BUSINESS INSIGHTS: The Decking Opportunity

By / 2 years ago

Insights and suggestions on building your share of this growing market.

Decking and railing continues to gain industry attention, as the outdoor living experience remains a high priority for homeowners when considering remodeling projects. The backyard is an extension of the home and provides the owner with a place for leisure and entertainment, along with increased home resale value in the future. This homeowner trend bodes well for any dealer who carries decking as part of its product lineup.

Steady demand for decking and railing provides an opportunity for manufacturers as well as all participants in the supply chain, regardless of product types or channels to market. According to preliminary estimates from Principia’s latest research underway, residential decking and railing demand in North America will rise 4.5% annually through 2018, to 3.5 billion linear feet valued at nearly $5 billion. Growing demand due to the recovering housing industry combined with consumer preference for better performing products will continue to push technology advances in product development and interest from new entrants, from wood to alternative choices.

The share battle between wood and synthetics continues within decking. Wood share has grown over the past five years during the economic slowdown, but sales of wood-alternative decking have more recently improved with a stronger economy and increased discretionary spending. In addition, the availability of a range of products along a good-better-best lineup of price and performance has enticed consumers to upgrade from wood to alternative products. Railing can differentiate any decking project and generates higher margins for everyone through the value chain. Consequently, manufacturers have developed better designed and customizable systems, and non-traditional materials such as aluminum have become popular among homeowners.

An altered supplier-distributor landscape in wood-alternative decking and railing during the past couple of years has led to new relationships that are still developing traction in the dealer market. Additional realignment possibilities exist for manufacturers and distributors, offering share-gain opportunities in certain markets. For dealers, some simple advice for dealers carrying or considering to add decking and railing to their lineup.

If you’re not carrying decking, why you should:
• Renewed growth: Decking is growing with increased consumer spending
• Consumer spending trends: Outdoor living projects rank high among homeowners
• Steady demand: Sales are less dependent on housing starts; more remodeling related
• Profitable: Decking generates higher margins than many other products

If you’re already stocking decking, where to focus:
• Manage the offering: Carry the right brands for your customers
• Lead with service: High service levels brings higher margins
• Develop contractor loyalty: Provide programs, training, and jobsite support
• Drive sales and marketing: Train sales staff, leverage brands
• Seek higher ground margins: Price in the market’s sweet spot based on value

The wood-alternative segment within decking remains a strong margin generator for dealers. In fact, recent research from Principia indicates that decking is one of the top three product categories of greatest interest to dealers, along with roofing and cabinetry. Take a closer look at why you should be in decking if you’re not, and if you are, what can you do to create even more opportunity for your business.

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