The Gold Rush Heads for the Garage

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The Gold Rush Heads for the Garage
More homeowners seek garage storage organization

By Jeff Kahn

A NEW CONSUMER product category has emerged— garage storage and organization, commonly referred to as GSO. This category didn’t exist a few years ago. Sure, some companies produced products that could be put into garages. Peg boards, for example, have been a garage staple for decades; and two nails hammered a couple of inches apart into walls have often served as broom and garden tool holders. Old metal cabinets and plastic containers have enabled many to put “stuff” away, never more to be seen until mice and moths have reduced it to scraps and dust.

Over the last two years, a growing number of companies have recognized “the garage” as a major opportunity for dedicated consumer products. By introducing specialized products at an amazing rate, these companies have startled major retailers into action. Some, such as Lowe’s superstores with 800- plus locations, have begun investing millions of dollars to consolidate products for the garage into specific in-store locations. Others, such as Menards, a chain of nearly 200 Midwest homeimprovement stores, have indicated they will be right behind Lowe’s in early 2004.

The GSO story doesn’t end with retailers. New home builders, always in need of something to attract buyers, have begun to offer GSO products as options, too. Upscale catalogers such as Front Gate and Sky Mall (the publication on airplanes) feature these goods. And so, revenues from GSO products are climbing. Peachtree Consulting Group estimates put total consumer garage spending at $650 million, while Whirlpool announced in 2002 it estimates the size of the GSO market could reach as high as $850 million. Whirlpool also announced it was prepared to spend $80 million in advertising to gain a major share of the GSO market. Whatever the true numbers, they are significant.

But, like all product beginnings, a lot of impractical, almost bizarre GSO offerings have been mixed with more practical ones—all vying to survive the ruthless winnowing out that always comes when consumers make their choices. There are even products that screw into garage ceilings. It is apparently hoped consumers will store heavy objects above their cars, garage walkways and work areas. Other products come with so many pieces and parts consumers are asked to fill out a detailed plan and then choose from among 30 to 40 different accessories.

Other companies rely on convincing consumers to mount heavy wooden or steel cabinets on the walls—not an easy task for the best do-it-yourselfers. Still others offer to redo garage walls with PVC slats and, for prices ranging from $4,000 to $15,000, try to convince consumers they need steel-clad refrigerators and washing machines (on rollers, no less) designed to survive the inevitable moment the car bumps into them.

A Distinct Sales Channel

Garage door dealers and installers (estimates place these anywhere from 6,000 to more than 10,000 in the country) are a distinct sales channel to garage owners. However, as a group of sellers and as a channel, they don’t fit into the plans of many manufacturers and retailers of GSO products.

There is a reason for this reluctance on the part of manufacturers. Dealers and installers have a reputation for being slow to adopt a product and picky about any nondoor or opener merchandise they carry. They are not big on holding inventory, so that leaves out companies with dozens of accessories; and they hate being asked to help a consumer “design the garage.” They are not enthusiastic about complex installations that hold the risk of having consumers calling them back to fix something that is not quite right. This is particularly true for products that are installed using dry-wall screws instead of the lags they use on doors. In short, they are a tough bunch to work with.

Nevertheless, not all GSO manufacturers—and certainly not all retailers of GSO products—have given up on the installer channel. The relentless march of statistics makes it impossible to ignore installers as a potential channel for the GSO product.

First, there is the fact that the average installer of garage doors visits four garages per day to provide estimates, service, repairs and installations. Taking the lowest estimate of the number of installers, 6,000, and you end up with visits to well over 6 million garages per year—all of which adds up to a staggering number of sales opportunities. GSO manufacturers simply can’t ignore this. They will continue to encourage installers to take and sell their products.

Second, retailers would like to sell products and not need to provide the installation. However, retailers question every GSO manufacturer about whether it is just selling a product or if it is providing an “install solution.” Only a very few GSO makers come with an installer base. The savvy ones can promise the retailers and garage owners their GSO comes with a reliable install solution.

Installers Wanted

While putting in only GSO products is probably not desirable for any installer, the business of installing products purchased through the vendors is laden with opportunity. There is, of course, an install fee for the product. Furthermore, there is a chance to get into older garages to help homeowners assess their existing doors and openers. Some installers use this install job to offer service and repair where needed. In the case of new homes, there is an install fee and the opening to offer service contracts on the equipment and products found in the garage.

All this adds up to a fact of life that can’t be ignored. GSO products will become increasingly available to garage owners. Some will purchase these products from installers smart enough to sell them along with doors and openers. Others will purchase GSOs from retailers or as options for their new homes. Installers will be offered the opportunity to become installers-of-record for different GSO products.

As the category grows to fit the predictions of hundreds of millions of dollars in GSO products purchased for garages annually, a majority of buyers will be looking for professional installers. GSO manufacturers as well as those who retail the products will also be looking to establish good working relations with those who can efficiently and safely install their products.

The emergence of a product category with dramatic sales potential doesn’t happen every day—not in the garage door installer channel. It doesn’t even happen every decade—it’s more like every 50 years or so. After all, garage doors have been around since the 1920s and garage door openers since the 1940s. Installers have an opportunity to participate successfully in this fast-growing consumer product segment. Let’s hope they do and wish them luck.

Jeff Kahn is CEO and co-founder of GarageGrids®, a supplier of garage storage and organization products designed with significant input from—and sold almost exclusively through— door dealers. Prior to starting the company, Mr. Kahn spent 17 years in the high-tech industry. He has an MBA from the University of Chicago and is a CPA in the state of Illinois. He lives in Newton, Mass., with his wife and two daughters. For more information, call 617.916.1255; visit www.garagegrids.com.

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