Distributing solid surface materials, like the industry it serves, is a rapidly changing business. As competition among solid surface brands increases, market share is being divided up, resulting in more players sharing the pie. Although I have no hard data as to the size and growth of the industry, I did query a few ISSFA industry friends regarding their perception and combined it with what I have learned from my own business. This is what I found:
The U.S. fabrication market, including all fabricators and OEM's, totals about $400 million in sheets and bowls of solid surface material. Approximately 95 percent is sold by distributors to fabricators whose primary business is making countertops, of which 75 percent is used for residential and 25 percent for commercial purposes.
The growth of the industry for the last 5 years been:
1998: 22 percent
1999: 21 percent
2000: 18 percent
2001: 8 percent
2002 : 5 percent
2003 projected growth: 8 - 10 percent.
Whether or not these numbers are accurate, they are perceived to be so by many of the leading fabricators in our industry. This perception, in itself, is enough to influence the behavior of distributors and fabricators alike.
Distribution of solid surface materials has changed and consolidated over the history of the industry. Some distributors have changed with the times while others have gone by the wayside. When I talk to other fabricators, very few are happy with their distributor relationships. This poor relationship is not limited to one brand. Many distributors have problems due largely to their reaction to increased competition from new brands and granite. I feel this poor relationship has been a major contributor towards the decline in growth over the past five years.
The trend of manufacturers attempting to shorten their products' routes to market through distributor consolidation probably will continue. If distributors want to survive in the future, good prices alone will not be enough. A strong distributor fabricator relationship is critical for success. In order to create a good relationship with fabricators, distributors must:
Market their brand and educate consumers, architects, and specifiers regarding the benefits of using their material and their fabricators.
Protect their fabricators by not selling to every guy with a router, or to customers of the fabricator.
Give their best customers the best price.
Issue credits within the same terms or faster than payment terms.
Not try to force equity among fabricators by splitting up markets.
Not talk price to the fabricators customers.
Not open or invest in their own fabrication shops.
Equally important for the distributor fabricator relationship to be successful, fabricators must reward the distributors who contribute to their success by:
Not switching specifications.
Paying their bills within terms.
Coordinating marketing plans.
Sharing information on sales and market segment activity.
Being brand loyal when possible.
The current poor relationship between fabricators and distributors must change if the solid surface industry is going to make an effective effort in stopping the erosion of the market by granite and other surfaces. The willingness to change cannot come from just distributors, but needs to be inclusive of fabricators and manufacturers as well. If distributors and fabricators follow the above guidelines we will all take a big step in returning our industry to the growth we know our products and services are capable of achieving.