Industry Consolidation: How does it affect YOUR business?
Did you hear about the latest industry merger between Universal Windows Direct and Great Day Improvements?
If not, let me summarize for you:
$195MM Home Improvement Company
+ $172MM Home Improvement Company
$367MM Home Improvement Company
How long before your local competition is a BILLION DOLLAR conglomerate?
So what? You may ask.
Our industry is experiencing consolidation at a historic level. Big companies and financial firms are gobbling up other home improvement companies left and right…but why?
1. It’s a faster way for some of these large companies to grow and gain market share.
2. It is easier than every before to centralize marketing and administration. i.e.- scale overhead costs and magnify profits.
3. Our industry has remained remarkably fragmented…and is now in a consolidation phase that other retail sectors have already been through.
It’s #3 that I want you to pay attention to.
Our country used to be filled with “mom and pop” retailers, grocers, clothing boutiques, etc… But eventually…the large companies began to buy them up. The big got bigger, and bigger and bigger. It’s part of what’s called an industry lifecycle.
And it’s now happening to our industry.
Big companies gain market share, insert synergies (advertising, internal systems, recruiting, etc…), increase revenue and profit…and with that profit, put more and more and more pressure on the small businesses, like us.
In many industries, this results in a disproportionate market share going to the behemoth companies…and I’m quite certain that’s the goal of the companies and PE firms that are so active in our niche.
Here’s the million dollar question:
What can you do to avoid being crushed by ever-growing home improvement companies with ever-growing marketing budgets…and the ability to absorb short term losses while they steal market share?
Well…I could probably write an entire series on this question. We could discuss financial fundamentals, customer retention, local identity and brand differentiation.
But for today, I’ll just give you this one thing to think about:
What about affiliating with a network of like-minded home improvement companies so that you can leverage buying power, generate more leads, and share best practices?
Please don’t be fooled:
– Industry consolidation is real.
– This IS a threat to your business.
There IS strength in numbers.
Why do this alone?
Give me a call, I’d love to tell you what we’re building here at Window Depot USA, and how we’re going to fight the GIANTS…TOGETHER.
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