These are uniquely challenging times for the kitchen and bath design trade, with a once-in-a-lifetime confluence of COVID-related headwinds and robust demand forcing design pros to remain especially vigilant, agile and adaptive if they’re to successfully navigate the market’s choppy waters.
That much should be evident to any company that designs and sells kitchens and baths, as well as to those that manufacture, market and distribute products from cabinetry, appliances and plumbing fixtures to countertops, hardware and accessories.
For even as the market remains on a projected growth trajectory – its expansion fueled by changing lifestyles, home-equity growth, rising mortgage rates and limited housing inventory – design pros face an unprecedented comingling of opportunities and challenges as 2022 winds to a close.
Most vexing among the challenges are inflationary pressures that continue to spark significant price hikes for both finished products and raw materials, along with lingering supply chain bottlenecks and declines in affordability that have stunted demand for new and existing homes.
Project timelines in the high-end, mass-market and entry-level sectors have risen markedly throughout 2022, with backlogs extending for months in many cases. A reported uptick in product and material defects has further lengthened lead times, while growing economic uncertainties are apparently leading wary consumers to postpone or cancel major remodeling projects. Vendor loyalty, in many cases, has also all but disappeared, with brand-agnostic consumers increasingly self-sourcing available products from e-commerce sites or settling for their third or fourth choices.
As if all of this isn’t enough, labor costs have been on a months-long incline, with a dearth of qualified employees and subcontractors having an adverse impact on companies’ ability to keep pace with demand. Indeed, many design firms report that they’ve been forced to make significant wage concessions to attract and retain skilled labor. A significant number, trying to preserve profit margins, are passing cost increases along to clients. Others, attempting to adhere to client budgets and ensure sales, are absorbing margin hits.
This challenging market, of course, is having a telling impact on companies at all levels of the trade. And it’s resulted in a widening array of tactics aimed at helping businesses cope.
Manufacturers, for their part, are investing in automation and square footage to drive production efficiencies and increase capacity. They’re also warehousing additional inventory to help reduce backlog, while slow-selling product lines are being discontinued to focus on top sellers.
Supply chain disruptions and price hikes have also been increasingly leading specifiers to explore new and untested suppliers, distribution channels and brands. A growing number of design firms have become more flexible than ever in terms of product sourcing – leveraging multiple vendors, shifting from foreign to domestic suppliers and substituting generic brands because the products they normally specify are difficult to obtain. Many have been forced to educate themselves about products they’re only marginally familiar with, while increasing the number of brands they offer so that clients don’t buy elsewhere.
A significant number of design pros also report that they’re ordering, and stocking, products further than ever in advance to lock in pricing – or are requiring larger-than-normal deposits. Still others are increasingly offering virtual design services in response to a shift by consumers away from in-person design consultations.
If all this sounds especially challenging, it’s also, in its own way, extremely encouraging in that it signals a willingness on the part of industry professionals to recognize, and react, to the unique set of forces shaping the market – instead of simply crying in their beer.
Clearly, this is not a time for a “business-as-usual” approach. Now, more than ever, it’s a time to stay closely attuned to the forces impacting the market – and to be prepared to turn on a dime when it comes to adopting outside-the-box business strategies.
Kitchen and bath design firms, to their credit, have skillfully adapted for decades to a vibrant, fast-changing market. There’s no reason to believe that they won’t adapt to current and future market forces, either.
They’d better – or they’ll be left in the dust. ▪