Long term looks good

By Keith Lanning Executive Vice President & General Manager California Redwood Association

A Nv FoRECAST of lumber I1n31[ets should consider long term as well as short term potentials and the effect on both of the influx of

Canadian lumber, now respon- sible for one third of U.S. lumber sales.

In the short term, Canadian shipments have caused a serious drop in prices of many U.S. species. Redwood clears and uppers have been less affected than other products, but the common grades of redwoodthe garden, deck and outdoor use lumberare in stiff price competition with other knotty species whose lowered prices allow them to be pressuretreated and marketed for the same end-uses.

Short term redwood projections must consider the price impact of the Canadian influx as well as the increase of pressure-treating of other species and the marketing efforts being put behind these new products.

The redwood response will continue to stress the inherent natural qualities of the wood that make it such an obvious choice for outdoor projects, and will drive home the message that the buyer is assured of a dependable supply from long-time producers. It will be a competitive year, but redwood sales are expected to keep pace.

The redwood industry's development of new air-seasoned sidings from the common grades of lumber is another answer to increased competition in commons sales. These new products have been well received in the marketplace and will continue to strengthen redwood commons sales.

In the long term, all redwood markets have reason for optimism. Continued consumer affluence and emphasis on the pleasures of outdoor living are creating nationwide demand for decking lumber that can allow room for many species in the market, and gradual strengthening of the

Canadian dollar may slow the flow of that country's lumber into U.S. markets.

But the most promising prospect in the long term picture comes from a new and different developmentthe growing popularity of traditional housing styles. Traditional design creates increased demand for bevel siding, roof overhangs and soffits, wood detail and wood window and door framesall excellent markets for redwood.

The graying of America is a big factor in this traditional trend. Older Americans are the fastest growing segment of the U.S. population today, and they are comfortable with the traditional look in both houses and commercial buildings. Many empty-nesters are buying townhouses, multi-units or other shared facilities, and all are heavy users of low-rise

Story at a Glance

Redwood faces competitive year wilh Canadian and pres. sure treated lumber..air.sea. soned sidings will strengthen sales...traditional country style home using wood is emerging trend.

commercial professional buildings. In all of these building types, they tend to prefer structures that have the same feel and style as the single unit homes they previously enjoyed.

There is a return to traditional values among younger buyers as well, and the new traditional, country or cottage-style homes have a romantic charm that makes them attractive to this vital market.

Americans of all ages are indicating clearly that they like to live with the beauty, familiarity and richness of natural wood. Redwood, with its inherent quality, high recognition, and proven performance, will profit from what appears to be emerging as a solid long term building trend.

D{-Y enters strategic era

By Lawrence R. Gavin President Ace Hardware Corporation

fl un TNDUSTRY today is charY acterized by excitement and incredible growth. Many companies, including Ace, are enjoying the best year in their history. Reduced interest rates, increased housing starts, greater consumer spending and more d-i-yers are creating opportunities to grow and prosper.

Through 1990, the compound annual growth rate will be 8.590 in the home improvement market. Factors going into these projections include the aging housing inventory which needs constant upgrading. There are an estimated 50 million homes which are over 20 years of age. Experts also expect an increase in home sales, and recent home buyers spend 4690 more on d-i-y projects than the average household.

Other statistics show that the d-i-y industry is entering a new strategic era characterized by a sustained high level of demand and above average earnings prospects. Incomes are up with the strengthening economy. Unemployment is down. The years ahead will present great opportunities for those who know their market and their customers.

Identifying the consumer and meeting his needs may well be the biggest challenge to all of us, as well as to our industry associations. Studies show that consumers look for durability before price at the top of their priority list. They are also very conscious of energy conservation.

Today's d-i-yers are second generation "how-to" enthusiasts. They are upscale and willing to tackle more complex projects. They are also more willing to purchase quality, both in redoing previous construction as well as improving amenities. The problem of economy construction has increased demand for quality d-i-y merchandise. Meanwhile many of today's consumers are upgrading their homes with higher quality items to reflect their improved financial status.

Baby-boomers are the largest demographic segment of the market. These 70 million Americans, born between 1946 and 19il, are grown up now. By the end of the decade, they will account for more than half of all consumer purchases. Developing ways to reach this group is about to become

Story at a Glance

Home improvement to grow 8.5%...d-i-y will increas e 12.7 o/o ...baby boomer will make 507o of consumor putchases by 1990...challenge of new mar. kets wlll bring casualties.

imperative for retail success, and for many retailers, for survival.

By 1990, nearly every other household in America will be headed by a baby boomer. These are households with money to spend. Already 25s/o of this generation makes at least $35,m0 annually.

Our challenge is how to understand what motivates this special group of consumers. Unless we do, we will find it impossible to forecast the coming years from a consumer marketing perspective.

The baby boomers need to be stimulated, not only in merchandising content, but in store design, merchandise presentation and advertising. Retailers, wholesalers and manufacturers that follow the moving target as this group matures will be the great winners of the future.

Looking at the present, members of our industry are finding that it's no longer just business as usual. Unlike recent years where growth was automatic, there are only two ways for a company to generate more real growth: do more business with existing customers or take customers from the competition. Taking customers from the competition means that there are going to be some casualties.

Suppliers, wholesalers and retailers who join together to meet the challenges in the marketplace, will all come out on top. Those who are aggressive and capitalize on these combined strengths will have an outstanding future.