Members of the kitchen and bath industry, along with the rest of the world, it seems, have been holding their collective breath since the middle of 2008. The world has changed dramatically since that time, enveloped in what has shaped up to be the worst recession since the Great Depression of the 1930s.
While no one is ready to exhale quite yet, there are signs that the kitchen and bath industry is finally on its way to recovery. And hopefully there is a silver lining to the “Great Recession,” in that those affected by it have learned from it, and can build a stronger future because of it (see related Editorial).
Picking up the Pace
Most kitchen and bath dealers report that, while business has shown improvement in the past year, the path has been unpredictable.
Matt Giardina, president, Front Row Kitchens, in Norwalk, CT saw business get slowly better from 2009 to 2010, “but it’s been uneven, rather than a straight line,” he reports. He notes that business started picking up in the middle of 2010, only to hit a lull in the third quarter.
Indeed, the NKBA’s Second Quarter Kitchen & Bath Remodeling Market Index Report showed increases in all five measures of the kitchen and bath remodeling industry’s health: showroom visitors, monthly kitchen sales volume, kitchen sales prices, monthly bath volume and bathroom sales prices. In the third quarter, however, all five measures decreased according to the report, which has been conducted since December 2008 by surveying kitchen and bath dealer members of the National Kitchen and Bath Association. The survey is conducted every three months to track quarterly changes in the kitchen and bath market (see related story, below).
Despite the declines in the third quarter, 43% of NKBA dealers expected their overall kitchen and bath revenue to increase in the fourth quarter of 2010.
When asked whether they were optimistic or pessimistic about the industry as a whole in the fourth quarter, NKBA dealers were slightly more optimistic than they were in the third quarter, noted the report.
“Kitchen dealers were very optimistic about the last three months of 2010, as half expected kitchen sales volumes to increase through the end of the year,” the survey noted.
Although showroom visits were down in the third quarter, the survey noted, NKBA dealer members were optimistic that the figure would reflect higher in the last quarter of 2010 and beyond.
“There does seem to be a fair amount of foot traffic now,” confirms Giardina. “I’m not sure how many people are actually buying, but there is enough traffic. If we can convert those into sales, things will be okay,” he reports.
Julian McKinney, general manager/senior designer, Wilmington Kitchens Design Studio in Wilmington, NC has seen an increase in the number of jobs in 2010 over the year before, partly because “2009 was horrible,” he notes. He adds that his firm, which is located in a fast-growing beach community, started seeing a dramatic increase in business at the mid-year point of 2010 “as far as walk-in traffic, people calling and in actual jobs,” and that is continuing.
“I have seen a definite change in attitudes and showroom traffic since the new elections,” adds Kathy Simoneaux, owner, Acadian House Kitchen & Bath Studio, in Baton Rouge, LA. For the future, “we’re signing jobs.”
McKinney also anticipates a rise in the number of jobs for 2011. “I already have four installations scheduled for January,” he reports. He believes that his company is going to have at least a 25 percent – if not a 50 percent – increase in business in 2011 over 2010. He also reports that people are definitely spending more than they have in the last few years.
“I’m going by what I’m seeing and the attitudes of people,” McKinney comments. “We’re getting a lot of remodels because people don’t want to move. They feel very comfortable living in their existing neighborhoods and upgrading because, when the market does come back, they’re going to have a greater product to offer.”
Sending a Message
While business may be picking up, dealers agree that they are going to have to continue to be creative when it comes to drumming up business. They have learned a lot about survival and how to keep their businesses going when the economy slows, and those lessons have helped to reshape how they conduct themselves on a daily basis.
While referrals may have been the bread and butter of the industry in the past, dealers have needed to go way beyond that to survive.
McKinney hired an advertising agency in 2008 to create a marketing campaign to brand his company in the marketplace. “It was high dollars, but it was worth it,” he comments. For his company, the result definitely proved the difference between marketing the firm’s services and simply advertising them.
Wilmington Kitchens Design Studio ended up sponsoring several high-end social and charity events in the area, as well as an outdoor concert series, at a time when few companies were spending the money to do so. “Our name and our logo were seen in a lot of different places – including a black tie event that I didn’t even know existed,” he continues.
Now that he knows what is involved, McKinney believes he could do about 70% of the work himself if he wanted to do a similar campaign in the future.
Simoneaux is also a big believer in the power of marketing, and is excited about her company’s new campaign, which involves doing a home makeover in the community.
“It’s a total renovation of a local home, and we will have a public viewing after it’s completed,” she reports. “We’re promoting it for nine weeks on a local radio station, and we’re going to be filming the renovation progress and posting it to our Web site.
“We have a lot of our vendors excited about doing something to try to stir the pot a little bit,” she adds. “And each vendor will be spotlighted in the video, talking about what they did in the house.”
With the promotion, Acadian House Kitchen & Bath is giving away a “man cave” to try to attract men to the home’s viewing, a growing demographic when it comes to design decision-making. The outdoor garage space will be furnished with a flat screen television, a couple of LSU chairs, some storage features and a draft beer tap.
“We want guys to come to see the makeover once it’s done, and this is our way of getting them there,” Simoneaux explains. “Instead of the wives trying to drag them there, they’ll have a reason to be there.”
Being a part of the community also has multi-faceted benefits, according to McKinney. One of his company’s designers came up with the idea of running a food drive for a local pantry. “We put an area for donations at the front of our showroom,” he comments, “and we’re featuring that on our Facebook page and on our Web site. It’s drawing traffic into our showroom.”
Another lesson that many dealers have learned is that all jobs are worth considering. Where just a few years ago partial jobs and powder rooms were passed over in favor of new construction bids and full-scale remodels, now every job gets a second look.
To make up for the loss in new construction, Giardina notes that his firm “will now do pretty much anything that somebody wants to buy. We’ve expanded our offerings, and have even gotten into more construction versus just kitchen remodeling.”
In the past two years, Simoneaux has fielded a lot of requests for small jobs – “parts of things, such as changing out a tub for a shower, or a new vanity or countertop,” she notes.
What she learned, however, was that one idea had potential for growth. “Customers would come in for a countertop and get interested in a backsplash. Then you could make suggestions about hardware,” she explains. “We went for smaller details to help our bottom line.”
Jeanné Sei, president, Kitchens by Jeanné, in Santa Fe, NM notes that, even when a customer came in just looking to change out a countertop, “we would have a discussion about the reality of putting something new on something old that needs to be replaced as well. And, they were willing to listen,” she remarks.
Incorporating these lessons into everyday business has proved beneficial for kitchen and bath dealers, and many plan to continue to investigate new and innovative ways to keep customers interested.
While it’s not done the same way anymore, Sei notes, “we’re thinking positive about the future, and hoping it turns out that way.”