Store fixture demand grew 5 percent in 2007, which is down slightly from 8 percent growth in 2006. "While 2007 has been another good growth year, we're optimistic with a bunch of question marks about what to expect in 2008," says Klein Merriman, executive director of the National Association of Store Fixture Manufacturers in Hollywood, Fla.
"The economy is strong, but I'm concerned about the lingering effects of the housing slump," says Jack Hale, president and CEO of T.J. Hale, Menomonee Falls, Wis., and president of NASFM. "We really haven't had a credit crunch but a wake up call, which will lead to slower growth through 2008."
While retail sales have been strong, fixture manufacturers are closely watching certain macroeconomic facets of the economy. "The housing slump and the falling dollar all affect the fixture industry as well as everyday challenges, such as material price increases, healthcare and the cost of oil," says Merriman.
"We're a lagging industry, and if there were an economic downturn we wouldn't feel it right away," comments Hale. "By the same token, when we come out of a downturn it takes a while for the fixture industry to pick up steam."
Adapting to change
As the fixture industry becomes more global, its focus is becoming broader. Merriman observes that since 2000, the roles of imports and global sourcing have grown and NASFM members have had to adapt quickly. "The kinds of fixtures that make the most sense to import tend to be items with long lead times, high labor content and large quantities"
At some point, China will adapt to the industry's speed to market with short lead times, comments Hale. In the meantime, U.S. fixture manufacturers are expanding their scope of services and using short lead times to their advantage.
"Years ago, we may have categorized ourselves as store fixture manufacturers but now by necessity we have morphed into a provider of traditional store fixtures, logistic managers, and helping retailers solve engineering or design problems," says Hale. "Because retailers have to quickly respond to their competition, they want us to move at breakneck speed. It's our job to figure out retailers' needs and respond to them."
Automating manufacturing operations and reinvesting in equipment is another way fixture companies are competing with China, comments Merriman. "They need to respond quickly and cost competitively, which may mean sourcing it internationally or manufacturing it more efficiently. Our members have been flexible and have responded to changing demands very well."
"We've had to become imaginative and we certainly are problem solvers as retailers toss a lot of ideas our way, and if we can't solve the problem the competition will," says Hale.
According to NASFM's 2007 Industry Financial Performance Report, the average fixture company has about $18 million in sales, occupies 144,000 square feet and has about 100 employees. However, that is not a complete picture of the industry. "There are few very large firms that have $100 million in sales. The industry is quite segmented," says Hale.
As a result, many fixture manufactures have a large concentration of sales with a few customers. "Most fixture companies have their own market segment, which means working with two or three big clients," he says. "We need to thoroughly understand a client's store concepts and thought processes as well as handle the logistics and installation. It's hard to understand a large number of retailers' needs."
"We can't be all things to all people," says Hale. "In our industry, we have to understand where our key strengths are and use them because that's the way to prosper."
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