I’m a bit troubled as I write this post. In a recent meeting with a representative of Hunter Douglas, they outlined a new pricing strategy that is of minor concern to me. I haven’t really determined how I feel about it yet, so I’m putting my thoughts here.
When I think about the name Hunter Douglas, I think of the world leader in window fashions; whether they be blinds, shades or other specialty window coverings. They have done a great job in promoting themselves as the “king of the market”. Now, as a business owner, I understand trying to capture as much of the market as possible, but here is my concern.
My representative asked me who I purchase the entry level product from. When I responded, they told me that they would like to get that business back and are willing to offer super-aggressive pricing in order to do that. Now, again, when someone offers you great pricing, it provides an opportunity to pass that pricing on to your clients and everyone wins. But there is another side of this, that my cynical mind struggles with. The company that Hunter Douglas wants to beat out is a Hunter Douglas owned company. A number of years ago, Hunter Douglas bought up a bunch of companies that were eating into their market share. I have no issue with this, as I’d do the same thing, if I had the same options. But when they start attacking their own company, then my antennae come up. To illustrate why, I will discuss a local company that many of you in the Reno and Lake Tahoe area will remember. Reno Air.
Reno Air was a start-up airline based in this area. They used Reno as a hub and we got great service at great prices and we supported a local business. So, what happened to Reno Air? American Airlines profits were impacted by the success of this smaller company, so they bought it. We were told that they just wanted to take advantage of the profits and customer base that Reno Air had and that they wouldn’t make any major changes to the airline. In reality, American Airlines made wholesale changes. They closed the airline completely, they took the flights from dozens per day down to two per day and effectively raised the prices per flight dramatically. So, American Airlines maintained their profit margin, reduced their competition and forced the public to deal with the higher prices and reduced convenience.
How does this relate to Hunter Douglas? When they purchase a competing company and then attack it, in the end, it hurts the consumer. When you have fewer options of where to buy from, the end result is usually not good. If they were competing against an independent company, I would have no issues. It’s just that they are buying up companies, seemingly to shut them down. When they have enough of the market share, what will happen to their prices? In reality, Hunter Douglas has some products that are premium in function and design and therefore have premium prices. My customers have no problem paying a premium price for such products. But, when Hunter Douglas forces out the lower price competition for the entry level products, like standard window blinds, roller shades, vertical blinds and the like, I fear that they will eventually cause price fixing and an escalation of the prices for everyone.
The good news is that there are still plenty of other window coverings manufacturers. There is nowhere near a monopoly by Hunter Douglas at this point, but this was a troubling trend that manifested itself to me recently.
Not that they are asking me, but my suggestion to Hunter Douglas would be to focus on the products that are truly unique and position itself strictly as the premium window fashions leader. Maybe they should re-brand their “entry-level” products as being “A Hunter Douglas Company”. Still maintaining the brand, but not cheapening the upper end product by price competing on the basic blinds and shades.
In conclusion, I love the Hunter Douglas products. When someone wants a unique product with tons of style, I almost always pull out my HD products. When someone wants cost to be their primary focus, usually the Hunter Douglas product won’t be shown. I just want those options not to be blurred. Short term, people will be able to get great quality products from Hunter Douglas for a fantastic price, but long term, I fear that once the competition has been cannibalized, the prices will go up significantly.