By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Registration numbers for next month's CEDIA Expo are running ahead of last year at this time despite the custom industry's slowdown.
At this rate, the convention's Denver finale is on track to beat last year's record-breaking attendance of more than 29,000, CEDIA officials said.
Next year, the show moves to Atlanta for three years, followed by three years in Dallas, because it has outgrown the Denver venue, CEDIA said.
By then, the industry hopes the home-building industry resumes the strong growth that continued almost uninterrupted from 1992 through 2005. This year, in contrast, new single-family housing starts are well into their third consecutive year of double-digit percentage declines, and new-home sales have plummeted in all Census Bureau-reported price ranges since 2006. A declining stock-market and election-year uncertainty could also be contributing to the industry's lethargic growth, marketers said.
"It's rougher this year," admitted Elan president/CTO Bob Farinelli. "Installers' job pipelines are skinnier."
Said CEDIA chairman Utz Baldwin, "There's no tremendous growth this year." The industry's growth this year has slowed to the single digits, he said.
Even high-end custom-home sales, the original driver of the CEDIA business, have taken a hit, said Bob Gartland, president of AVAD (Association of Value Added Distributors). Builders of custom high-end homes began five years ago to build "a ton of spec homes that were sold before they were put on the market, and when the market crashed, they stopped doing it. That speculation is over," he said. Demand for these homes has fallen, he speculates, because potential buyers either couldn't sell their own home or couldn't sell their homes for what they thought they could.
"The statistics suggested there is still single-digit [industry] growth, but I don't know any dealers or vendors who support that," Gartland said following four dealer roundtables, each held in different regions and attended by about 20 installers each. "I think most people are flat to down," whereas last year, "people were up but not a lot."
Elan's Farinelli said he believes the industry's residential-custom sales, excluding displays and PCs, "are probably down overall" in 2008 following 2007 growth that slowed from 2006 levels.
The dealers "with the most positive feedback," said Gartland, target higher-end custom homes whose builders entered into a contract with a consumer to build a house. The latter business model is the "core that launched the [custom-install] business 25 years ago," he said. On the other hand, installers who allied themselves closely with production home builders, particularly high-volume production builders, are in "dire straits," he said.
Even among affluent consumers who are still buying custom homes, the average ticket is heading down, Gartland said. "In the high end, where the job might have been $300,000 two years ago, it's now $220,000," he noted. "At the high end, people spend based on the perception of their wealth," he explained in pointing to the falling stock market and economic uncertainty. "They tend to spend less on something. The middle class just won't buy at all."
Even if industry numbers aren't looking so good, some of the numbers for the Sept. 3-7 Expo are. By early August, registration numbers were up from last year at this time, "and there's usually a big spike in the last three weeks," said CEDIA's Baldwin. Registration for education classes is also up, he said.
On the show floor, the exhibitor count was up slightly by early August, to 572, from last year's final count of 569, said marketing director Jamie Antcliff. And the amount of exhibit space is up this year, reaching 327,479 net paid square footage compared with last year's 318,159 and 2006's 315,293.
The number of booths is down slightly, to 530 from last year's 533, because multiple exhibitors are sharing booths in part because some c)ompanies have been acquired by others, CEDIA said.
To help out installers during the industry's slow-growth phase, CEDIA is offering select education courses for free for the first time at an Expo, said Michael Creeden, chairman of CEDIA's content action team. The classes include all entry-level business courses and many other entry-level courses, he said. "We're seeing a lot of people take classes who have not taken education classes before," Creedon noted.
In another change, CEDIA is bringing association-sponsored hands-on training to the Expo for the first time, complementing manufacturers' hands-on training. Fifteen Learning Lab classes targeted to technicians are modeled after CEDIA's Boot Camps, held at the association's Indianapolis headquarters.
Education is one way to stay in business, but installers have also turned to other ways at a time when increasing numbers of installers are targeting fewer potential jobs, executives told TWICE. Installers are working harder to step customers up, and they're taking on smaller jobs that they wouldn't have considered before. Some are taking on light-commercial installs in restaurants and stores, and more are targeting the retrofit market, including Baldwin's installation company, AD Systems of Houston.
Baldwin is reaching out to real-estate agents to educate them that their customers can differentiate their homes by installing retrofitted lighting-control systems. The retrofit potential is huge, he contended. "With the number of retrofit products available, and with more homes in the rearview mirror than ahead, the opportunity is enormous." In fact, he said, one of CEDIA's key initiatives is to work with the National Association of Realtors to help real-estate agents explain electronic systems and refer home buyers to installers, he noted.
For some installers, the major home-remodeling business is already up, AVAD's Gartland noted. "More remodeling is happening, and more dealers are willing to do it," he said. Because their houses don't command the dollars they thought they would, these consumers are planning to stay in their homes for a few more years and upgrade it, Gartland said he was told by dealers.
Although installers have been working harder lately to get fewer jobs, CEDIA's Baldwin said he believes the industry's long-term trend is up. "We always catered to the early adopters, but now we're reaching the early majority," he said. Parks Associates, he said, forecasts industry growth for the five years ending 2012.New Homes Sold By Price
|(Value of lot included in sale price.)|
Source: Census Bureau (www.census.gov) © TWICE 2008
|Sources: Census Bureau statistics through H1 2008 (www.census.gov); National Association of Home Builders (NAHB) 2008-2009 forecasts, revised July 8, 2008 (www.nahb.org) © TWICE 2008|
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