Buying Bonanza

by WOHe

Buying Bonanza

Kitchen and bath dealers are continuing to
invest in new products lines, technology, equipment and their
showrooms, a new K&BDN survey reports.

By Janice Anne Costa

Kitchen and bath dealers, like the rest of the
population, love to buy things. The good news is, with a strong
remodeling market continuing to fuel both the kitchen and bath
market and the economy as a whole, kitchen and bath dealers are
buying more than ever, with a great many planning to add new
product lines, upgrade technology and equipment and increase the
size of their showrooms in the coming year.

 


That’s the finding of a new survey conducted by Kitchen & Bath
Design News which polled more than 150 kitchen and bath dealers and
designers across the U.S. about their product purchasing plans.

The findings spoke positively about both the
economy and the confidence level of kitchen and bath dealers, the
majority of whom noted plans to increase the number of product
lines they carry in 2003. Likewise, more than half of dealers
surveyed said they expect to add to their equipment in the coming
year, while an appreciable number also noted plans to expand on
their showroom space for 2003.

The number of product lines carried by kitchen and
bath dealers is clearly on the rise. In fact, survey respondents
said they expect to carry an average of 9.9 kitchen product lines
in 2003, compared to only 9.1 carried in 2002.

Likewise, kitchen and bath dealers said they
carried an average of 7.8 bath product lines in 2002, but plan to
carry an average of 8.7 bath product lines in 2003.

Additionally, when adding new product lines, more
than half (57.9%) of all survey respondents said they would add a
desired product line outright, rather than substitute it for an
existing product line (see Graph 3). As one dealer explained it,
“Diverse offerings are part of what fuel growth. There are a lot of
people out there who want product, and you have to be able to meet
their [diverse product] needs, or someone else will.”

The majority of dealers said they purchase products
direct from manufacturers (80%), but a good number also utilize
distributors/”whotailers” (33.8%), and a small amount supplement
their product purchasing by going to lumber yards or other retail
outlets (2.8%), home centers (2.1%) or other sources (3.4%), the
survey showed (see Graph 1).

 

The large majority of dealer respondents (82.1%)
said they did not intend to significantly change these sources of
supply in 2003, though 6.9% did plan changes their supply sources,
while another 11% was unsure whether they would be changing their
supply sources.

While buying groups still comprise a relatively
small percent of the dealer market, some 13.8% of dealers surveyed
said they are currently a member of a buying group, and several
commented that this has opened new doors to them in terms of
product discounts and opportunities.

Interestingly, when asked whether they intend to
join a buying group in the future, a whopping 45.3% of survey
respondents said they were unsure, suggesting that this is an area
where dealer education about buying groups would be beneficial to
the industry.


New Technology
New equipment was another area where dealers said they are planning
for growth, with nearly two-thirds (62.8%) saying they are planning
to add to or upgrade their equipment or technology in the next 12
months (see Graph 7). Of those, 37.9% said they were planning to
add to or upgrade their computer hardware, 31% planned to add to or
upgrade their office equipment, 27.6% reported plans to upgrade or
add to their computer-aided-design software, 4.8% said they would
upgrade or add to their computer-aided manufacturing software, and
11.7% cited plans to add to other equipment or technology areas.

 


“We’ve actually looked at some Web site design software,” one
dealer stated, while others noted the purchase of digital cameras
to help promote their projects and capture them for use on a
company Web site.

Indeed, the Internet is clearly an area where
dealers are focusing their attention, with more than three-quarters
(75.2%) of dealers surveyed saying they currently use the Internet
to visit manufacturers’ Web sites in order to research or buy
products they are specifying for their clients.

“The specs change so fast, you really can’t live
without it,” explained one dealer, who, as a self-proclaimed
Internet addict, sees manufacturers’ Web sites as “the ultimate
research tool for consumers and designers.”


Quality Counts
While everyone wants to make a profit, kitchen and bath dealers
still cite “quality” as their bottom line when it comes to factors
impacting their purchasing decisions (see Graph 2). In fact, on a
scale of one to five, with five being most important, dealers rated
quality a whopping 4.9 out of 5.

“Accurate and timely deliveries” was rated the
second-highest priority, scoring an impressive 4.7 out of 5,
followed by “supplier service/support” (4.5 out of 5), “product
availability” (4.4 out of 5), “profit margin” (4.3 out of 5) and
“product features” (4.2 out of 5).

While “price” was rated more toward the middle of
the pack (coming in seventh out of 15 items rated, with a 4.1 out
of 5), many dealers noted that price only becomes key once quality
is there. As one dealer explained it, “If the quality isn’t there,
price is irrelevant. Why would you expect a client to be happy with
a poor-quality product, even if it is well priced? Quality is
always the best bargain.”

 


Kitchen and bath dealers rated their least important factors in the
purchasing decision as “merchandising assistance” (3.5 out of 5),
“brand name/consumer demand” (3.6 out of 5) and “promotional
literature” (3.7 out of 5).

Showroom Stats
The average size for surveyed dealers’ showrooms was 2,444 square
feet, with dealers saying they devote an average of 69.5% of their
space to kitchens, 20.8% devoted to bathrooms and the remaining
9.7% devoted to other-room displays, office space and conference
areas.
Respondents also noted that their showrooms contained an average of
3.8 full kitchen displays, 1.4 full bath displays, 5.1 kitchen
vignettes or partial kitchen displays and 3.8 bath vignettes or
partial bath displays (see Graph 4).

“The full displays are key because they allow you
to create an actual kitchen or bath environment that people can
visualize in their homes,” a Northwest-based dealer said. “The
vignettes, on the other hand, allow you to showcase more variety. I
place my full kitchens strategically around the showroom, with my
‘live’ kitchen as the centerpiece.”

Survey respondents were quite vocal about the
importance of having a good number of quality displays. To that
end, a full 20.7% said they are expecting to increase their
showroom space in 2003 (see Graph 6). Additionally, another 10.3%
are considering increasing their showroom space this year.

 


“We just got a brand new building with much more space, and I can
hardly wait to get started filling it up!” enthused one kitchen
dealer. “Up until now, we’ve had so many products we couldn’t show
now we’ll be able to give our clients so much more variety, and we
expect that that will pay for itself rather quickly.”

Indeed, it seems that kitchen and bath dealers and
designers are quite willing to invest in themselves and their
futures in order to see continued growth, according to survey
responses.

“We view investments in new products and technology
as key to our growth,” explained a dealer with several satellite
showrooms. “The remodeling market is strong, and so many people
have bought homes in the past year, we can’t see that changing. If
we want to get that business, we have to spend the money so we’re
prepared. That means staff, equipment, the Web site…and, of
course, products. You have to have high-quality products, and a
good selection of them.”

As another dealer concluded, “There’s no way around
it. Things change fast in this industry either you’re part of that,
or you’re history.” KBDN
 

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