVC could prove to be a transitional product. One example of how top-of-the-line composites outperform PVC is the ability to offer dark colors at a lower price point. A composite only requires UV inhibitors in the capstock; with PVC decking, it must be added to the entire board.
But while performance is important, the biggest reason for composite’s growth is better aesthetics. Mitch Cox, a Principia partner, points out that composite technology has finally evolved to where it’s meeting buyer expectations. “Older composites looked like plastic, were prone to fading, and scratched easily,” he says. The latest products overcome those limitations and do a good job of mimicking real wood.
Composite sales are healthy and growing, but no one is taking that for granted. One way manufacturers are encouraging growth is by restructuring their rebate programs. “Dealers are going to see more rebate opportunities,” predicts Brent Gwatney, MoistureShield’s senior VP of sales and marketing. He says that though rebate programs traditionally have benefited distributors, more manufacturers, his company included, are turning their focus to dealers and contractors. For instance, MoistureShield offers a 4% rebate on all purchases after the dealer reaches a defined threshold.
“These people are on the front line,” Gwatney says. “We want to get the money to them to help them market our products.”
The composite market will also benefit from more deck building in general, which is where NADRA has decided to put its efforts. Beaudry estimates that 40 million decks in this country need replacing, and says that the association has been looking for ways to motivate homeowners to get the work done.
The best opportunity may be when a home is put up for sale, and to that end NADRA has partnered with the American Society of Home Inspectors (ASHI), offering ASHI members a four-hour certification course on how to inspect decks and make recommendations. As of November 2015, NADRA had certified 56 inspectors. Beaudry says that one way a dealer could grow its decking business would be to partner with an inspector and offer this service to homeowners.
While decking has seen healthy growth recently, there has been a veritable explosion in the number of new manufactured railing products. Manufactured railings go together more easily and have more predictable costs and performance characteristics than site-built wood railings. They also seem to be preferred by some building inspectors.
“Railings have a lot of code requirements that wood doesn’t necessarily meet if it’s not engineered,” says Ed Peterson, VP of sales at railing manufacturer UltraLox. “More officials are pushing for code compliant products.”
But as with decking, the biggest driver behind the growing popularity of custom railings is the variety of good-looking products. As decks evolve into outdoor living spaces, homeowners are using railings to set their deck apart. On decks that overlook attractive landscapes, for example, many buyers want a railing system that doesn’t block the view. This has helped grow the market share of cable rail and glass panels.
These products are all about aesthetics, with each manufacturer offering lots of choices in posts, rails, and hardware. Although many builders attach cables to site-built wood posts, manufacturers also offer metal posts and rails in tubular or rectangular profiles. Some metal systems come with metal handrails; others can be topped with wood or composite rails.
As decking and railing choices multiply, so does the number of available accessories. With an ever-expanding arrays of lighting, built-in seating, outdoor storage, and manufactured pergolas, the choices seem endless.
Actually, a better word might be “overwhelming.” As the 2015 Principia report put it, SKU propagation is creating distribution stress. “Composite decking and railing suppliers, attempting to offer every possible product that every possible consumer might want, have collectively placed too many products in the market,” it says. “Dealers, as a result, are stocking fewer products and relying instead more on special orders.”
Anything that can help dealers, contractors, and buyers make sense of these choices should help expedite the sales process. Adam Zambanini, VP of marketing at Trex, says that during the coming year his company will be focused on selling collections, pairing particular railings and accessories with particular deck products. A homeowner or contractor will be able to select a package, then bring a bill of materials to the contractor of dealer. “Everyone is focused on products, but we want to focus on marketing,” he says.
A plethora of choices isn’t a bad problem to have. With so many decking, railing, and related products, smart dealers should have no trouble assembling the right mix for their market.