Wellborn Cabinet closet lines also offer closet retailers a brand identity.

While better than 2009, the home organization market is certainly not out of the woods. Trends among independent closet-industry businesses — a segment comprised of non-franchised retailers and small chains — suggest business is improving.

“We’ve been in business a little less than four years, and it is not any less challenging — in fact it’s much more challenging — than the first year,” says Tony Sigillito of Liberty Closet and Garage Co., an independent home organization operation in Danbury, CT.

However, this year, Sigillito says, “The tenor of the market and the tenor of the clientele is better. “

Sigillito started his firm as a garage refurbishing operation. “I met up with a colleague in the closet business, we collaborated and designed a showroom that is half garage and half closet.”

For Liberty Closet and Garage, “The showroom gives some validity in the mind of the customer. But I’m not sure there is an economic argument for it. It’s very hard to compete with ‘Chuck in a truck,’” Sigillito says, citing the proverbial competitor that designs and plans from a mobile operation. Independent closet retailers have a growing number of competitors,
including cabinetry and custom woodworkers who’ve entered the business, expanded closets offerings at big-box
home improvement centers, as well as their peers at franchises.

Also challenging independent and franchise firms alike are the do-it-yourselfers, newly empowered by sophisticated online tools for planning home organization systems. Though sometimes supplied by the same sources, closet professionals are quick to assert that DIY programs lack two critical advantages that independent firms provide: planning and design know-how and installation skills.

“Most people don’t want to start down the do-it-yourself path,” contends Sigillito.

Closets firms are becoming much more aggressive about marketing, and are relying on increasingly robust online offerings to provide exposure to consumers searching for advice and services in home organization.

Jeff Klein, owner of Closet Specialists, Savannah, GA, says the market has hit bottom and is beginning to show signs of life. “We’ve seen a little bit of a pulse,” says Klein, who also is president of the Association of Closet and Storage
Professionals (ACSP). The Wheaton, IL, trade group supports all professional businesses serving the home organization market, including franchises, independent operators like Klein and others.

“Different areas of the country are recovering at different speeds,” says Klein, whose business spans the historic
areas of Savannah, GA, and the Hilton Head, SC, region.

To survive, Klein has emphasized repeat marketing to his satisfied customer base. “We’ve always depended heavily on our repeat customers and our referrals. We have tried to target-market to let them know about our product innovations and new lines.”

With new home construction and real estate sales mostly at a standstill, one of the driving forces for home organization services is the realization by consumers that they are likely going to stay longer than expected at their current home. This shifted the mix of business for Diana Augspurger, owner of Closets and More in West Seneca, NY.

“We have shifted from 55 percent of our business in new-home closets to just 12 percent,” says Augspurger.
“Remodeling is taking over.”

While her business is much leaner, Augspurger has not had to downsize her firm, maintaining in-house production. She also expanded into selling more closet fixtures and more complex installations. “The consumer has gotten very sophisticated,” Augspurger says.

Customers will analyze a closet proposal, and compare various approaches to home storage expansion. “We have begun building furniture-like components into projects,” she says.

The Buffalo market where Closets and More operates did not experience the boom and bust of the Southwest and Southeast regions. “Sales are largely flat,” she says. Augspurger, a past president of ACSP, presents a Closets Symposium on August 24 at IWF.

As closet buyers age
Demographic shifts that once sparked moves now lead people to rethink how to get the most of the space they are in.
Empty nesters are a good example of a burgeoning market for home organization services, says Klein.

“Their kids are away at school, so these people are interested in converting a child’s unused bedroom into a man cave or home office and adding a Murphy Bed — turning it into something useful between visits,” says Klein.
“It’s the cheapest room addition.”

In his own business, Klein has been faced with difficult choices, including closure of internal manufacturing after 24 years in business serving greater Savannah and Hilton Head, SC.

“We now outsource our manufacturing,” Klein says. “When I started, I either had to manufacture my own closet components or join a franchise. Now independent closet firms have the option of outsourcing. Was it difficult to make that decision after 24 years? Yes, it was. In this kind of an economy it has caused a lot of closet business owners to revisit that issue.”

Franchise operations, though relatively small in numbers, enjoy national branding and online support.

California Closets, with the largest national footprint of the franchises, is a unit of TFC (The Franchise Company),
owned by FSV Investors. FSV Investors told analysts that California Closets represents 11% of the $1.3 billion revenue it derives from its FSV’s Property Services Unit.