Survey supports building optimism in POU/POE industry

July 1, 2014

Our findings show positive signs of dealer performance and opportunities over the past 12 months and into the future.

In recent months, through conversations with dealers and other water treatment professionals as well as articles published in Water Technology magazine and on, there is definite optimism for our industry’s future. There is also a feeling of being ready to move forward and past one of our country’s most significant economic setbacks in recent history. With dealers looking to put the business conditions of 2008 in their rearview mirrors, studies and research continue to predict growth for our industry, indicating a much brighter future ahead.

In this year’s survey, which supports that dealers are riding the wave and serving customers’ growing interest in filtered or soft water, the majority of respondents noted that profits were up over the past year. “Up, by 10 percent or less,” was an option selected by 35.9 percent of respondents and “Up, by more than 10 percent,” was the response by 34.4 percent.

Optimism in the news

According to The Freedonia Group Inc., the U.S. demand for filters will advance 3.6 percent each year to $14.8 billion in 2018. Replacement demand including for water filters as well as regulatory changes will contribute to the demand, sales and end user awareness.

Also from The Freedonia Group, world demand for activated carbon is projected to rise 8.1 percent per year to 2.1 million metric tons in 2018. The new study from the Cleveland-based industry market research firm notes that tightening regulatory standards, particularly in the two largest markets — the U.S. and China — will drive growth.

“In the U.S. and other industrialized countries, these stricter standards will reflect increasing emphasis on mercury removal, while in contrast, in China and other developing countries, stronger standards and stepped-up enforcement will stem from efforts to battle air and water pollution caused by rapid industrialization,” as stated in WaterTech e-News Daily

According to the press release, robust growth in mercury removal applications will drive growth in powdered activated carbon demand, which will significantly outpace gains in demand for granular and other activated carbon products, while powdered activated carbons are also favored in developing countries for their low cost and ease of use in other applications such as water treatment.

Critical issues from industry leader viewpoint

We discussed this year’s survey as well as the critical issues facing our industry with Pentair’s Vertical Vice President Sam Karge. According to Karge, for dealers to be successful moving forward, they have to adapt to post recession consumer buying habits. He also notes some positive outcomes that resulted from recent negative times.

“The ability for consumer discretionary spending to pick up again is a major key indicator for me. In the recession, people had less discretionary income, and when they did have some extra cash, water filtration and softening was at the bottom of the list,” explains Karge, who also serves as WQA’s board president (2014-2015). “Thankfully, the good news is while the recession was bad for the economy, it did clean up many people’s personal budget sheets. I’m more optimistic looking at this year compared to last because consumers have more discretionary income to spend, which gives us the perfect opportunity to make water treatment top of mind.”

However, as more homeowners and business owners or managers are attracted to your services, a new type of customer has emerged. Today’s customers are smarter in regards to water treatment technologies and potential contamination risks of water. The Internet as well as traditional media coverage of water issues has contributed to the spike in consumer awareness.

“Consumers are better educated, they know how to use the technology to their advantage and have better alternatives for water treatment,” says Karge. “In order to meet these new expectations, dealers need to embrace new technologies.”

Karge adds that dealers shouldn’t view the Internet and apps as competition, but rather a tool to grow business. “If you ignore it forever, you won’t survive long term,” he says.

Price is still an important factor for many customers. As a result, the Internet and retail stores have increased the risk to lower customers’ expectations through cheap, easy to obtain POU/POE equipment. Not only is the customer making an uneducated purchase driven by a low price, but our industry’s reputation is often lowered by these bad experiences as well.

“A major societal trend that negatively affects manufacturing and product development is the recent ‘race to the bottom’ in terms of price and technology. In a big box world, the need to meet a super low price point discourages industry leaders from spending money on innovation,” notes Karge. “In an effort to overcome this trend, Pentair and core WQA members are focusing on how to drive innovations by using certifications to ensure that investments are made so companies, and consumers, can reap the long-term benefits of a high quality product at a reasonable price point.”

Thank you for taking our survey

As mentioned earlier in this issue, surveys are an integral component of forming our editorial content. We would like to thank all of you who took the time out of your busy day to complete our survey. These findings are helpful to our readers and industry all year long.

Since our industry’s trends are always shifting, we included some new topics in this year’s survey. If you have a suggestion on how we can make our survey better next year, please email me at [email protected]

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