Wood industry representatives from various industry associations were queried on the climate of their wood products market, including expectations for 2013 sales. Below are some additional comments by Klein Merriman, executive director of the Association for Retail Environments.
Wood & Wood Products: Overall, what are your members’ sales expectations for 2013 and how do they compare to 2012 figures?
Klein Merriman: Based on A.R.E.’s Fall 2012 Revenue Survey, A.R.E. member companies overall forecast 10 percent growth for 2013. In the same survey, 59 percent report that they expect their companies’ 2012 profits to have improved over 2011; 24 percent expect little change; and just 17 percent expect to see a decline in profits.
W&WP: What are the biggest challenges to your members and your industry in 2013? What are the biggest opportunities?
Merriman: • Speed will continue to be a critical competitive factor with shorter lead times for both prototypes and production runs.Supplier companies that focus on improving their cycle times to meet these needs should be able to compete on other than just price.
• Elements of the “barbell economy” will continue as companies that serve either the luxury end of the market or the deep discount/dollar store segment should do well.
• Despite stumbles from retailers,some North American retailers continue to place an emphasis on international expansion simply because that’s where the growth is. And they are frequently looking to their North American vendors for assistance in expanding into these emerging markets. This international component presents are series of challenges, and opportunities, for ARE members.
The competitive landscape continues to shift in the retail environments industry. On one hand, the pattern of retail environments companies failing continued in 2012 with, unfortunately, no indication that the pace is likely to slow any time soon. On the other hand, we’ve also seen members broadening their focus by adding new manufacturing capabilities, providing new services, or entering new markets.
W&WP: Are you seeing a big demand for sustainable/green certified products?
Merriman: As retail rebounds, sustainability is once again on store planners’ radar screens. A.R.E.’s Sustainability Council identified several developments, challenges, and opportunities.
1. Sustainability is now assumed.The retail environments industry is far more aware of sustainability than it was a few years ago, and retailers and project teams expect projects to demonstrate some aspects of green building. But specific goals are less common. Often, the level of sustainability and how it is applied is left up to the designer— within the bounds of budgetary and other constraints and usually without much discussion.
2. Certification is rarely the goal.Not every project with sustainable aspects is eligible for certification, but even among those that are, retailers tend to be reluctant to spend the extra money that certification entails. Sustainable strategies, therefore, tend to be less formal, with deciding factors for selecting a strategy varying widely. Some retailers emphasize upfront costs while others are more interested in ROI. Large projects continue to be the most likely to be certified.
3. The focus is on energy.Since energy-saving strategies provide a measurable return, they are often more attractive to retailers than other strategies such as sustainable products that may cost more without a measurable return.
4. FSC continues to dominate product ecolabel requests.Retail specifiers and purchasers now tend to assume that the materials and products used in their stores will include recycled content and contain no added urea formaldehyde, but most leave details up to the designer. Retailers seldom specifically request that products carry ecolabels, but when they do, the one mentioned most often is FSC certification.
5. Customer values matter.Green building strategies and in-store communication are being informed by the values of brands’ target demo- graphics. For instance, stores whose clientele prioritizes air quality as important are telling customers about their use of low-VOC paints and materials without added urea formaldehyde.
Four Challenges To Retail Sustainability
Each market segment faces unique challenges in greening its buildings. A.R.E.’s Sustainability Council identified several characteristics of retail projects that continue to present challenges to green building.
1. Payback time versus remodel schedule.The cycle time for giving stores a fresh look is some- times shorter than the time needed for investment in some sustainable strategies to pay off.
2. The relative speed of retail projects.Even when low-emission materials are used, contaminants accumulated during shipping, storage, and installation can make it difficult for a retail project to pass the air quality test for LEED IAQ 3.2 in the time frame between installation and occupancy. Stores reportedly often fail the first time around, and rapidly approaching grand openings can hinder the ability to pass retests, as time is needed to flush out the space properly. Testing costs can also affect the budget when unexpected retests are required.
3. The preponderance of mixed-profile materials.As lifecycle considerations gain ground in the green building landscape, more attention will be placed on design for disassembly (DfD) for end- of-life management of building materials. Bonding agents may need to be replaced with alternative ways of attaching one material to another so that the materials may be separated for recycling at the end of their useful life. Fixture design can become more complex and require more labor, for example, to replace glue with hardware that might require additional machining of the piece.
4. The complexity of fixture contributions to LEED.Rather than falling under one credit, fixtures may contribute to credits for recycled con- tent, renewable materials, certified wood, regional materials, and low-emitting materials, but only as part of the overall sum of materials on the project. This makes it difficult for fixture suppliers to understand where they fit in, how to market their company’s products, and what documentation to provide. Similarly, it is difficult for designers to elicit the data they need to determine and document credit compliance. In addition to complex calculations, sometimes by component, information on the origin of raw materials is also needed, further complicating matters.
W&WP: Any additional comments and/or observations about the store fixture industry or the woodworking marketplace in general?
Merriman: In an industry whose vendor participants vary so widely in terms of products, materials, size of operation, and types of clients, there really isn’t a “typical” A.R.E. member company. While the statistical typical company represented by our survey results has enjoyed a compound annual growth rate of more than 10 percent over the past three years and expects 10 percent growth again in 2013, the reality has varied widely for individual companies. The “new normal” economy continues to translate into uneven demand and razor-thin profit margins for many of the retail environments companies.
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