There is always problems when a market starts to run away with itself. We have seen it with the PVC market and all signs are is that the aluminium bi-fold market is going the same way. There are a number of concerns we should be aware of:
The more companies that enter the market, the more competitive it becomes. The more competition there is, the harder it becomes to win business and capture essential market share. So, to try and win the business, some will resort to undercutting others to get the contracts. A terrible way to do business.
We all know how bad undercutting is for the health of a company. We see it in the PVC market all the time. Companies knocking money off left, right and centre just so their prices creep under their competitor’s. But to do that profit has to be shed. There is only so long a business can reduce profit margins before the whole business becomes unprofitable. This leads to the greater risk of businesses closing their doors and in turn leaving a negative mark on the aluminum bi-fold door industry.
During the undercutting process, if profit margins can’t be altered, the product quality always can be. As with any industry, there is a differing range of qualities within the aluminium bi-fold market. Some more expensive than others, but usually the better quality ones are the more expensive.
However, as more companies start to enter the market, whether in production or installation of the product, variety and choice becomes more diluted, with more USP’s for both customers and companies to sift through. It is much easier then to use a cheaper specification to stand out from the crowd. So what is wrong with that?
Well bi-folding doors, especially aluminium ones, are meant to be sold as an aspirational, high-end product that customers savour in spending a higher amount of money to have the pleasure of one fitted in their home. But I fear that if we start seeing a brigade of quality cutters and price slashers, all value will be taken out of the market and it will become just like the PVC one, where cheapest wins comes first, quality comes second.
Loss Of Brand Value
Too much of a good thing can also spoil the party. The nice thing about a niche market is that it is niche. A small but high value little corner of the market where products are sought after with a high price tag that makes that small little business a rather healthy profit margin. And with all that comes a certain value. Customers and companies always have a greater sense of pride and loyalty to a brand that isn’t flooding a market and becomes a product that everyone else has.
You think Bentley would be seen as just as prestigious if they dropped their quality and prices, just so that everyone could have one? No. You think that Bang & Olufsen would slash their quality and prices of their sound systems just so everyone could have one? No. Yet this is what I fear is going to happen to the aluminium bi-fold market.
As the market becomes more populous, the competition will grow, the fight for the killer USPs will become harder, with undercutting and reduction in quality a major risk. The market stands to collapse under it’s own weight. But maybe that isn’t a bad thing…
Every so often markets readjust themselves, whether from internal or external causes. Take the great recession. This cut away a lot of the dead wood companies our industry didn’t need. So perhaps in the future, if the aluminium market did swell too big and did collapse, it might get rid of the undercutters and quality dodger. It will then mean it is easier to re-establish a quality product again in a market dedicated to high-end products and installation.
Agree or disagree? Comments as always welcome in the section below.