USA Market Share

There are several major retailers who are selling window coverings in United States, retailers like Wal-mart, K-mart, Target, Home Depot and Lowes. Here is the data that was provided by the Company A and the data was from 2014.

In figure 13, the bar graph is based on the number of linear footage of each different product displayed in different retail stores. Linear footage is a term that is used in this industry when it comes to merchandising the product. It is referring to the footage of displays or bays that have been used for merchandising the products. In another words, it is the number of feet that displays certain products visually for the consumer to shop. From this bar graph, we can see a couple things; one, both Lowes and Home Depot has most linear footage in total in store than the other three mass merchants, Wal-mart, K-Mart and Target. Two, both Home Depot and Lowes have the most product varieties (or number of products) when compared to mass merchants, Wal-mart, K-mart and Target. These differences are due to different types of stores and different types of customers. Home Depot and Lowes are Home Improvement stores which appeals to customers looking for more selection and specialized window coverings. Thus the product range offered by them is much more and the selected sizes offered are a lot more than the mass merchants. Mass merchants like Wal-mart, K-mart and Target have fewer sizes and less product variety because their customers are less specialized shoppers. Here is a pie chart that shows the market share of each different type of window coverings in United States.

From figure 14, there is clear evidence of venetian blinds been the number one selling window covering from all the different categories. It consists of a total of 56%.

The second place is the roman shades & Roll-up shades of 19% overall. The third place is the fabric & cellular shades which has 11%. It is amazing how many window coverings can be sold in a single year. It is estimated that Wal-mart sells their 1” mini blind (both LF & RD) by as much as 12 million pieces in a single year, Lowes sells their 1” mini blind at about 10 million pieces (both LF & RD) in a single year. This is just one single product in the window covering industry. The number would increase if we added everything up to an annual total of 2.0 billion dollars of window coverings in United States.

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Figure 13: Market Share of five major retailers in USA. Source: Retrieved from Company A

Figure 14: Market Share of Different Types of Window Coverings in USA. Source: Retrieved from

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2.3 Sales Channels & Distributions

There are many sales channels for the window covering manufacturers but there are two major channels. One is thru the local retailers in the United States and another one is thru the online. From Company A’s sales data, it has been thirty years for them selling stock size window coverings thru local retailers like Wal-mart, JC Penney, Lowes, Home Depot and etc. It is until recent years that Company A has started to sell thru online. The stock sizes products are dealt in Free-On-Board (FOB) terms and the product are loaded in a container and shipped from China to the retailers in the United States. Depends on the type of product, each container can hold up to few thousands of units. The ownership of the product is transfer from the manufacturer to the retailers. The retailers take the products and distribute them into their own stores. The retailers would then sell to their customers who visit their store.

For online sales, the product are manufactured and shipped from China and then storage in the warehouse in the United States. The customer orders online from the retailer’s website and the product is then shipped from the warehouse to the customer.

Customer can order online from one unit to multiple units. The term is either freight prepaid or freight collect. The retailer does not take the ownership of the goods.

Figure 15: Revenue of Online of Company A

In figure 15, there is a huge increase in online sales from Company A in the first few years and there are double digit increases in the latter years. With this data, it clearly shows online sale is a significant business model to an industry. In figure 16 and 17, photos show difference between retail shopping and online shopping.

26 Figure 16: Lowes displays window coverings.

Figure 17: JC Penney’s website of online shopping.

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2.4 Related Thesis of Window Covering Industry

Window coverings are not only part of home living; they are an essential part of home décor. In addition to light filtering, sound-absorbing, landscaping and embellishment; a decorative window covering and its design style highlights each consumer’s preference and personality. From the historical point of view, in the early days mostly natural materials like bamboo and wood were used for the main materials of window treatments. It was not until the 17^th century that it was replaced by textile materials. As late the 60’s and 70’s, it was replaced by the cheaper materials like Poly Vinyl Chloride or PVC. However, environment conservation protection awareness has caused the consumer to look for other safer and environmentally friendly materials.

Such an increase in demand has led the industry to shift towards fire retardant, low cost and recycled materials which will be the next goal of development. (吳宗諭, 2009)

Window covering is an industry led by the window covering manufacturers.

Once in a while, new textile materials are provided by the fabric mills to be selected by these window covering manufacturers. As the technology of textile advances, newly innovative window coverings are presented in wide varieties with multiple aesthetics and functions. Not only covering and insulating interiors but others like sound reducing and electromagnetic resistance are added features. Other than the functions mentioned above, the biggest function of a window covering is that it changes the mood of the interior as the slats or draperies open and close. The lighting effects from the window change the context of the home furnishings. (林建良, 2010)

Window covering has a multiple variety of products. It has soft (Ex.: drapery, roller shade, pleated shades, cellular shades, etc.) and hard (Ex.: aluminum made, steel made, wood made and PVC made mini blind, shutters and decorative rods.) as two categories, both have privacy and decorative features. At the end of 1979, the PVC mini blind was developed from zero to a revolutionary consumer product. It created a huge wave in the industry. The years between 1983 and 1989 created the heyday of Taiwanese plastic mini blind manufacturers as export numbers reached their highest peak. On October 6^th, 1990, Taiwan's Ministry of Economic Affairs promulgated on the act of "Indirect Investment or Technical Cooperation Management in Mainland China ", which opened up both indirect investment and encouraged

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sizeable manufacturers that survived this ordeal. The reduction of export orders and the sever industry price competition resulted in a low profit margin. Window covering manufacturers were forced to turn to products that were high end products, unique products, or custom products such as roman shades, roller shades, etc. These new window coverings required higher skills in manufacturing, fabric material and multiple presentations, thus providing a higher profit margin and have become the main stream in the Taiwanese window covering market. (林建良, 2010).

In terms of functionality, window covering, surrounding temperature and energy saving have a close relationship among one another. (林暐順, 2004). Matching room color is not an easy job! Coordinating colors not only makes a home appealing, but also allows the home owners to feel happy. Non-coordinating colors may cause and effect serious health issues. Some soft printed window coverings have colored dyes and chemical additives used during printing and post manufacturing process. These so called resins may contain formaldehyde, a type of carcinogen. (紀康寶, 2010). In the current living environment, window coverings have great impact on the human body’s psychological and physical health. However, in the current domestic market, it only recognizes “Fire-Retardant-Certified” window coverings (Fire Services Act Enforcement Rule Article 7). There are no other rules. As the technology of home furnishings advances and skills improve and with the opening of international trade, new window coverings are innovated every day. Different levels of imported fabrics by the trading companies have flooded the current market with untested window coverings and salespeople who have no knowledge of such an impact on health, directly or indirectly, leave the home owners situated in an unhealthy environment. So, the Industrial Development Bureau of Ministry of Economic Affairs is actively promoting “Soft Window Covering Made In Taiwan Smile Face Product Tested Quality Certificates”, lifting the good image of quality made products that are made in Taiwan protecting consumer health and providing safety. (蕭志舟, 2013)

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Chapter 3 Research Methodology

This research is by way of case study of Company A which collects data of their online sale history in a single year. This chapter reveals in four sections; First section gives introduction of Company A and covers its background; Second part of this chapter discusses Company A and its market share; Third section discovers the research procedure and; the Final section covers the analysis of this research.

3.1 Introduction of Company A in Study

Company A is one of the leading window covering manufacturers in Asia, exporting a full line of mini blinds, roll up blinds, vertical blinds, shutters, roman shades and convolute rollers－all manufactured to their customers specifications as part of their private label program. Corporate headquarters and show room are located in Taipei close to the Taiwan World Trade Center and easily accessible to visiting buyers. Products are manufactured at our two factories in China. These facilities have more than 60,000 sq. meters of manufacturing space, equipped with up-to-date equipment and staffed by management with extensive experience in plastic technology, fabrication and assembly. Both are completely self-sufficient facilities directed from the company’s Taipei headquarters. All PVC products are manufactured in facility No. 1, while textile and woven wood products are produced in facility No. 2.

A third facility will be located in North Vietnam which is one hour away from the Hanoi Airport with more than 90,000 sq. meters of manufacturing space. This company is strong and continues to grow in size.

Company A is dedicated to continuous development of new products and improvements that respond to market demand. A continuous flow of new product is the life for a company to remain competitive in its industry. (Barczak, 1995) Company A stays in close contact with markets worldwide through their US and Canada liaison offices. This has contributed to company A leading in development of

“Insulated Cellular” venetian blind slats; “Clear-View” room darkening blinds; a new

“Luxer” gloss finish to give practical vinyl an aluminum look; and patented

“Child-Safe” cordless systems for both blinds and roman shades. Other quality innovations are under development as part of a continuing program to supplement its basic assortment of high volume promotional products.

Company A has been in this industry for over 30 years and stays in the top three major manufacturers in China and is a current vendor/supplier for major retailers in USA including but not limited to, Home Depot, Lowes, JC Penney, etc. Not only has their sale growth in the past 15 years doubled to over 75 million dollars, their number

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of employees has been doubled with more than 1300 people today. Their gross profit has increased as much as 20% compared to 15 years ago. The key to its success lays in their fast development of new product innovation and acute sense of adaptation prior to the market change. A firm deals with the market intelligence to facilitate the customer needs and generate appropriate response to such needs is the key to success.

(Borges, Hoppen, & Luce, 2009) As the technology advances throughout the years, Company A has been implementing a new management system from the inspiration of Toyota, the automaker; new automated machines for the manufacturing process; and new training programs for its employees to become more diverse and trained with multiple skills rather than single task work.

However, both labor and material costs have increased over the years and the profit margin has been reduced. It is important to micromanage the business by more detailed analysis in its sales.

3.2 Product Portfolio of Company A

It is estimated that there are over 100 million units of hard window coverings shipped from China to United States and Company A has about 10% of its market share. See below pie chart of an overall view.

Figure 18: Product Type Category in units of Company A.

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From figure 18, the pie chart shows that there is a significant quantity of mini blinds manufactured by Company A, it is over 50% which is more than half of what Company A has manufactured. The second highest product is the fauxwood blind which is another type of venetian blind but premium. The roller shade is in third place.

However, the figures would be different in dollars, it is a different story.

Figure 19: Product Type Category in dollars of Company A.

In figure 19, the pie chart shows products in dollars of Company A, fauxwood Blind has a higher ratio than the mini blinds. Fauxwood blind is indeed a premium product which costs more to manufacture. Mini blind is a commodity product which is sold by bulk size. Thus dollar value of a mini blind is much lower than the fauxwood blind. Another very extreme product is the Shutters, it consists only 1% of units but 11% of dollars. That’s 11 times difference between dollars and units. Shutter is a very high premium product with extremely high costs to manufacture. For the purpose of this research, it is important to categorize them into different types of categories by their light control. It is difficult to analyze them by product type categories as it has no relationship with our three factors.

It is important to review these products into three different product categories as specified in table 1 in both sales units and dollars. Those three product categories are Light Filtering, Room Darkening and Light Blocking. For the purpose of this research, comparison can be made between the sales of stock sizes and the online sales. Here is

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the layout of all three based on the units and dollars.

Figure 20: Product Category in Units (top) and Dollars (bottom) of Company A.

The light filtering category has over 50% while light blocking only has 31% in units, but in dollars, the light blocking has over 50% and light filtering has 28%. The data clearly shows that light blocking is more expensive than the light filtering in cost.

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It would be interesting to compare this with the online sales. See figure 21 for the online sales.

Figure 21: Product Category in Online Sales in Units (top) and Dollars (bottom) of Company A.

The data of online sales is telling a different story than the stock sizes. This data

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clearly shows the online shopping focuses on more expensive and light blocking window coverings. Because of these differences between stock size sales and online sales, this research looks into the three factors that are affecting the online business.

These factors are environment, economics and demographics in the United States.

Table 2: Key Factors and Their Elements with Brief Descriptions

The above table is a list of this research looking at the six elements that may which means that the products are manufactured and shipped to vendor’s warehouse in United States. These products are sold through the retailers’ online business; and then courier delivered directly to the consumer. The original data consist of sales units and dollars of each state and filed by different retailers. The data also consist of product returns which were the result of incorrect orders or damaged during shipping and are removed from the data. Finally, these data of different retailers are then pooled together in one large organized data.

However, as there are many different varieties of products in the pooled data, products are then categorized into three types by sharing the same common properties of light control. Please refer to table 1 in chapter 1.

Geographic data are collected from the original data and further analysis is done by different regions in United States. United States Census Bureau defines four statistical regions, Northeast, South, Midwest and West. See below figure 22. This

# Key Factors Elements Descriptions

Average Temperature The average temperature of each state.

Number of Clear Days The number of clear days of each state.

State Population Population in each states.

Racial Population Different racial groups' population in each state.

Home Sales Number of Home Sales in each state.

Household Income Median Household Income in each state.

Environmental Factor

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would help to understand the different regions and their relationship with sales. These data are affiliated with other three factors, weather, demographic and economic.

Figure 22: Census Regions and Divisions of the United States; Source Census Bureau of United States of America. Source: www.census.com

Weather data are collected through “National Oceanic and Atmospheric Administration or NOAA” including the Average Temperature in 2014 and Number of Clear Days (the average number of days annually when cloud covers at most 30 percent of the sky during daylight hours) from the website of “Current Result”. Both the average temperature of each state and the number of clear days were collected from the same city in the same state.

Demographic data are collected through Wikipedia website which consists of the population of each state in year 2014 and racial breakdown including Non-Hispanic White, Hispanic or Latino, Black, American Indian or Alaskan Native, Asian, Native Hawaiian or Pacific Islander and Mixed Race in fifty different states. The ratios of different races were based on the year in 2010 as it is closest data to 2014.

Economic data are collected from two web sites. The Home Sales (number of home sales in year 2014) in each state is collected from the Zillow web site and the household income by states of year 2014 is collected from the Wikipedia website. The

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data from Zillow consist from June of 2008 to November of 2015, thus only the data collected from year of 2014 were used.

3.4 Research Analysis

Every data set has a story, and if statistics are used properly, they do a good job of uncovering and reporting that story. In this research, descriptive statistic, correlation coefficient and multiple regressions are used as tools to analyze the data.

Descriptive statistics is taking a set of data and boiling it down to a set of basic information. Correlation coefficient is used as a tool to see the strength and direction of the linear relationship between x and y. Then regression analysis is used to estimate the relationship among variables.

As the researcher collects the data, the researcher arranged data accordingly by

As the researcher collects the data, the researcher arranged data accordingly by