By Wade Vonasek and Matt Warnock
Like many others, the store fixture industry faces challenges in the current economy, but remains hopeful of future opportunities. Read our Woodworking VIPs' opinions about the current state of the industry.
Some see a more customer-oriented approach from retailers in regards to future store fixture design trends.
As with a myriad of industries and companies in present times, the store fixture industry faces a challenging economic environment. In Wood & Wood Products last State of the Industry report on the store fixture industry (October 2007), an overall vibe of growth was prevalent in the companies interviewed, including an upturn in total retail sales and increased retail outlets. But judging from responses for the current report, things have changed to some extent in 2008, with the economy repeatedly being listed as the biggest issue facing the store fixture industry today.
â[The biggest issue is] confidence in the economy,â says Lisa Pelletier-Fekete, president of Modern Woodcrafts LLC. âRetail is projecting their worst holiday season this year, and that directly impacts our volume.â
â[The biggest issue is] probably a stable economy that allows the retailers to grow their business with less risk,â says Wallace Fetzer, president and CEO of Fetzer Architectural Woodwork. âI guess it is kind of like having air to breathe. If we have none, it is all we care about. If we donât, we thrash about trying to get some air quick. The current financial crisis on Wall Street certainly doesnât help.â
The current economy is putting a number of different burdens on businesses, according to Mark Bernhard, president of Bernhard Woodwork. âYouâve got to figure that there are going to be some pressures, purely from the standpoint that people are paying $4 a gallon for gas, with fuel prices going up,â he says. âYouâre going to have wage pressure and youâre going to have commodity pressure, material pressures. Then youâve got healthcare prices going up through the roof. There are some issues on the rollout side of things too. Starbucks is closing 600 stores and Iâve heard that Target has cut back on store construction. That middle market â thereâs going to be some fall out.â
âIn 2008, our sales are just about even with the whole year of 2007,â says Tom Brogle, owner of T.B.âs Custom Woodworking Inc. âOur numbers are up, but our pocketbook is down, because along with more sales come more employees, more materials and more fuel for deliveries.â
|Nearly 50 percent of store fixture and architectural millwork companies surveyed for this article reported some decrease in sales from 2007 to 2008. Photo courtesy of POWERS.|
Looking for the silver lining on the dark cloud of current financial woes is not easy, but something necessary for companies hoping to make it through the times. Looking for the opportunities that do still exist, and planning for when the economy rebounds, is key. Boe Young, vice president of Impressions Marketing Group, says opportunities are unlimited.
âThe store fixture industry is huge and more and more retailers are turning to companies who can offer a complete solutions approach, from strategic design through fabrication and installation,â he says. âWe are fortunate to be in a strong competitive position.â
âThereâs still a lot of work out there,â says Bernhard. âI think for the folks that are in the right niches for the market, thereâs still work out there. There are certain niches that are still going very strong.â
âCompanies have to have an ear to the ground to understand market conditions and how they are changing,â says Jack Hale, chairman of the board for T.J. Hale Co. Inc. and president of the Association for Retail Environments (A.R.E.). âThose who increase value and decrease costs will fare the best.â
âSchools, private institutions and hospitals [are opportunities],â says Pelletier-Fekete. âWe have made significant investments in machinery, software and human capital to help us gain momentum in new markets, in addition to staying competitive in our current niche. The challenge is to bring the work we know that is out there to our plant.â
âIn our case, the way we react is just to do a little more than we are used to doing for the potential new customer,â says Brogle. âIn todayâs environment, for a small shop to survive, it needs to think outside the box.â
|More retailers are turning to companies that offer a complete solutions approach, according to Boe Young of Impressions Marketing Group.|
What Kind of Design Do You Have in Mind?
In regards to current store fixture design trends, thoughts are mixed. Daniel Powers, CEO of POWERS, sees movement away from products that are more environmentally safe. âUnfortunately, lots of very environmentally unfriendly materials [are current design trends],â he says. âMetals, plastics, aluminum, which is probably the worst, and less wood.â
Young disagrees. âWe see a further return and embrace of wood over metal,â he says. âThis is driven by cost as well as the fact that retailers recognize wood as a more environmentally responsible raw material than metal.â
âWe are seeing LED lighting in more than just display cases and a lot more coordination of metal, plastic and lighting with wood products,â adds Pelletier-Fekete.
Fetzer says he sees a more customer-oriented approach from retailers. âI see a movement from functionality to more consumer-friendly products, such as lower displays, softer in presentation,â he says. âRetailers are sacrificing SKU count for a more friendly environment.â
While many consumers see green as the wave of the future, not many people realize that the wood products industry, including store fixtures, has been âgreenâ for years.
âWe are fortunate to work with the most environmentally friendly material in the world â wood,â says Fetzer. âWood captures carbon and is renewable.â
That said, the demand for green in the store fixture industry is growing, just as it is growing in the rest of the woodworking industry. In September, the A.R.E. announced its intention to take a leadership role in the development of green retail environments.
âProviding assistance to members, retailers and the industry for the greening of retail environments is the top priority of the Association for Retail Environments under the new strategic plan,â A.R.E. said in a release. Aided by its 100-member green task force, the association is developing new green initiatives.
Additionally, A.R.E. announced in September that it has joined forces with the U.S. Green Building Council (USGBC) to emphasize its âcommitment to the development of retail environments that are environmentally responsible, profitable and healthy places to work and shop.â
While some are still skeptical on the need for green and weary of the long-term effects it will have on the woodworking industry, more companies are embracing the green movement every day.
âWe have a âGreen Championâ who is responsible for being the focal point of company-wide sustainability/green education, as well as research of raw materials and other processes we can adopt,â says Young.
âThe supply chains for our industry continue to make strides in establishing green products for us,â says Powers. âIn addition, all our customers have indicated an interest in green products.â
âOur current environmental policy is evolving every day as we react to our customer demands,â says Pelletier-Fekete. âThe evolution will continue, as itâs not going away, and we will adapt accordingly. We are not losing jobs because we are unable to provide LEED-certified products. However, we understand the speed at which this movement is progressing, and we are staying on top of it.â
Still, since green building as a formalized movement is relatively young, there are issues to overcome, such as a continued need for education and standardization, as well as a lack of green materials.
âGreen is huge, but the problem is in finding a definition of what green really means,â says Bernhard. âEveryone wants to put their own spin on it. People are asking for green, but everybodyâs definition of green is different."
âGreen materials are in too short a supply and are expensive,â explains Fetzer. âOnly a small percentage of LEED-registered projects are actually certified in the end. This needs to change. Specifications are ahead of the available product.â
|A majority of companies surveyed for this article listed the economy as the number one concern for 2008. Photo courtesy of Impressions Marketing Group.|
Importâs Mixed Bag
When it comes to the store fixture industry, the issue of imports and exports is a mixed bag, with both negative and positive impacts on the industry.
âThe global marketplace is affecting us both negatively and positively,â says Pelletier-Fekete. âOverseas expansion is enabling some of our competition to take their factories abroad to produce equitable products for a fraction of the cost. We do notice, however, European retailers are looking to expand in the United States to take advantage of the weak dollar, which opens up our opportunities to provide millwork packages for their retail expansion programs.â
Traditionally, retail giants conducting massive rollouts with long lead times might be able to source their materials from overseas. Smaller or high-end store requiring custom and semi-custom displays, as well as stores with shorter rollout lead times, typically cannot afford to source their products from overseas.
âImports are not having a significant effect on the wood store fixture industry, at least not from our perspective,â remarks Young. âIn addition to size, shape and weight, most of our clients demand a lead time and run size that is incompatible with sourcing overseas.â
Powers says his company does not feel much impact from overseas imports because, âwe manufacture engineered products, versus catalog or commodity type products.â
On the other hand, with todayâs economic conditions as they are, some companies that have not previously felt the impact of the import market are seeing some of their customers go overseas for their store fixtures.
âFor the first time we are seeing an impact from overseas imports,â says Bernhard.
âOnly one customer has gone overseas to get their goods, so we just ramped it up a little to offset that,â adds Brogle.
As for what the future holds, at this time, no one can really say.
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