How To Keep Your Profits Up When Your Market Is Down
Allow me to introduce you to a business which understand how to continue being profitable during a market slow down. Headquartered in Upper Saddle River, NJ, Hunter Douglas Window Fashions is the leading manufacturer of custom window coverings in North America, representing 50% of the Hunter Douglas Group sales. Their strategy is to grow the market, and their market share, by continuing to introduce state-of-the-art, innovative products, providing their customers with consistently superior service and expanding their presence in key geographic markets.
Clearly, the slow down in the housing market due to massive foreclosures could have a tremendous negative effect on a company whose primary business is manufacturing custom made window coverings. Regardless of the industry in which your company operates, you are going to face times when the particular market in your business takes substantial economic hits. When that happens, you can sit by idly waiting for the slow down to pass while your profit margins dwindle. Or, you can take other approaches which will continue profitablility during the slow down and increase profitability when it is over.
Marv Hopkins is the President and CEO of Hunter Douglas. He joined the company in 1986 as the first president of the new Window Fashions Division, based in Broomfield, Colorado. Under Hopkins’ direction, the division achieved explosive growth by introducing a series of award-winning window coverings that have achieved universal acclaim among consumers and designers throughout the world. Before joining Hunter Douglas, Hopkins was a Division President for Lenox Inc., the leading American manufacturer of fine china, crystal and giftware. Hopkins graduated from the United States Air Force Academy and served as an Air Force pilot during the Vietnam conflict.
The New York Times recently did a report on Hunter Douglas. The report begins with this paragraph–
“As the post-holiday blues drag on for retailers, even high-end brands are feeling the pinch. Hunter Douglas, in Upper Saddle River, N.J., is the leader in the custom window coverings industry, but even it is not immune from the housing slowdown and the current economy. While waiting for the housing industry and consumer confidence to improve, Hunter Douglas is focusing on its internal operations and strengthening its dealer and distributor alliances.”
The bulk of the report is an interview done with Marv Hopkins. Here is some of that interview–
Q. How is Hunter Douglas faring in the housing slowdown?
A. Business is tougher than it was when housing was at an all-time high the last few years, but our December sales were flat with last December. Given the market and the general performance of home furnishings and home décor companies, we feel we did far better than most companies in the industry, who have reported 15, 20 or 30 percent downturns. We like our chances going forward.
Q. Are you wholly dependent on how well the housing industry does, or do high-end consumers like yours buy no matter what?
A. As anyone in the home furnishing or home décor industry, we’re affected, but we’re not wholly dependent. Our target consumer has substantial discretionary funds and they’re interested in the best products and brands for their home. Our average sale to consumers is somewhere between $1,500 and $3,000. They look at it as a long-term investment.
The largest segment of our business is related to remodels and renovations. If folks aren’t buying new homes, they’re probably going to renovate and thus need new window-covering products.
Q. What is your strategy when there are rumors of a recession? Have you cut back on staff, or will you, if the economy doesn’t improve soon?
A. We don’t anticipate cutbacks. It takes a long time to learn the complexity of our products and our business. We believe in a long-term strategy. We may be more selective in adding personnel in the future. When business is good in our industry, there’s a tendency, no matter how good you are, to operate a little more loosely than you should. The current economy is an opportunity for us to tighten up internally and improve our operations, come out of it a stronger company.
In 2008 we’re going to be even more aggressive and invest more in marketing and our overall sales effort than in previous years. It’s an opportunity to strengthen our position in the market. The window is one of the most important visual areas in the home. We need to do an even better job of preparing our retail dealers and educating the consumer about our products. We’re also making a major investment to redesign and improve our Web site so customers can better interact with us.
Q. How does this downturn compare to earlier ones you’ve been through?
A. To us, the last soft period was in 1991. The business did flatten out for a time, but we took an aggressive position. We introduced one of the most successful products in the industry, Silhouette window shading, and we couldn’t keep up in demand in the near term. We invested heavily in it, and despite the consumer slowdown it took off like a rocket.
Q. You’ve been at the top of your game for so long. Is this a chance for the smaller companies to gain on you?
A. In custom window coverings, we have a larger share than the next two companies combined. As closely as we can measure it, we have between 25 and 30 percent market share. I’m always running scared because I don’t want to take anything for granted. We respect our competition. Our feeling is, if we take better care of our customers than anyone else, we’ll be O.K.
Market slowdowns in your industry does not have to mean profit slowdowns in your business. But whether it does or doesn’t largely depends on you being alert and innovative in how you navigate those waters.
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