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Positive Signs

For years, “the economy” had been something of a dirty word. But ask kitchen and bath dealers and designers today, and the word is largely positive, with 60% saying revenue has increased over the past 12 months and 69% projecting increases in the coming year.

authors Janice Costa 

For years, “the economy” had been something of a dirty word. But ask kitchen and bath dealers and designers today, and the word is largely positive, with 60% saying revenue has increased over the past 12 months and 69% projecting increases in the coming year. Storage/organizational features and lighting products, in particular, are booming, while countertops are also seeing strong growth.

That’s according to the National Kitchen & Bath Association’s State of the Industry Report for 2015, which based its findings on research culled from interviews with 640 kitchen and bath professionals.

Conducted by the Research Institute for Kitchen & Cooking Intelligence (RICKI) in conjunction with Kitchen & Bath Design News, the research looked at the economic landscape for kitchen and bath dealers and designers, key growth areas in terms of products and market segments, how showrooms are evolving, critical issues facing today’s kitchen and bath professionals, important marketing tools and more.

 

A Brighter Picture

One of the key findings of the research showed a brightening economic picture, with 84% of those polled reporting that revenue either increased (60%) or stayed the same (24%) last year compared to the previous one (see Graph 1).

And, an even greater number (69%) expect business to be even better this year, compared to 27% who expect it to be about the same and only 4% who expect business to decrease this year over last (see Graph 2).

When survey respondents were asked to submit a one-word description that they feel describes the kitchen and bath industry today versus a year ago, the words were overwhelmingly positive ones, with the most common choices including: Better, Improved, Improving, Competitive, Optimistic, Hopeful, Busy, Progressing, Stable, Stabilizing, Evolving and Strong.

 

Trending Products

When it comes to what’s hot right now, storage and organizational products continue to be all the rage in both the kitchen and the bath; in the kitchen, 58% of those polled seeing increases in this category (see Graph 3) while 51% are reporting increases in this category for the bath (see Graph 4).

Lighting is also trending, with 53% of survey respondents reporting increased demand for kitchen lighting products and 44% citing increased demand for bath lighting products.

Countertops are third on the list of kitchen products showing a spike in sales, with 43% of those polled seeing increases in this category. Also seeing increased sales in the kitchen products arena were induction cooking appliances (43%), cabinets (40%), decorative hardware (33%) and sinks and faucets (30%).

In the bathroom, the greatest demand was for freestanding tubs (45%), vanities (38%), shower systems/tub enclosures (34%), bath heating/ventilation (33%), bath accessories (31%) and sinks and faucets (30%).

 

Showroom Snapshot

The survey also looked at what’s going on in showrooms today, giving a better picture of what’s trending in kitchen and bath showrooms. Of those polled, 68 percent currently have a showroom, with another 3% planning to have a showroom in the next 12 months. The median showroom size among those polled was 2,300 square feet.

The majority of showrooms carry a wide diversity of product categories, according to those polled with almost all the respondents saying they carry cabinets (97%), countertops (95%) and decorative hardware (94%) for the kitchen (see Graph 5), along with vanities (91%) and decorative hardware (89%) for the bath (see Graph 6).

While downsizing has been the buzzword of the past few years, interestingly, nearly 20% of those polled plan to increase their showroom space in the next few years.

Nine in 10 (91%) showrooms of those surveyed carry both kitchen and bath products, with those showrooms averaging nearly eight kitchen displays and just over six bath displays. A

dditionally, nearly half (49%) of those polled are planning to add kitchen displays or vignettes over the next 12 months (see Graph 7), while nearly a third (32%) say they plan to add bath displays of vignettes in the coming year (see Graph 8).

The showrooms carry an average of 6.6 different kitchen product lines and 5.5 bath product lines.

 

Demographic Trends

Dealers and designers surveyed reported doing more projects with Baby Boomers and higher-income households, with 59% saying they are doing more projects for boomers age 48 to 67) than they did compared to a year ago.

Nearly half (48%) say they are doing more projects for higher-income households compared to last year, while 47% mention doing an increased number of projects for Gen X (age 33-47).

While mature (68+) homeowners may have more capital due to working longer, only 29% of dealers and designers surveyed say they are doing more projects for these consumers as compared to last year, and 16% say they are doing fewer than they did last year.

Neither do single people seem to be jumping on the kitchen and bath remodeling bandwagon, if the survey is any indication, with less than a fifth (18%) of respondents saying they are doing more jobs for this segment, while 15% say they are doing fewer jobs for these homeowners as compared to last year.

When asked about the average cost of their projects, dealers and designers reported an average kitchen price of $36,400 and an average bath price of $18,400.

 

 

Business Challenges

Although the economy continues to pick up, when it comes to critical issues and business challenges, price and budget were still oft-cited concerns. Indeed, dealers and designers surveyed report “customers with unrealistic budget expectations” as their greatest challenge, with the next most commonly cited business challenge “customers being more price sensitive.”

One respondent notes, “[A major challenge is] customers looking to take design work to other competitors looking to beat our deal. The competitor [then] uses our design.”

Internet competition was also cited by as a challenge facing today’s kitchen and bath dealers. As one points out, “Our suppliers cannot keep up with the low prices shown online at some retailers. Customers feel that we should purchase the lowest online, even if we feel the online company is not reputable.

But challenges from the Internet aren’t all price related; rather, they can be knowledge related as well. As one respondent states, “Customers think THEY are the experts instead of me due to the Internet and manufacturers allowing the end user to design on the sites.”

A shortage of time was also seen as an obstacle by many dealers and designers. As one of the those polled explains, “[One of our greatest challenges is] having enough time to be owner, bookkeeper, marketer, networker, etc.”

Another points to “time management due to not enough manpower as a result of lower profit margins” as a key challenge.

Other commonly cited business challenges include “determining how to best market the business,” finding and keeping good employees” and “keeping up with the wide variety of products available.”

 

 

 

 

CHARTS

 

(PIE CHART TOTALLING 100%)

1.  Dealers/Designers Who Saw Increased Revenue in the Past Year

60%     Increased

16%     Decreased

24%     Stayed the Same

Source: RICKI

 

 

(PIE CHART TOTALLING 100%)

2.  Dealers’ & Designers’ Expectations for Business in the Coming Year

69%     Better

4%       Worse

27%     About the Same

Source: RICKI

 

 

(TABLE?)

3.  Kitchen Growth Areas

                                                            % who saw increase             % who saw decrease

Storage/Organizational Features         58%                                         5%

Lighting                                               53%                                         3%

Countertops                                        43%                                         2%

Flooring                                               37%                                         3%

Cabinets                                              40%                                         7%

Induction Cooking Appliances           43%                                         13%

Decorative Hardware                          33%                                         4%

Sinks & Faucets                                  30%                                         2%

Ventilation                                          30%                                         4%

Wine Refrigerators                              38%                                         17%

Refrigerators                                       22%                                         2%

Stoves or Ranges                                 21%                                         4%

Dishwashers                                       15%                                         1%

Stream Ovens                                      31%                                         19%

Cooktops                                            22%                                         13%

Wall Ovens                                         21%                                         20%

Source: RICKI

 

 

(TABLE?)

4.  Bath Growth Areas

                                                            % who saw increase             % who saw decrease

Storage/Organizational Features         51%                                         3%

Lighting                                               44%                                         2%

Vanities                                               38%                                         2%

Bath Heating/Ventilation                    33%                                         4%

Sinks & Faucets                                  30%                                         1%

Freestanding Tubs                              45%                                         19%

Bath Accessories                                31%                                         5%

Shower Systems & Tub Enclosures   34%                                         11%

Decorative Hardware                          27%                                         4%

Soaking or Jetted Tubs                       18%                                         40%

Sauns & Steam Baths                          16%                                         38%

Source: RICKI

 

 

(BAR GRAPH NOT TOTALING 100%)

5.  Percent of K&B Showrooms Carrying Kitchen Products

 

97%                 Cabinets

95%                 Countertops

94%                 Decorative Hardware

83%                 Storage & Organizational Features

79%                 Sinks & Faucets

63%                 Lighting

59%                 Flooring

52%                 Ventilation/Hoods

43%                 Refrigerators

43%                 Cooktops

42%                 Dishwashers

41%                 Stoves/Ranges

35%                 Wall Ovens

33%                 Wine Refrigerators

23%                 Induction Cooking Appliances

16%                 Steam Ovens

Source: RICKI

 

 

(BAR GRAPH NOT TOTALING 100%)

6.  Percent of K&B Showrooms Carrying Bath Products

91%                 Vanities

89%                 Decorative Hardware

78%                 Sinks & Faucets

65%                 Storage & Organizational Features

58%                 Bath Accessories

55%                 Lighting

42%                 Shower Systems & Tub Enclosures

32%                 Bath Heating/Ventilation

30%                 Soaking or Jetted Tubs

24%                 Freestanding Tubs

11%                 Saunas or Steam Baths

Source: RICKI

 

 

 

(PIE CHART TOTALING 100%)

7.  Showrooms Planning to Add Kitchen Displays in the Coming Year

49%                 Yes

35%                 No

16%                 Maybe

Source: RICKI

 

 

(PIE CHART TOTALING 100%)

8.  Showrooms Planning to Add Bath Displays in the Coming Year

32%                 Yes

46%                 No

22%                 Maybe

Source: RICKI

 

 

 

 

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