Shifts in the siding market

Vinyl still holds the dominant position in the U.S. residential siding market, but not as securely as it once did. Fiber cement siding products are gaining market share with mid-priced homes where vinyl traditionally has held a strong position, while brick/stone and stucco/EIFS continue their popularity with owners of higher-end homes.

These insights and more come from Principia in Malvern, Pa., a marketing consulting firm focused on building materials, which for 10 years has tracked the U.S. siding market, conducting surveys and releasing reports every two years. The fifth edition of its siding market report is scheduled to be released this month, and the consulting firm has shared results and analysis with Qualified Remodeler. The report covers product popularity as well as contractor preferences, among other topics.

To no one’s surprise, re-siding activity claimed a higher percentage of the market in 2013 compared to new construction after the housing crash. The crash favored products such as vinyl, fiber cement and engineered wood, and products that suffered included brick and stucco.

“When you look at the graph [see Graph 1 on this page], you’re looking at a variety of different siding products used on homes with varying values, says Gary Acinapura, vice president of operations, Principia. “If you go back 10 years, vinyl would have maintained a fairly consistent percentage of the market across all home values. The recent falloff in vinyl usage is made up by the usage of fiber cement, which the market has shifted to for higher-priced homes. But when you talk about the fiber cement category, you’re really talking about a single producer that dominates the market. That manufacturer represents the category, and as such you have a unified voice, which you don’t have in the vinyl category. I don’t think the value of vinyl will ever be touched in terms of longevity and price point, but it’s clear that as homes move up in value the shift is away from vinyl.”

 

Value of brand

In the vinyl siding category, price beats brand [see Graph 2 on this page], says Ken Jacobson, partner, Principia. “When you look at brands of vinyl siding, there’s a lot of confusion. One manufacturer might have four to eight brands in its portfolio, so there’s a blurry view on behalf of property owners about the value proposition of each brand. There has been some consolidation of manufacturers in recent years in an attempt to eliminate that, but that’s a relatively new development,” Jacobson says.

To a degree, some form of a loyalty program from siding manufacturers is expected, which makes those programs less important, Acinapura says. “Secondly and equally important, contractors tend to already be aligned with brands, so they don’t need to be incentivized. They place more value in other services offered by a manufacturer.”

Jacobson adds, “Maybe those programs were needed 10 or 15 years ago to establish brand loyalty and the credibility of each brand, but today those are legacy programs that don’t carry as much value.” Now, it’s about helping contractors grow their business and keeping them competitive.

 

What contractors value

Siding contractors expect manufacturers to help them get the job done, not provide unneeded programs by delivering product where and when contractors need it. “A few years ago during the downturn, product availability would have been the No. 1 attribute contractors look for from a siding brand [see Graph 3] because there had been periodic outages during the course of the remodeling seasons. Supply couldn’t keep up with demand,” Acinapura says. Contractors also dislike when manufacturers introduce new products but are unable to keep up with demand, he adds. “But finally, it looks like that dynamic has sorted itself out.”

Product performance and quality reign supreme with contractors, and price isn’t far behind. “This is what contractors are interested in and what will drive their decisions,” Jacobson explains. “There’s a lot of commonality in manufacturers’ value propositions, and overlap in their product lines, so there hasn’t been much shift in market share. It will be interesting to see what will move the needle.”

For information about obtaining the full siding report, contact Dawn Habgood, VP, research solutions, by sending email to DHabgood@PrincipiaConsulting.com.

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