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Laszlo Barla

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Market Analyst at Interconnection Consulting since 2013, Industry Expert for market data and product trends. Laszlo Barla is responsible for the preparation of studies and market forecasting models within the construction industry and gastronomy. He heads various consulting projects and is an expert in internationalization.

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Tel:+43 1585462368

E-mail:barla@interconnectionconsulting.com

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IC News

Window Market Looking Skyward Again

The market for windows in Western Europe will grow by 3.6% this year. According to a study by Interconnection Consulting, average growth for the industry is forecast to be 3.3% to 2021. Nearly all the regions surveyed, except the UK and Ireland, show robust growth rates.

 

Southern Europe on the Right Path

Southern Europe (Italy, Spain, and Portugal) has a growth rate of over 5%, making it the region with the strongest growth. Part of this simply has to do with making up for lost time since between 2010 and 2018 the market share of the southern European countries plummeted 42.9% to 11.8%. Italy managed to turn the corner in 2017 and has been posting positive growth figures ever since. The new construction sector, as just one example, is expected to rise by 13.8% in 2018. The region with the highest market share (34.9%) is the German-speaking region of Germany, Austria, and Switzerland. Germany’s window market will grow by 5.4% this year.

 

France Spreading Optimism

The second largest region is France and the Benelux countries with a market share of 23.5%. Regional growth in 2018 will reach 3.1% in volume, just below the overall average of 3.2%. New construction in France is the sector that is really continuing to spread optimism. “We expect a steady increase in the number of completed buildings in the coming years,” explains Tobias Stickelberger, author of the study. With a growth rate of 3.8%, the Nordic countries of Denmark, Sweden, Norway, and Finland are also showing stable growth rates. The pacesetter among the Nordic countries is Sweden, notching a growth of 4.8% in the window market last year. The suburbs surrounding the cities of Stockholm, Malmö, and Gothenburg are proving to be the areas in Sweden that are registering a boom in construction. The only region whose growth is stagnating is the United Kingdom and Ireland, with projected growth of less than one percent for 2018. The situation for the economy, including the window industry, is unlikely to change in the next two years, either.

 

Renovation and Housing the Cash Cows

Overall, the renovation sector is dominating the window market across all regions. While in German, Austria, and Switzerland the dominance is still relatively weak compared to the new building sector (51:49), the ratio in Southern Europe is 70:30. Residential construction is the most important window market across all regions. This trend is strongest in France and the Benelux countries, where the share of the market reaches 73.7%. Four out of 10 windows are fitted with PVC frames. Metal is in second place with 25.9%, followed by wood with 16.6%. The leading companies include Aluplast, Guardian, Saint-Gobain, Internorm, AFG, Finstral, Schüco, Velux, and Rehau.

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Large Price Differences Characterize Window Market

A mystery shopping test conducted by Interconnection Consulting reveals large differences in window prices in Austria. A total of 17 window brands were examined. Enhanced safety and better insulation increase the costs of windows. There are also geographical price differences. Residents in Tyrol, for example, pay more for PVC windows than elsewhere.

 

A Premium for Safety

At a price of EUR 452.50, Tyrol’s PVC windows are even higher than Vienna’s (EUR 403.10), followed by Burgenland (EUR 380.60) and Vorarlberg (EUR 370). Prices rise considerably especially when increasing the safety of the windows, with features like lockable handles. Compared to the standard model, the prices for safety-enhanced windows are, on average, 61.1% higher. For PVC windows with a Ug value of 0.5 (thermal transmittance of the window glass) and a Uw value of 0.71-0.75 W/m²K (thermal transmittance of the window plus the frame), the average price for windows with enhanced safety is EUR 424.40. The test revealed that, at EUR 231.30, WAKU offers the least expensive standard-size (1,000 x 1,400 mm) PVC windows, while Rieder, at EUR 832.90, leads the high-end market.

 

Highest-Priced Wood-Aluminum Windows in Vienna

For standard-safety wood-aluminum windows with a Ug value of 0.5, the price was EUR 625.40. For added safety, customers were expected to pay EUR 665.20 on average. Wood-aluminum windows with a Ug value of 0.6 are a third more expensive, due mainly to the better frame and depth values. On average, the surcharge for windows with added safety was 42.3%. Wood-aluminum windows are most expensive in Vienna, with an average price of EUR 740, and cheapest in Styria (EUR 534.40). Among the dealers participating in the test, Strussnig sells (EUR 532.50) the lowest-priced wood-aluminum windows (1,000 x 1,400). Hrachowina lies at the opposite end of the price range. For PVC lift-and-slide doors, the average price stood at EUR 4,280. “You’re paying not only for safety features and good thermal values, but also for the brand,” Viorica Jeler, author of the study, explains. For wood-aluminum lift-and-slide doors, the average price is EUR 6,700.

 

Rebates Instead of Lower Prices

The mystery shopping test also inquired about installation prices. The average price was EUR 2,274. Overall, the installation prices were highest in Vorarlberg (EUR 2,886) and lowest in Carinthia (EUR 1,860). Among the window companies, Rieder compensates its high installation prices with generous rebates. Rieder ranks a clear first in rebates, with 46.5%, followed by Bruckner (23%) and Rekord (20%). Roughly half of the dealers (51%) automatically offer rebates, whereas 10.3% offer rebates only after dealing with the customer in person or when drawing up the contract.

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Prompt Response Now the Norm

As businesses continue to understand the growing importance of online communication with their customers, Interconnection Consulting decided to analyze how the 34 leading Austrian manufacturers of prefabricated homes react to online customer inquiries. The results show that, compared to last year, manufacturers have improved their online customer service. Their reaction time to query emails fell by nearly 10%.

Prompt Response Now the Norm

Companies are getting better at tapping into the potential of the internet for generating leads. Of those companies contacted, 69.4% reacted to a customer’s initial online inquiry. Following a reminder email and a phone call, the percentage of companies who responded jumped to 96.8%. More than two-thirds responded within two days.

Wide Range of Responses

Overall, the prefab home manufacturers reacted in widely different ways. Whereas 39.3% did not respond to any of the customer’s four questions regarding warranty, building regulations, financing, and energy, a quarter of the companies (25.2%) took the time to answer all of the questions. In addition, a third of the manufacturers (33.3%) offered additional information in electronic format in attempts to persuade their interested customers; 20.3% provided printed material. However, after sending out the information, the manufacturers fell short of their ostensible goals: only 21.4% of the companies who sent info followed up to ask if their customers were still interested in a home. “Advertising costs accrue without a follow-up. Ads are not being monitored as to their efficiency. And businesses are losing customers due to poor tracking and record keeping,” explains Viorica-Maria Jeler, author of the study.

In-Person Meeting Preferred

Companies utilize online communication to create a link to the offline world. The manufacturers under investigation chose different methods of closing a deal. Two-thirds (66.1%) suggested an in-person meeting, 16.1% preferred a phone call, and nearly one in ten (8.9%) was content with corresponding by email.

In this study, Interconnection tested the 31 leading Austrian prefabricated home manufacturers. To do so, the manufacturers were contacted with a specific question regarding possible business. Their responses were then analyzed.

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China’s New Economy Cools Down Global Window Market

The global window market reached a volume of €68.8 billion in 2017, corresponding to a sales volume of 442.9 million window units and representing a growth of 2.4% over the previous year. According to a new study by Interconnection Consulting, annual sales will continue to rise by 3.3% until 2021.

China’s Bull Economy Stagnating
China is by far the largest global window market, with nearly one in three windows (30.8%) being sold there. In terms of sales volume, however, China’s market share of 15.9% is only third worldwide, lagging behind Western Europe (25.8%) and North America (21.5%). This disparity stems from China’s attempt to accomplish its massive urbanization efforts with inexpensive sash windows and simple metal frames, whereas demand in Europe, for example, is clearly for high-quality, energy-efficient windows (with a high R-value). On account of the cool down in China’s housing construction, due in part to anti-corruption measures adopted by the government, double-digit growth rates would seem to be a thing of the past. For this reason, Interconnection Consulting expects only a moderate annual growth of 2.9% up to the year 2021. By comparison, India is the region with the largest growth worldwide (+5.9%), stemming in part to gradually rising labor costs in China and South Korea, which, in turn, has resulted in a higher employment rate and increased construction activities in India.

North American Market Edging Towards Saturation
Growth in North America is expected to rise 3.3% this year, which is “already a sign of market saturation,” according to Laszlo Barla, author of the study. Market dynamics in recent years have grown increasingly weaker. In addition, the Trump administration has given rise to a degree of uncertainty among both buyers and lenders across the country. Similar growth (+3.1%) is forecast for Latin America in 2018. The most-recent economic figures have raised expectations that the national economies in South and Central America will continue to recover. Certain risks do remain, however. Certain South American currencies (the Columbia peso and the Brazilian real) are still among the most volatile in the world.

Low Interest Rates Bolster Europe’s Window Market
Not until 2015 did the Western European window market start seeing renewed growth following the heavy toll it took from the financial crisis of 2008. Currently, the region is benefitting from low lending rates, making investments in private housing construction attractive and thereby bolstering the window market. In the previous year, window sales grew 3.2%. Yet the window sector is threatened by ever-diminishing land available for construction and the concomitant rise in real estate prices. In similar developments, Eastern Europe also saw a turnaround in growth as of 2015 – though with even higher growth rates. Sales grew 6.0% in 2017. Low interest rates, rising salaries, and an efficient labor market with sinking unemployment are all factors enabling more and more people in Central and Eastern European countries to be able to afford a home of their own.

Housing Construction Gains Market Shares
Metal frames still manage to represent the highest-volume product group globally with 187.4 million units, followed by PVC windows (164.2 million units) and wood windows (73 million units). PVC windows are expected to register the largest growth in sales, with an average annual growth rate of 4.0% to the year 2021. Double-pane windows continue to be the dominant window type with a sales volume of 270 million units, followed by single-pane windows (104 million) and triple-pane windows (67.4 million units). Triple-pane windows also have the greatest growth potential (5.2% annually to 2021). In general, the share of housing construction to non-residential construction is increasing and is currently (2017) at 61.5%.

> read more

Window Dealers Remain Shut to Online Inquiries

Online inquiries in the Austrian window market continue to go neglected. According to a recent mystery shopping test undertaken by Interconnection Consulting, 86% of the participating window firms did not even respond to an initial online inquiry. In the investigation, 115 of the leading window producers in Austria were contacted with a specific question regarding possible business. Their responses and their offers were then analyzed.

 

Customers Need Perseverance

Of the 115 companies contacted, a mere 16 responded to an initial inquiry. The response rate rose to 60% after a follow-up email. Only when contacted a further time by phone did 90% of the analyzed dealers respond to the inquiry regarding windows and lift-and-slide doors. Viorica Jeler faults the dealers’ responses: “The emails are largely hand crafted instead of using standardized phrasing to cover the gist of the sale.” A stunning 10% of the dealers did not even respond after a follow-up call and email.

 

Answers Seldom Adequate

Although nine out of ten dealers did respond to the inquiry in the end, only 35.9% of dealers studied actually responded to all four of the questions asked, while 37.2% of the dealers did not answer a single question. Companies responded most often (46.2%) to the technical question (whether installation, removal, and disposal are provided), followed by information regarding burglary protection (44.9%), warranty (42.3%), and government subsidies (39.7%). The length of time it took for a response also left something to be desired. Responding within 24 hours has become an internet standard. However, only 26% of the companies that responded did so within this time frame. On average, customers waited 6.4 days for a response. Most of the inquiries were answered in four days (median value).

 

Business Dealings Show Room for Improvement

Of the dealers who responded, 76.7% made an offer, a rate just marginally above last year (75.0%). In their responses, the dealers revealed preferences in working with various brands. For example, a German brand was offered (1.3%) instead of the requested Austrian brand, and instead of a specifically requested brand dealers offered a different one (6.3%). Less than a quarter of the dealers (23.1%) sell additional products through cross-selling initiatives. The study also shows that only few dealers seemed actively interested in closing a deal: just 11.5% of the dealers who made an offer followed up by asking if the customer was still interested or had any questions. More than two-thirds of the dealers who made an offer were unsatisfied with communicating in writing and suggested a phone call and/or an in-person meeting.

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Leading Companies trust in Interconnection Consulting

Deutscher Holzfertigbau Verband

Interconnection provides us with the prefabricated house study a plausible and veritable data basis for the analysis of the actual situation in the prefabricated house market and beyond for the assessment of the future market development. We are happy to use this interpreted data for our lobbying and everyday work.

Thomas Schäfer (Managing Director, Deutscher Holzfertigbau-Verband)

ELK

The prefabricated housing study by Interconnection Consulting shows a real picture of the actual market situation and forms a valuable basis for our strategic decisions.

Gerhard Schuller (CFO ELK)

Epson

EPSON is satisfied with the Interconnection's way of communication with the market and with clients. EPSON is also appriciate the Interconnection's continuous work trying to aim the report to be at the higher level. As a result, EPSON rely on Interconnection data, for the market of POS Printers and Systems.

T.Murakami (Brand Management, Seiko Epson Corporation)

Saint Gobain

Long experience and deep understanding of the construciton industry markets make up the quality of the IC studies. Interconnection Consulting is a constant companion concerning the assessment of markets and helpful for decision-making.

Bernd Blümmers (Directeur General, Saint-Gobain Solar Systems, Central Europe, Aachen)

Salamander

Interconnection Consulting reports deliver a worthfull external perspective and are so a good contrast with regards to our internal market point of views.

Pedro Posada (CEO Salamander Industrial Products Spain)

Scandinavian Business Seating

The IC Report gives a very good overview of the Western European office furniture market, in a well-structured way. The data is helpful to better understand the market developments and drivers.

Beatrice Sotelo (Director Business Development , Scandinavian Business Seating)

Schneider Electric

Under a short time constraint, Interconnection was able to deliver an outstanding study that exceeded my expectation in terms of quality and market breadth. I highly recommend Interconnection to anyone in need of market research.

Jeff Canterberry (Director of Strategy and M&A, Schneider Electric)

Österreichs Personaldienstleister

The sales management tool ZAIS has become indispensable for many Austrian temporary staffing providers for fast and correct sales management decisions. A tailor-made online cockpit provides comprehensive monthly figures and data on temporary work and the labor market in Austria, while at the same time impressing with its overview and intuitive user guidance. Interconnection Consulting has consider individually to all user needs during development process and also convinces with fast response times during operation.

Dr. Gertraud Höltl (Generalsekretärin Österreichs Personal Dienstleister)

Admonter

At the IC Impulsworkhop "Sales Optimization" we appreciate not only the practical relevance, but also the eloquent language and the perfect rhetoric. The most important benefit for our company was the sales pipeline. Adrian Capellarie (Head of Sales Admonter Holzindustrie)

Gaulhofer

I appreciate on the forum "Impulsworkshop Vertriebsoptimierung" the practical relevance of Peter Berger linked with his practical examples. I also liked the sovereign presentation style. The most important benefit was for me, on the one hand refresh of methods and also the sales management tools that were shown. Ing. Dietmar Hammer (Head of Product Management Gaulhofer)

Kontron

The most important benefit of the Impulsworkshop "sales optimization" was in my view the procedure of the definition of strengths and the entire sales process. Mr. Berger is very competent and professional. Fabian Freund (Sales Manager, Kontron Austria)

Sodexo

When developing new market strategies, Interconnection is a trusted source we always come back to. Christian Frey (Marketing Manager CS DACH)

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