Study Shows Consumers Proceed with Caution

CHARLOTTE, NC — Kitchen designers have been significantly impacted by the current economic downturn, and are reporting that clients moving forward with a kitchen projects are altering their behavior to adjust for economic conditions.

That’s the key finding of a recently released research study conducted by the Research Institute for Cooking & Kitchen Intelligence (RICKI), a Charlotte, NC-based organization of manufacturers, retailers, wholesalers and others whose revenue derives from kitchen remodeling and related activities.

According to RICKI, the study – called “Kitchen Intelligence: A Designer’s Perspective” – revealed that today’s consumers “are compromising on the scope of the project, being extra cautious to stay on budget and within the scale typical for the neighborhood, and voicing concern about the long-term stability of suppliers due to concern that the company may not be in business for service after the sale.”

“This is not a large quantitative survey, but does represent what a number of designers across the country are hearing from consumers,” said Brenda Bryan, RICKI’s executive director. She notes that the study was conducted via online discussion groups, a format similar to that used in traditional focus groups but within a longer time frame, “allowing for thoughtful feedback given at the designer’s convenience.”

Nineteen certified kitchen designers nationwide from RICKI’s proprietary “Kitchen Designer Panel” participated in the project, which took place over a period of three days in early December, and also probed trends in both kitchen design and specific product categories, including refrigeration, dishwashers, range/ovens/cooktops, range hoods/ventilation, cabinets, cabinet hardware, faucets, sinks and countertops.

AIR OF CAUTION

Around two-thirds of the designers participating in the study reported that the slowdown in the economy has negatively impacted the number of kitchen projects they are doing – some “dramatically.”

Still, a number of designers have clients who are moving forward with kitchen projects. Those designers told RICKI that clients who are moving forward with a kitchen project are altering their behavior to adjust for economic conditions in the following ways:

  • Compromise – Despite the “general angst” of the population at large, kitchen designers are still getting business, although clients are proceeding more cautiously than a year ago. In addition to tighter profit margins, surveyed designers say current conditions sometimes means compromising on design. Besides compromising on products and materials, designers say homeowners are mindful to stay within the kitchen’s original footprint, “planning around existing barriers so as not to increase the cost of a project.”
  • Caution – Kitchen designers say clients are being “extra cautious” when selecting products and materials to ensure they stay within budget – “really shopping around,” “being very careful about every dollar spent,” “doing more research” and “legwork” on their own, and “considering less expensive items in order to still do the project,” according to RICKI. In addition, surveyed kitchen designers say homeowners are talking more about future resale and are more concerned about not overbuilding for their neighborhood.
  • Concern – Designers say some clients are questioning a company’s prospective longevity. As one designer explained, “Clients consider companies closing their doors because of the economic crunch. Some decisions are based on warranty issues and service after the sale. If a company goes under, you lose that.”

As the economy has slowed, designers are seeing a corresponding downturn in demand for environmentally friendly products and materials – at least for the time being, RICKI said. According to designers in the study, requests for environmentally friendly options were increasing, but demand has waned recently.

“There is still interest among clients for information on green options, according to designers in the study, but most are still not willing to sacrifice style or quality or pay more to go green, particularly given the current economic climate,” RICKI said.

POSITIVE SIGNS

Despite the doom and gloom atmosphere pervasive throughout the press, some designers say they see positive signs, according to RICKI (see related Market Pulse, and Barometers).

“For the first seven months of 2008, we had very few customers,” one kitchen designer related. “Since the middle of August, though, we’ve been nearly as busy as we were during the boom.”

According to RICKI, surveyed designers pointed to several reasons for optimism, including the fact that, with the soft real estate market, most homeowners are not planning to sell any time soon, so they’re prone to consider remodeling if they can afford it.

Other themes emerged that may have longer-term implications for designers and manufacturers, RICKI said. Among them:

Downsized kitchens: In previous RICKI studies, kitchen designers were focused on the trend toward increasingly larger homes, which led to a “bigger the better” philosophy in kitchen design. In contrast, designers participating in the 2008 study have seen a move away from “McMansions” and huge kitchens toward a philosophy of “less is more” and smaller, more efficient kitchens, RICKI said.

Streamlined design, less ornamentation: While designers participating in RICKI’s 2007 study indicated mounting interest in modern/contemporary styling, clients were still asking for ornate mouldings and multi-layered glazes on cabinets. In contrast, “designers in 2008 suggest streamlined modern is hot and now driving the demand for simple, clean lines and less ornamentation in kitchen design and across product lines,” RICKI said.

A number of designers volunteered that heavy detailing and Old World styling are “asked for much less frequently” now than in years past, according to RICKI. An example is in cabinets, the research firm said, noting that surveyed kitchen designers are getting more requests for cabinets that are “simple” and “unadorned” rather than “intricate and complicated.”

Mixing and matching: Kitchen designers have recently seen a willingness – even a demand – for “mixing and matching” appliances.

“Designers are getting fewer requests than a year ago for one brand of appliances throughout the kitchen, suggesting that even main market clients are now opting for looks and functionality in individual appliances over appliances in the same line that match perfectly,” RICKI said. “A comparable analogy is in the fashion industry, where a segment of more fashion-conscious consumers are mixing colors and styles that violate the mass market’s desire for consistency.”

“While we’ve seen hints in the news [recently] about some of these trends, many of these insights you just wouldn’t hear about and could have big implications for the industry,” said RICKI’s Bryan. “These designers are focused on kitchen projects, so they have their fingers on the pulse of the market.”

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