The hottest ticket: Aluminum
Julie Sturgeon -- Casual Living, May 15, 2007
It will take more than rising prices to destroy aluminum's popularity in the outdoor furniture niche — manufacturers consider it indestructible in more ways than one. After all, it offers an excellent strength-to-weight ratio, is non-rusting and can be formed, welded, cast, shaped, waved and any other kind of machining in its cold form. Not to mention it's ideal for powder coating. Here's what four manufacturers are saying about its future:
Jamie Lowsky, CEO, Pride Family Brands
Casual furniture will continue to experience growth, and aluminum is still the lion's share of that market — for some retailers it represents more than 60%.
The industry is trending up as much as 15%, with the biggest slice of the pie going to mass retailers who carry some better goods. I expect aluminum dollar sales will be up 7 to 10%, but total industry units and customer invoices will be down. Pride's year-to-date sales are up 22%, so our feeling is the top price points are selling better and face little competition. The wealthiest consumers are spending and are looking for special products and white glove service!
But the mass retailers who now carry better goods are making a big impact with consumers. Retailers need to step up, but it's difficult to reinvest in leasehold improvements, employee training, new displays and unique merchandise if the profits aren't there. That's why we develop collections that are so deep, the retailers that floor our lines cannot be compared to mass retail. It's like trying to compare the Bentley to the Pontiac.
Henry Vanderminden IV, president, Telescope Casual Furniture
In the past 20 years we've seen the highest spikes in aluminum in the last year and a half. Short term, it seems like it's staying close to its peak last April 2006. As far as the future of aluminum, that's the million dollar question. Crystal ball wise, I really can't say other than more and more aluminum is being used with a tremendous amount of products, not just outdoor furniture. Therefore I think it will stay pretty stable and not price itself out of the industry.
Quite honestly, the price hikes the industry has incurred and passed on in the last year and a half are a combination of the aluminum raw material going up, but also many other factors that had been suppressed by manufacturers because they just couldn't pass on that price. Now we've been forced to that point. For example, any oil-based derivatuve used in manufacturing or fuel to transport product is a big part of adding inflation to our product. Aluminum has been the staple, the industry's No. 1 raw material for outdoor furniture for a very long time. I don't see that changing.
Rick Baker, national sales manager, Suncoast Furniture
Our channel distribution is specialty retailers, and they have to be a step ahead because the next year the mass merchants catch up and copy whatever they do. But I've even seen the mass merchants' price points going up, especially with the rise in aluminum and oil and everything else over the last two years. People through their life cycle usually buy the inexpensive patio set until they realize it only lasts a few years and they throw it away. That's when they go to a specialty store, so that's where we are with retailers.
Consumers compare our cast aluminum chairs to another line, and yes, ours are more expensive but it's a more expensive chair, with more aluminum, and a wider, deeper contoured design. And we don't have delivery issues — one manufacturer last year said it was delayed on its shipping because of a shortage of aluminum. That was a bunch of baloney. They could get it, they just didn't want to pay for it. Supply and demand. We didn't have any interruptions from the flow of aluminum into our factory.
Mike Echolds, CEO, Tropitone Furniture
Aluminum is still the most important outdoor material because the nature of the metal itself is phenomenal. For that reason alone, it is always a very strong place in the marketplace. The challenge for us is to be innovative in the way we use the material and relentless to new approaches to using the medium. We are expecting it to be a good year for aluminum and so far it is.
One thing that is driving the aluminum side of the business is that across the whole market and particularly in the Sunbelt, there is major growth in the demand of product with cushions. And aluminum frame with modern cushion technology is quite a value for consumers. We are taking advantage of trends as people build their incredible outdoor rooms.
Right now we are seeing a period of relative price stabilities — this time last year we were all being hit with significant increases in cost. Now it's fairly flat, which is a good thing, and I wouldn't expect it to moderate much. If the economy were to soften significantly worldwide, then you could see some moderation of the price because it is a commodity.
Tiny Girl, Big Dream