2019 Kitchen and Bath Forecast Changes Part II Dealers

By Thad Whittenburg

“Our love of technology is perhaps rivaled only by our fear of change. Every time technology advances, the ripple effect of change can cripple even the strongest companies” – Patrick Forth

Before we start talking about what changes we will see with Kitchen and Bath Dealers in 2019, I did want to mention one last thing about Manufacturers:

They are closely watching the ever-changing channels that are emerging in our industry. The progressive ones are exploring a multitude of options where they can sell their product, whether it’s direct to consumers, through Amazon, Wayfair, Costco, or any other options they feel might be a viable opportunity. No stones will be unturned most likely with a private label approach.

This will of course force more pressure on dealers to be aggressive in changing their business model to compete with all these new options consumers will have to buy the product.

There are roughly 20,000+ K & B dealers in the U.S. depending on how you classify them. If you include Flooring businesses, Lumberyards, and Design/Build firms, that number goes much higher

Out of the true traditional K & B dealers, about 80% of them have 2 million in sales or less. So, what’s coming down the pipeline? Yep…more consolidation. I have seen a lot more businesses growing to anywhere between 10-30 million in revenues. There used to be only a handful of these companies, but they are becoming more and more common. As they take market share, the smaller dealers will be the ones that will start experiencing flat or negative growth.

Also, there are a lot of K & B owners that have reached an age where they are ready to retire but don’t have an exit strategy other than closing the doors. (sad but true) This seems to be happening more and more often.

The last two things I want to focus on are the labor market and technology. They really are tied together.
I think I may have only spoken with maybe 1-2 dealers this year that was fully staffed and didn’t need anybody. The other 99% were all looking for people but having a hard time finding any. Why is this and is the trend going to continue? The answer is yes, and the reason is simple: Fewer people are starting a career in K & B Design than are leaving it. Throw in the fact that the industry is growing and viola…you have a designer labor shortage.

So, K & B Dealers have a few options to deal with this:
1. Outsource some of their designs so they don’t get capped on sales because their current salespeople are overwhelmed.
2. Hire support for the sales team even if they don’t have K & B experience. This will free up the Designers from things they don’t need to be involved in like quoting, ordering, job management, etc. Who knows, they may turn into future salespeople for you.
3. The 3rd option and the best one is to embrace technology to help run your business. This will eliminate all the manual and double-entry work that is done. When you can streamline your business processes with software, you can gain great efficiencies.

For example, the result could mean moving your sales per person from 400K to 500K and then even over time, to 600K. If you have 5 total people, that’s a gain of between 500K to 1 million in sales without adding a single person to the payroll. It does mean that you’ll be paying your people more in commissions but that’s a good thing!

Though moving in this direction is the obvious answer, most K & B dealers will continue to drag their feet about implementing a new system. They all say they don’t have the time because they are too busy. Is that ever going to change? Well if they don’t embrace new technologies, they may find in the end that they are going to have a lot of free time on their hands.

It’s time to make a paradigm shift and embrace change!

I hope you enjoyed this blog as always, I look forward to your comments. Take care, Thad

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