A home run market

Just as consumer catalogers are riding high on the home decor-buying wave, some business-to-business mailers are benefiting from the home construction boom.

The National Association of Home Builders (NAHB) projects that 1.56 million new homes-5.5% more than last year and 53.5% more than in 1991-will be built in 1998. “The number of new housing starts has been surprising and phenomenal,” says the NAHB’s director of forecasting, Stan Buovinis, citing lower 30-year fixed mortgage rates as a primary catalyst.

And b-to-b catalogers selling all manner of home-building items-from hardware to lighting fixtures to plumbing supplies-are hustling to take advantage of the trend. Outwater Plastics Industries, for one, recognized a year ago that it wasn’t reaching enough home construction customers. So the Wood Ridge, NJ-based cataloger-which sells 20,000 products, including polyurethane door jambs and moldings-drastically increased its circulation.

In the past, Outwater mailed the majority of its books to furniture manufacturers andwoodworkers. “We mailed only 20,000-30,000 catalogs a year to the building trade out of 1 million books overall,” says Rich Fallon, database marketing and MIS manager for the $30 million cataloger. “Then a year ago, we started mailing 300,000 catalogs a year to builders and architects, and we’ll mail 2 million books overall this year.” Outwater’s 1998 sales jumped 25%-30% over last year’s, and the response rate has vaulted from 2%-3% last year to 12%-13% this year, Fallon says. “Next year, we’ll probably mail even more to home builders and as many as 3 million catalogs overall if all goes well.”

Outwater now has 17,000 home construction buyers in its customer file, more than double the 6,000-7,000 such buyers it had last year. And the nationwide pool of more than 130,000 construction firms (according to the Census Bureau) and 20,000-plus registered architectural firms (according to the American Institute of Architects) leaves Outwater with many more prospects to reach.

For prospecting, Outwater most often rents compiled lists. By using MarketPlace Pro software from Waltham, MA-based iMarket, the cataloger was able to uncover potential customers among more than 100 standard industrial classification codes that the cataloger had previously dismissed, such as numerous kinds of woodworkers. The program “allowed us to triple our mailings,” Fallon says.

More selective prospecting Portland, OR-based A-Ball Plumbing Supply also goes after home-building companies-but by targeting the end user. Kent Frutiger, president of the $1 million-plus cataloger of high-end sinks, toilets, and other bathroom components, says half of A-Ball’s customers are actually the future homeowners.

A-Ball mails 10,000 books a year to building firms and another 10,000 to consumers, many of whose names it captured via its Website. A-Ball has spent three years building up its Website, which includes a complete catalog from which users can order via fax.

To target construction firms, the company also attends regional and national trade shows such as the Oregon Home Builders Association.

Supply Depot, the Houston-based direct marketing unit of $196 million Wilmar Industries, takes yet another approach. Supply Depot, which caters to the new apartment construction market, relies on its field sales force to land accounts.

Although Supply Depot’s catalog of lighting fixtures is one of the company’s sales vehicles, “there’s no role for the catalog” when bidding on apartment construction, says vice president of corporate development Fred Gross. “We have national salespeople who travel the country, visit builders, obtain blueprints of construction jobs, and bid on them.” Often architects will request specs for lighting fixtures that aren’t in the catalog, Gross says, but Supply Depot will produce them if it wins the contract. Supply Depot has doubled its field sales staff from two to four people over the past 18 months to take advantage of the growing apartment construction market.

Few fear a downturn A home-building slowdown could be in the cards for next year, cautions the NAHB’s Buovinis. Expect the number of new homes built to settle back to 1997 levels “because the financial problems in Asia and now Latin America will result in a huge drop in exports,” he says. “So the trade balance will work negatively toward the U.S., which will affect some industries.” In other words, the domino effect of overseas financial troubles is likely to ripple back into the new housing market.

Nonetheless, most building supplies catalogers don’t seem worried that the market may turn south next year or in 2000. For Wilmar, new construction accounts for only 2% of its total revenue. Its primary business is serving apartment renovators, and the renovation market thrives when the new housing market fades, Gross says.

Outwater Plastics’ Fallon says his company hasn’t planned for a downturn in housing starts. As with Wilmar, Outwater’s products are also used in remodeling, Fallon notes, “which can be done at any given point in time based on the economy.”

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