Forging Ahead Toward Growth
Despite a challenging business environment, kitchen and bath
dealers are aggressively forging ahead, increasing advertising,
staff and product offerings, and branching out into new areas to
keep their businesses growing strong.
By Janice Anne Costa
The economy may be shaky, but when it comes to kitchen and bath
dealers’ current and projected business practices, it’s all about
growth. In fact, more than 40% plan to increase the size of their
staff in 2003, and more than a third plan to increase advertising,
add to the number of product lines and displays in their showrooms,
and branch out into new types of work.
That was the result of a recent survey conducted by Kitchen
& Bath Design News, which polled more than 225 kitchen and bath
dealers throughout the U.S. about their business practices, plans
for the future and major challenges facing the industry.
The results can be summed up by one dealer’s comment: “If you
want to be competitive, the bottom line is that you have to forge
ahead toward growth.”
To that end, kitchen and bath dealers surveyed seemed primed for
growth, with many engaged in or planning definitive actions to
increase business in the next 12 months. Plans ranged from adding a
new showroom and establishing new specialty niches to joining a
The number one change dealers made in 2002 was to increase the
number of product lines they carry, with some 41.1% of respondents
stating they did this in 2002, and another 34.9% planning to
increase their number of product lines in ’03 (see Graph 4). Some
36.3% of respondents said they’d increased advertising in 2002,
with 39.7% planning to do this in 2003.
Exploring new avenues of business was also high on many dealers’
list of plans, with 35.6% saying they planned to branch out into
new types of work in 2003, and 34.9% saying they planned to
establish a new specialty area/client niche in 2003.
Far fewer dealers were planning cut backs for 2003, with only
6.2% planning staff reductions, 5.5% cutting back on product lines
carried, 3.4% planning to decrease the number of displays in their
showroom and a mere 0.7% expecting to decrease the size of their
Providing essential services was also key to dealers’ business
practices, with 88.8% of survey respondents saying they provide
installation services. As one dealer noted, “If I provide
installation, I have more control over the job, and the customer’s
level of satisfaction. That means I can control the outcome and my
ability to get referrals.”
Some 58.9% of dealers reported that they handled installation
with an in-house crew, 34.2% used a supervised, sub-contracted
crew, and 6.9% said they would recommend a crew but not supervise
the installation process (see Graph 6).
Likewise, many dealers have found added opportunities for growth
and enhanced customer service by either manufacturing or modifying
the cabinet lines they sell. More than half of respondents (60.8%)
said they were able to modify the cabinet lines they sell, while
another 10% said they manufacture their own cabinet lines (see
Graph 5). And, nearly a third (29.2%) said they do both.
Availability, too, ties into the service theme, with 10.3% of
survey respondents planning to change store hours to make them more
convenient for customers.
What They Do
It’s no surprise that most kitchen and bath dealers do the bulk of
their work on kitchens (60.6%) and baths (21%). However, more and
more dealers are finding extra work in other-room projects (13.1%),
from home offices to entertainment rooms, laundry rooms and even
garages, while another 5.1% of respondents’ work comes from
commercial jobs. As one dealer explained, “You have your specialty,
but it doesn’t hurt to diversify a bit.”
Dealers surveyed said the lion’s share of their jobs come in the
form of remodels (66.8%), with that number expected to increase to
69.9% in ’03.
Surprisingly, though, dealers reported an average cost of a
kitchen project at only $27,021 in 2002 and the average cost of a
bath project at only $8,979, suggesting that many are doing more
small jobs than in the past.
However, as one dealer noted, “Part of our growth plan is to
take on different kinds of projects. That may include home offices,
wet bars, entertainment centers or master bedroom suites, or it may
be a smaller job a kitchen where they just want a new countertop,
but not a total overhaul.”
As another dealer said, “Some people who normally do big jobs
are doing smaller ‘quick fixes’ right now because of the [economic]
uncertainty. We do these because we know when they’re ready to do
the whole shebang, they’ll come back to us for it.”
While kitchen and bath dealers are planning for growth in many
avenues, particularly with regard to offering more services, one
area they still seem to be falling short on is financing: A
whopping 82.3% do not currently offer financing options to their
Dealers surveyed reported that the most popular form of payment
is cash (70.3%), while 11.4 percent said their customers took out a
home improvement loan, 9.2% said their customers paid with home
refinancing, and another 9.1% said their customers financed their
kitchen through other methods such as credit cards (see Graph
When it comes to buying products, most dealers used multiple
sources. Some two thirds (66%) said they buy direct from the
manufacturer, 54.9% buy from distributors, 20.9% buy from
retailers, 7.2% buy from subcontractors, and another 1.3% said they
buy from other sources (see Graph 3).
Other major findings of the survey include the following:
- More than a third (37.7%) of respondents said they charge a
design fee (see Graph 2), ranging from several hundred dollars to
several thousand dollars.
- Dealers surveyed said they carry an average of 9.1 different
kitchen product lines and 8.5 different bath product lines.
- Roughly half (49%) of those surveyed said they currently belong
to an industry trade association, and of those, 81.1% believe that
the association membership is valuable to their business.