‘Slowdown’ Gets Mixed Reviews

by WOHe

‘Slowdown’ Gets Mixed Reviews

While the economy is no doubt slowing, and the housing market
weakening, the latest construction-related data is being greeted by
mixed reviews from housing analysts, many of whom view the expected
slowdown in 2000-2001 as being positive for the market long term.
In the meantime, the kitchen and bath industry has apparently not
been impacted significantly by recent interest rate hikes and stock
market volatility at least based on continued positive shipments of
key products such as cabinets and appliances.

Among the key statistics released by government agencies and
industry-related trade associations in recent weeks were the
following:

Home Sales
Existing home sales, exhibiting increased signs of weakening, fell
once again in April, slipping 6.2% to a seasonally adjusted annual
rate of 4.88 million, the National Association of Realtors
reported. The Washington, DC-based NAR said that despite the
decline, however, “the overall [housing] market remains strong,”
with inventory levels recovering from an “exceptionally limited”
first quarter. “The outlook for the housing sector is very bright,”
observed the NAR, adding that a slower economy and higher interest
rates will prove positive in the long run, since “inflation will be
kept in check and the economy will be allowed to continue running
without slipping into a recession.” And, in fact, new-home sales
recorded a blistering seasonally adjusted annual rate of 966,000
units in March 6% above last year’s “extraordinary” level, the NAR
said. “New-home buyers are rebelling in the face of higher mortgage
rates, ” the trade association noted, predicting “only” a 4.8%
decline in new home sales in 2000 compared to last year.

Appliance Shipments
Domestic shipments of
major home appliances, showing no signs of slowing, continued to
rise from their record pace of 1999, gaining 9.4% in May compared
to the same month last year, the Association of Home Appliance
Manufacturers reported. According to the Chicago-based AHAM,
appliance sales through the first five months of 2000 were also
9.4% over sales for the same period in 1999. Moreover, AHAM said,
its latest forecast projects total appliance shipments for the year
to increase to nearly 63.6 million units this year, up from the
approximately 62.4 million units shipped during the record year in
’99 (see graph, above right). 

Cabinet & Vanity Sales
Sales of kitchen cabinets and bath vanities increased 13.1% in May,
the Kitchen Cabinet Manufacturers Association reported. The Reston,
VA-based KCMA said that manufacturers participating in the
association’s monthly “Trend of Business” survey also reported that
year-to-date sales for the first five months of 2000 posted a 10%
increase over the same January-May period in 1999. Sales gains were
consistent for stock and custom cabinetry, the KCMA noted.


U.S. Consumer ‘Spending Spree’ Seen
Continuing

Washington, DC The economically and demographically driven
“spending spree” currently in evidence among American consumers is
apparently far from over even in the face of recent interest-rate
hikes and stock market volatility, the National Association of Home
Builders said last month.

According to the NAHB, consumer confidence has been “very well
maintained” at near-record levels, despite the multiple rounds of
Federal Reserve credit tightening and associated stock market
problems and this, along with homeowner spending, has significantly
fueled the housing, residential remodeling and kitchen/bath
markets.

NAHB noted that home prices have been rising steadily,
“generating large increases in household wealth that are
complicating the Fed’s efforts to slow down [consumer]
spending.”

Despite continued spending and high levels of consumer
confidence, however, the interest-sensitive housing sector of the
economy has “begun to feel the pinch” resulting from Fed policy and
reversals in the stock market,” the NAHB added.


market pulse/ensuring referrals

While the specifics may vary, dealers surveyed by Kitchen &
Bath Design News report that customer service remains the key to
ensuring repeat business and is even more important than price.

Certainly, offering reasonable prices and convenience aren’t
unimportant, but providing the customer with an enjoyable and
comfortable experience is the main source of repeat business,
dealers say. 

One example of how far dealers will go when it comes to service
is the willingness of many dealers to refer their customers to
their competition if they feel they cannot accommodate them.

Following, dealers interviewed by K&BDN associate editor
John Filippelli share their thoughts about how to ensure repeat
customers:

“We ensure repeat customers by taking care of any problems and
having a good installation, and by selling products that are
trouble free, like granite. We haven’t had any problems with
granite tops. We get good fabricators that make a quality products,
and we can basically meet all cabinetry needs. “
Doris St. Clair, president, 
Showcase Design Center, 
Huntington, WV

“We are a second generation shop, and we are also an exclusive
Wood-Mode and Brookhaven dealership. Because of the longevity of
our business, we have many customers who come back for their second
kitchen, and, in a few instances, even a third kitchen. The quality
of the cabinetry ensures their return, and it also ensures a budget
job, if pricing is critical. There are many things you can do that
ensure a budget job and still provide customers with wonderful
cabinetry that’s cost effective. 
Diane Kania, designer, Abington Cabinetry, 
Clarks Summit, PA

“Service is probably the prime thing in keeping your customers.
Most of our customers are general contractors, and we get the
repeat business because we give a quality product at a reasonable
price, with good service. We control our deliveries with our own
trucks and we supply more than just cabinets. We also do
countertops, marble tops and medicine cabinets. We ship in 12
different states. We definitely recommend other companies if there
are products we don’t handle. We make direct contact with the
contractor. It gives the contractor a little more faith in us. We
have one customer , (a Minnesota contractor) who has been with us
for over 20 years. We do most of his work. Price is not always the
determining factor [but going the extra mile is]. We do a lot of
special work in cabinet designs and bookcases. We do the complete
cabinet.”
Warren Thomas, owner, Lakewood Kitchens, 
Lakewood, WI

“Price is a factor, but it only means so much. Getting to know
the customer, asking a lot of questions [matters more]. It’s
important to make customers feel comfortable, make them laugh. A
lot of times, I make them feel comfortable by telling them to get
another quote if they’re not comfortable with a price. This also
helps them get to know me and how I run my business. Extra customer
service makes the difference in getting others to recommend your
business.”
Brian Delano, owner, 
B&D Custom Cabinets, 
Mansfield, MA

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