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Who buys smart-home products?

BY Ken Clark

Chicago — Dan Arnold did something unusual for a presenter on the topic of the smart-and-connected home: He started with a thorough definition of the phrase "smart-and-connected device."

Here it is: "A product for home-device management that senses conditions and adjusts itself, captures data for greater efficiency, 'learns' your behaviors and adapts accordingly, and/or allows for monitoring and control while you are away from home."

Arnold followed that exercise with a more common pursuit — measuring the growth of smart-device usage. And here, the managing partner for Asheville, North Carolina-based research firm Trifecta served some eye-opening numbers.

  • Sales of cell phones increased from $18 billion in 2010 to $51 billion in 2015;
  • 90% of adults own cell phones, most of them smart; and
  • Penetration of home Wi-Fi has increased from 55% of U.S. households in 2010 to 81% in 2015.

"There are tons of reasons, and tons of stats explain why smart and connected devices are here to stay," said Arnold, speaking here at the 2015 Home Improvement Research Institute Fall Conference.

While the trend exists, so do the barriers to purchase. Two of the primary obstacles, he said are cost of purchase and cost of installation.

Of course, obstacles and drivers vary depending on the customer, and in this regard, Trifecta has identified six segments along the spectrum of smart and connected homeowners.

  • Technocrati: These consumers want the latest and greatest digital toys for their homes. They also have the resources to buy them.
  • Home controllers: These consumers see technology as a tool to improve their lives.
  • Security seekers: Ambivalent about technology, this segment is interested in smart products mainly for personal safety and security.
  • Lean and green: These consumers are thrifty with strong environmental interests.
  • Austerity at home: Homeowners who are more focused on frugality than comfort, convenience or security.
  • Disinterested technophobes: Consumers with little interest in either technology or the benefits of smart and connected homes.

Clearly, the top of the list represents better sales opportunities than the bottom. More surprising, he said, is the way consumers move from awareness to installation. Cost of installation is an issue, but fear of installation is not an issue, regardless of the homeowners generational label.

Arnold added that he thought it was interesting that manufacturer's websites have been largely non-factors in the path to purchase. Instead, it's homedepot.com and lowes.com, along with reviews on Google and Amazon, among others, that lead the consideration stage of the purchase path.

Arnold's presentation was part of the 2015 Home Improvement Research Institute Fall Conference held here last month. For more information, visit HIRI.org.

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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

A price index of lumber and panels used in actual construction for Oct. 30, 2015

*Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow's Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow's Weekly Market Report.

Lumber: Fluidity in the SPF lumber remained good throughout the supply chain. Producers reported solid sales, although often not enough to seek higher prices. Instead, they continued to bolster order files, with some lead times in narrow widths extending lightly into the week of November 23. A notably slower sales pace at Southern Pine lumber mills brought about what increasingly appeared to be a turning point in the market. Most often, mills fell back on order files to maintain many price levels. Sales activity in Coastal species continued at a solid pace, lifting many #2&Btr prices. Dry Doug Fir pricing remained the strongest. Wholesalers attempted to sell off positions and secure trucking for orders prior to attending the NAWLA gathering next week. Inland lumber producers report steady demand this week, with good price appreciation in certain key items. Overall activity at mill level has been less hectic than in the previous couple of weeks, but the market is still trending in an upward direction. Studs continued to sell at steady to higher price levels. Most of those increases were of the $5 variety. Some reports indicate that regular users of Radiata Pine have begun reconsidering their use of the product, given its wide price spread with Ponderosa. Ponderosa Pine Mldg&Btr continues to be reported at unchanged levels for both 5/4 and 6/4 stock. Recent reports indicate that Ponderosa Pine in both Selects and #2 Common boards are in good demand and moving at a reasonable pace from both mills and warehouses. Sales in the Western Red Cedar market remained seasonally slow overall. Producers noted that calls from Texas were considerably less, largely due to extreme weather and flooding the state experienced early in the week.

Panels: OSB pricing gained more strength from last week, up appreciably in most categories, leaping $20 in many cases. However, activity was a bit quieter this week, as winter weather approaches and buyers begin to consider the possibility of a two-tiered market developing. Southern Pine plywood producers reported a quieter but decent week of sales overall. Those sales and most order files extending into the week of November 9 maintained mostly firm rated sheathing pricing. Sales activity in the Western Fir plywood remained dull, forcing mills to listen to offers more earnestly and accept deeper counters than in previous weeks. Buildups of some items kept downward pressure on prices. Canadian plywood activity slowed this week, as buyers digested volumes bought during last week’s little run. Buyers are considering the possibility of impending snow and, as order files shuffle into late November, are staying lean on inventory. Particleboard producers reported a slower to steady pace to the market. “Mediocre,” was one description of mill sales. Domestic MDF producers struggled with competition from offshore imports. Some price pressure continued, as prompt shipments remained available.

For more on RISI, click here.

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Builders FirstSource CEO looks back, and ahead

BY Ken Clark

Colorado Springs, Colorado — In his 50-plus-year career in the LBM business, beginning as a teenager carrying lumber in the Catskill Mountains of New York, Builders FirstSource CEO Floyd Sherman has seen business hit soaring heights and brutal lows.

For Sherman, and Dallas-based Builders FirstSource, Oct. 28 marked another high — acceptance of the 2015 Pro Dealer of the Year Award.

In his acceptance speech here at the Broadmoor Resort during the ProDealer Industry Summit, Sherman reflected on the company's sacrifices during the dark days of the housing "depression;" its successful emergence on the other side; and its optimism for the bigger, better post-ProBuild-acquisition company. 

"When you consider the steady recovery that we’ve made from the housing downtown and look at the growing demand we are seeing with historically low interest rates coupled with improving credit availability and job growth," Sherman said, "I think we have some very sunny days ahead of us."

The Pro Dealer of the Year award recognizes a high-performance company with a commitment to maintaining the best practices and best values of the lumber and building material industry. It is selected by the editors of Hardware + Building Supply Dealer and presented at the ProDealer Industry Summit, an event hosted jointly by HBSDealer and the National Lumber & Building Material Dealers Association.

Sherman described the past 10 years at Builders FirstSource as an amazing ride, with highs and lows. The company announced its initial public offering in 2005, at a time when the industry enjoyed housing starts at  2 million-plus level. "Life was real good," he said. But three short years later came the dramatic housing market depression that changed everything. Starts fell to under 500,000, and head count was reduced from about 8,000 to under 2,800.

The company's stock slipped from a lofty $26 per share, all the way down to $1.

"Through the worst of times, our people never quit; they never lost hope," Sherman said. "Our people never stopped believing and dreaming about what we could be." 

Fast forward to April 13 — the announcement of the acquisition of ProBuild Holdings, the LBM industry's largest-ever acquisition. The combination creates a $6 billion company operating more than 500 locations in 40 states and was the LBM industry's blockbuster story of the year.

"We are approximately 90 days into to the life of our new company, and we have made incredible progress in integrating the two companies with much work yet to be done," Sherman said.  

The Pro Dealer of the Year Award was sponsored by Weyerhaeuser. Adrian Blocker, senior VP wood products, presented Sherman the award and congratulated the entire team for their growth and success.

"With 50 plus years in the industry, I don’t think I’ve seen a more exciting time to be in this industry," Sherman said.

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