Kitchen and Bath Industry 2023… and How Those Dominoes Will Fall…

I know some people I have talked to recently are still hopeful that the recent decline in business will be short lived and the depth of the downturn will be minimal. As I have mentioned in previous blogs, I’m predicting that the drop in sales will be 20% or more. Not happy to see it happen, but also feel the need to do a reality check.

I’ve been told that I need to shorten my blogs because attention deficit is on the rise…. Really?? They said something else too, but I wasn’t listening at that point….  Here is what I was paying attention to:

  • Inflation – At this time last year, inflation was running 4.7%. This year it is 8.2%. Read the tea leaves.
  • The Fed – They have raised interest rates 5 times already this year and we will most likely see two more. November .75 basis points and at least another .5 in December. The main thrust of raising these is to cool down the housing industry.
  • Single family housing starts are down 18.5% YOY. As of last week, mortgage purchase applications are down 38%. That marks the lowest rating since 2014. This is called “demand destruction” and appears to be by design, according to Forbes.
  • The recession environment is going to push consumers away from large purchases.
  • Our industry is now moving into the next phase where supply is higher than demand. This may trigger some cabinet manufacturers to close their plant down.
  • As far as Dealers are concerned, I’m thinking they are looking at 2 options next year:
    • They can stay the course and hope for the best which would mean minimal returns/losses or face the possibility of shuttering their doors.
    • Or they can get serious about taking market share and start to move forward with a plan that does just that. Take a look at what our ERP system can offer you. Personally speaking, that’s where I would put my efforts because the best time to take market share is during a downturn. Why, you ask? During “boom” times people are just focused on how to manage their increased volume and not thinking about how to make their company better. Another reason this is a smart thing to do is that you are positioning yourself to be more competitive and to be able to scale up even higher when the next growth cycle starts.

Here are some things that Dealers should consider doing:

  • Open your mind to change. No, really. Open your mind to change. Here’s a quick story I want to share that will demonstrate kind of what I’m talking about. We were recently introducing Kitchen Planner to Dealers for their website, (Design tool for consumers) and the feedback from many companies was that they didn’t want their customers designing their own kitchens, which is really not what this tool is about, or “our type of customers wouldn’t do design online.” How about the fact that you have about 10 seconds to capture the interest of someone who visits your website. Maybe just pictures and content will be enough or just maybe a little added pizazz like adding an option for them to start imagining what their future kitchen could look like would keep them there longer. Bad consumer! Don’t you know that doesn’t comply with our processes? Bad consumer, bad consumer…
  • Start building a better online presence. Have a first-rate customer journey on your website. It is really going to become your new retail store front.
  • Measure, measure, measure! I don’t know what this industry has against KPI’s {Key Performance Indicators} but my guess is someone lost a bet or maybe there was a bad breakup but let’s forgive and move forward!  That means you’re going to need to have systems in place to track this information and if you’re thinking about doing it manually, think again please. It’s more time consuming and inconsistent.
  • Train your sales team to take your customers experience to a whole new level! We’re talking Zappo’s type service.

Last thing, if you’re not sure where to start, find somebody to help. You don’t want to take the time to learn from the “School of Hard Knocks.” I am here for you if you like but if it’s not us, that’s okay too. The fact that you are being proactive to improve how your company operates, still has me rooting for you!

Feel free to reach out to me directly [email protected], and if you’d like to set up a 20 minute meeting to discuss our services, you can schedule on the Calendly link below.