4 MAJOR TRENDS AND DEVELOPMENTS IN THE DECKING & RAILING INDUSTRY. Residential Decking & Railing 2015

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1 DEVELOPMENTS IN THE DECKING Residential Decking & Railing 2015

2 1. Composite Decking Is Rapidly Trending to Higher Performance Products The mainstream homeowner market increasingly wants decks that reflect aesthetics and features that used to be almost exclusively targeted only to the affluent end of the market. Composite decking manufacturers have responded, targeting product introductions in the past five years either to higher-priced products or to lower-priced products that provide enhanced performance and aesthetics to still deliver some of the higher-end benefits at a budget price. Many suppliers have adopted a goodbetter-best product tier strategy.

3 2. Homeowners Seek Outdoor Living Space, Decision Process Is All in the Family The trend of homeowners seeking outdoor living space continues and strengthens. Homeowners increasingly see their decks as more than a place to grill dinner but a relatively inexpensive addition to the usable living space of their house. This trend also fosters a mindset that a deck is an outlet for homeowners to be creative with decorating style and self-expression. The decisions on decking projects include both male and female heads of household (males more materials and females more colors and style). Manufacturer marketing materials should be designed to speak to each of these audiences, catering to their portion of the homeowner decision.

4 3. Contractors Important in Homeowner Product Selection Deck builders and remodelers rank among the most important influencers at helping homeowners determine which brand and type of decking and railing product to select. Further, contractors see themselves as being able to steer homeowner product selections toward their recommendations. Top-tier suppliers continue to aggressively promote their brands to specialist deck contractors by offering a variety of services and loyalty programs to contractors. As with dealers, training programs targeted to contractors are an essential part of increasing product knowledge and supplier sales.

5 4. Distributors Continue to Play a Key Role for Composites Two-step distribution is the most widely used path to market for composite decking and railing, followed by the big box channel. The two-step distributors play a critical function in moving products to market. Within the two-step channel, distributors are being pulled by dealers to fulfill more special orders. Increasingly, dealers are holding less inventory and are relying more on special orders, using distributors as their de facto warehouse. Distributors indicate that the trend to more special orders for composites has increased dramatically in recent years. This trend is cutting into distributor margins, as they are finding they cannot pass on all the additional costs associated with such special orders. With lower margins and increased logistics, D&R is falling out of favor among some distributors as a preferred category.

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