Builder and dealer sentiment regarding business performance shows a slowing of sales activity in a recent survey by Shed Business Journal.
There is a comparable split in the number of respondents showing no change in new orders for the last month (28.1%) or a slight increase (21.9%) compared to those indicating a decline. Half (50%) of those responding to the survey indicated a decline in sales activity in the last month compared to the previous month.
But it is hard to ignore that more than half of respondents (54.2%) report that 2024 sales activity is lagging behind 2023.
On the brighter side, more than half (51.7%) of respondents indicate the backlog of existing orders stayed the same or increased compared to the past month. The August survey reflects sales during the middle of the summer months.
As people finish summer vacations and kids go back to school, look for a tick upward in sales activity. Those in the north will need to prepare for storage needs as winter approaches, which could boost sales.
Despite the feelings expressed regarding a decline in sales activity, employment levels
remain stable. 84.4% of those responding indicate employment levels stayed the same (61.5%) or increased (22.9%) in 2024. A protracted decline in sales could cause a reduction in employment levels as companies try to remain profitable. These numbers do not reflect this.
A combined 90.5% of respondents indicated that material prices have had no negative impact on the price of sheds in the last month. 71.6% report that material prices have not affected the price of sheds with 18.9% saying that shed prices are lower. This shows that the shed industry has a strong supply chain with competitively priced materials. Unstable and rising material prices would be reflected in higher shed prices.
An alternative explanation could be a reluctance by shed manufacturers to pass along higher material costs as sales are slowing. Whereas during the Covid and post-Covid era, price increases were routinely passed along with little to no effect on sales activity. The bottom line is that rising material costs must be passed along for a company to remain profitable in the long-term.
As we continue to survey the shed-building industry and develop a bank of responses,
future comparisons will reveal exactly how shed manufacturers feel about material costs and their effects on shed prices.
NOTABLE COMMENTS
• Shed sales have decreased about 20% YOY in the same areas at the same sales locations.
• Business has dropped off but is coming back slowly.
• It’s hard to say since we added lots in the last 12 months. Sales are softer for sure, but we have expanded our sales base so that has helped.
• I believe shed sales as a whole are softer in 2024. We have expanded our area which is why we stayed the same in workforce and backlog.
• Our biggest challenge currently is dealing with the frightfully increased cost of lead generation. Ads cost and real estate both are costing us significantly more than
ever before.
• While 2023 and 2024 have been harder in general than the previous few years, we have seen growth YTD in 2024.
• Our business is really trying to think outside the box in the shed world. Sheds don’t have to all look alike. Sheds can be exciting and fun and a true reflection of each family’s needs and lifestyle.
• We offer custom buildings so demand is increasing in the finished office and extra bedroom sales.
• We have been selling sheds for about 6 years. Sales in 2024 are horrible compared to previous years.
• In 5 years, this has been the slowest year for sales.
• Orders are a little softer, but I see potential for growth in a wider customer area.
• Inflation has hit hard, and buyer confidence is not good. However, I’m optimistic that shed sales will get better it just may take a little while. Covid soaked the market with sheds.
• This season is a slight increase for us from last year, but we are still not up to Covid era numbers.
• I’ve been in the shed business since 1978. Prior to the early 2000s, it was always a regional mom-and-pop business, where working class families could make a decent living.
Each little shed business was a grassroots, backyard startup, working from the same shoestring budget.
The competition was equal, and the successes were made with quality service and a quality product. In most cases, the customers met the owners, and he was usually wearing a tool belt, working up a sweat, and doing his absolute best to bend over backwards to make the customer happy.
In many cases, it was the owner who would sell you the shed, build the shed, and deliver it, too. If it wasn’t the owner doing the work himself, he had employees that he trusted. When they failed, he showed up to make it right. The owner was never too far away and was hands-on from start to finish.
Nowadays, the industry is flooded with multi-million-dollar private equity firms building networks of independent sub-contractors—all of which are only concerned with their portion of the job.
When customers have an issue, the owner doesn’t show up and fix it; they’re simply redirected to the fine print in the terms and conditions which they were required to sign. If it’s a legitimate company issue, upper management shifts the liability toward the subcontractor.
Either way, the owner, or owners, hide behind corporate umbrellas. They’re not leaving their board room, putting on their tool belt, hopping in their pickup truck, and going out to fix the problem and ensure customer satisfaction.
Many of these companies are made up of accountants and lawyers that have never put on a pair of work boots, got a splinter in their finger, or callus on their hand.
But unfortunately, they’ve flooded the market with a shed for sale on every corner and structured a system that allows their army of sub-contractors to exploit desperate immigrant labor, working excessive hours, to build the sheds in exchange for less than legal wages.
Their system of sub-contractors used to sell and deliver the sheds, hold 100% liability in exchange for just enough earnings to keep them hanging on, just like the sucker at the casino slot machine. He keeps winning just enough to keep him in the game, but in the end, the house always wins.
I hate the way that big business has taken over what had always been a neat little system of small, Christian-based family businesses, with old fashioned values and work ethics.
The shed industry has lost its identity, the “thing” that made it so unique 30 or so years ago.
I’ll be glad to sell out to one of these big firms and retire, because, as you can tell, I’m not happy about the direction it’s gone, but I guess that’s progress, huh?
How does your shed business compare? Do you see things differently? Let us know where you stand. Share your comments at survey@shedbuildermag.com.
Shed Business Journal will be compiling survey results and publishing this information in aggregate in an upcoming issue. Individual responses will remain confidential. Take the survey next time, email the word “subscribe” to survey@shedbuildermag.com.
