In a fall filled with hurricanes, Supreme Court nominations, avian flu warnings and war, both Time and Newsweek made room in their pages for an issue that affects all of us: closets. More specifically, homeowner demand for storage space, and how that translates into big business in custom and semi-custom closets.
Five years ago, an NAHB survey of customer preferences showed that 30 percent of homeowners thought that master bedroom closets did not provide enough storage, while 47 percent said that secondary bedroom closets did not provide enough space. As a result, homeowners want to make the best possible use of the closet space they do have, or create bigger closets.
|Furniture-look closet systems eliminate the need for a separate room and even for dressers.
Photo courtesy of: 2005 California Closet Co. Inc. All Rights Reserved
Forget the white-walled rectangle with single rods and wire shelves. In fact, forget the word "closet" — they're storage solutions, and they have multiple functions, features and finishes. Job prices can range from several hundred dollars to more than $30,000.
The storage industry, which includes manufacturers, retailers and installers of a wide range of products, is about $2 billion annually, estimates Kristina Ferrigan of the National Closet Group. The group represents about 50 independent closet companies with $100 million in annual revenue.
Franchiser California Closets, with 27 years in business and 95 U.S. locations, brought in $208 million in 2004 and projects $239 million for 2005.
"Everybody I've talked to seems to be growing about 20 percent a year," says Ferrigan, who is director of marketing for Closet Works, a National Closet Group member headquartered in Elmhurst, Ill. Like many closet companies, the firm designs, manufactures and installs its own products, usually working directly with homeowners. Builders and remodelers, however, are a growing portion of the business.
If you want to hire a closet company as a subcontractor, keep in mind that it can be hard to get much of a markup unless you lump the cost into an overall fixed sum contract for a large project. "It's like homeowners can sense the markup in there," says Ferrigan. "They tend to go and do it after market."
Another option is to have clients work directly with a closet specialist. Lisa Lennard, corporate program development manager for California Closets, says that she used to quote retail price to the homeowner but bill the contractor at a 10 percent discount, in essence providing a referral fee.
Owners of design/build firms may choose to keep the entire project in house, especially if they employ finish carpenters and use different materials. For example, Jim Edgar, owner of Starcraft Custom Builders in Lincoln, Neb., builds his closets with solid wood rather than particleboard or plywood.