BETHLEHEM, PA — Facing difficult market conditions that are resulting in decreased project leads as well as postponements and cancellations, design firms are “pivoting” to a range of strategies aimed at advancing their business, according to a recently released report by the National Kitchen & Bath Association.
The Bethlehem, PA-based NKBA reported, for example, that surveyed kitchen and bath design firms are increasingly focusing their sales message to maximize leads in the luxury segment, “given that wealthier customers are often unfazed by higher pricing, (and) many firms believe this will help them sustain or even increase their business.”
Other business strategies detailed in the NKBA’s recent Q3 2023 Kitchen & Bath Market Index (KBMI) report were the following:
- Looking to technology to boost productivity. By adding new business technology kitchen and bath design firms “believe they will be less dependent on labor, which is becoming harder to source and more costly,” NKBA said, noting that labor costs are outpacing inflation, while one in three design firms expect their hourly wages to rise by 6% or more in 2024.
- Taking action to offset declining profit margins. Potential actions to boost margins include obtaining supplier discounts, taking on larger projects, and charging higher design fees and markups. “Many designers are also readjusting by focusing on design and consultation only, eliminating the need to deal directly with material and labor costs,” the NKBA said.
- Outsourcing purchasing to clients. The “stress of inflation” has changed the outlook among many customers, “influencing how much they budget for their kitchen or bathroom remodel,” according to the NKBA. Outsourcing purchasing functions – such as preliminary searching for materials, ordering and checking in on materials, and communicating with vendors – makes it easier for clients to reduce costs.
- Utilizing subcontractors in lieu of in-house employees. Strategies include marketing directly to skilled trades, attending trade events to recruit trades and contractors, and creating relationships in which trades refer clients to one another. Designers also reported actively recruiting the younger generation to incentivize them to learn a trade, with a long-term commitment to their company, the NKBA said.