2019 Kitchen and Bath Forecast Changes

Part I of III (Manufacturers, Dealers, Consumers)

By Thad Whittenburg

Today we will cover Part 1 in a series of III. Today’s topic is: Cabinet Manufacturing Consolidation

Over the last couple of years, we have seen some of the larger players acquiring mid-size and smaller manufacturers. MasterBrand and Norcraft, American Woodmark and RSI, and the latest being ACPI buying Elkay Wood Products.

I think 2019 will be a year that we see even more acquisition activity than in past years. What does that mean for everybody? Let’s start with the manufacturers:

Bigger doesn’t always mean better. For example, if you look at MasterBrand (which is the largest), they are experiencing a reduction in market share. Other manufacturers may be able to leverage new acquisitions by expanding their offerings to their current dealer base and increasing their growth in the market. Only time will tell how well these companies perform as they gobble up the smaller fish.

The impact on Dealers could be that they have one source suppliers or at least fewer companies that they are buying from. This may be a big plus for them because they can develop a stronger relationship with the vendor. On the other side of the coin, this is going to mean fewer choices since the top 4 now make up close to 50% of the cabinet market. It also could lead to some disruption in service since managing these acquisitions can cause companies to lose focus on their customers due to the complicated process of merging two together.

Due to their size, mid-range manufacturers (50-250 million) could really come out as the winners in this game because they are more agile. If they use their time, energy, and resources to increase their focus on customers by investing in technology that will make them easier to do business with, it could make them a fierce competitor. This should also include efforts in marketing support and training programs and an emphasis on educating their own salesforce in these areas.

All the manufacturers should be working towards building an omnichannel experience for their customers. This includes products, marketing, sales, customer support, and most importantly, customer success. They need to swim downstream more to understand how dealers’ and customers’ needs are changing and how they can help instead of just making cabinets and selling them.

The door is wide open right now for a manufacturer to step up and throw away the traditional ways of doing business and embrace the changes they need to make to take market share.

I will leave you with a few examples and then we can pick up this topic next week.

1. Is their customer service department open on Saturdays when most of their customers are having their busiest day?
2. Are they providing a mobile platform where dealers can get information easily with a push of a button on their phone or iPad?
3. Are they providing marketing support through technology to help their dealers connect with their customers?

Just some things to think about. As always, I would love to hear from you! Thad [email protected]

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