On the fence: study points to opportunity

The fence category offers retailers several openings -- including the growing popularity of vinyl, the introduction of composites with similar aesthetics to wood and the aging population in general. According to the Freedonia Group, an industry research firm, these trends and others point to a U.S. fencing market that is expected to grow 2 percent annually through 2012.

Chris Church, an analyst with Cleveland-based Freedonia Group, said home centers will see the greatest opportunity in installation because the fast-growing vinyl fencing requires precision in its installation. “As the market for vinyl fencing continues to grow, home centers may increasingly be the point of purchase for both materials and installation services,” he said. “Also, as the U.S. population ages, a growing segment of the population with the willingness to pay for fencing and its installation will increase demand for such services.”

U.S. fencing demand is expected to grow from 857 million linear feet in 2007 to 935 million in 2012. The residential market accounts for more than 50 percent of that demand, according to Freedonia.

Wood remains the most popular fencing in the residential market and will continue to be the favorite choice for the foreseeable future, the research group said. “Vinyl requires less maintenance than wood fencing, however, consumers like the appearance of wood fencing,” Church said. “And many DIY homeowners are more comfortable installing a wood fence than a vinyl fence.” 

Asked if his group could predict the timing of the housing turnaround, Church said, “We’re reluctant to predict when the market will bottom out. The recent turbulence in credit markets has added to the uncertainty regarding the outlook for housing construction.”

Among fencing materials, demand for plastic and composite fencing is forecast to grow fastest, as these products continue to penetrate the large residential fencing market at the expense of wood products. Plastic materials can offer similar aesthetics to wood products while significantly reducing maintenance costs.

"Composites are an exciting segment of the fencing industry,” Church said. “There is a lot of innovation among composite fencing manufacturers, and many focus on improving the environmental profile of the fencing product. For example, Trex makes its fencing out of wood scrap and recycled plastic grocery bags. Additionally, these products look similar to wood products, often possessing a similar grain and color. Although composites only hold a small share of the market, they are expected to be one of the fastest growing products.” 

In its report, "Fencing," Freedonia said the nonresidential fencing market should provide some of the best opportunities for growth. Installations at institutional buildings will grow this market, as demographic trends drive the construction of new health care and educational facilities.