Down But Not Out

In a Flat Market, Dealers See Promising Opportunities in Designs that Focus on Personal Expression

Over the past decade, the housing and financial markets enjoyed unprecedented growth and appreciation. Real estate is a business of cycles, and despite the invincible perception in an up market, history eventually repeats itself and the cyclical nature of the market always prevails. However, even with the unpredictable economic landscape, kitchen and bath designers are finding creative ways to maintain, or even increase, their work for the coming year.

Darius Baker, CKBR, of Sacramento, CA-based D & J Kitchens & Baths, Inc., describes two distinct markets in the Sacramento area – the “white collar” government legislative workers, who look more for an upscale, open floor plan, all-out remodel, and the “blue collar” Air Force base workers, who want to upgrade their kitchen but leave the footprint in place.

“Many of the homes around here are track houses, which don’t lend themselves very well to the open floor plan concept,” he says. “These clients, who have built up substantial equity in their homes since the 1970s, want to upgrade their kitchens, but leave the floor plan exactly as is. They are not moving walls or putting in stainless steel appliances and cherry cabinets.”

The sheer number of these type of houses built in the 1970s opens up a huge remodeling inventory. In response, Baker has developed the Good-Better-Best marketing plan set to roll out at the beginning of 2008.

“We are taking the floor plan of a typical track house and showing clients what their kitchen will look like with a ‘good’ remodel, a ‘better’ remodel and a ‘best’ remodel. The quantities and labor are not changing, the quality of the products are.”
The state of the financial markets does not seem to be much of an issue with this clientele, according to Baker, because many of them already have money put aside for the project. For those wanting a more upscale remodel, Baker has been offering financing for the past year.

It hasn’t been an easy sell, Baker admits. “Most people have their home equity credit lines already set up when they get here, and they are more comfortable in that arena,” he says. “Still, we have been trying to sell design ideas on a payment concept, rather than have the clients view the cost of the project as a huge lump sum.”

As for the drop in the housing market, Baker says he isn’t that worried. “I’ve been in business 27 years and have weathered a lot of ups and downs,” he says. “I’m in a better position now than the last downturn due to the number of jobs I have done since then. I have age and longevity working for me.”

Industry insiders agree that the market situation has not really affected the high-end clientele as much as the middle-of-the-road clients. “We are cautiously optimistic for the new year,” says James Drury of Drury Design in Glen Ellyn, IL. “With new construction down, our business is focused on remodeling. The higher-end remodel jobs are not as affected as new construction in the current market place. But people are looking for efficiencies in terms of project detail and related costs.”

And now is not the time to stop marketing, according to Drury. “Marketing is more important than ever in a tougher marketplace,” he asserts. “We are going to focus more on our Internet marketing this year than in the past. We will have a real customer service focus by truly listening and providing good solutions for our clients.”

Susan Serra, CKD, of Northport, NY-based Susan Serra Associates, Inc. and author of the blog thekitchendesigner.org, agrees that the industry is in a state of flux, with uncertainty settling more in the middle-end of the customer spectrum.

“People in that category may hold off on their renovation plans until the market stabilizes a bit more,” she says. “They are tending to question the wisdom of spending that kind of money on a kitchen or bath remodel. The higher-end clients, however, are not really affected by the market situation – they always have money.”

For 2008, Serra sees personalization as a critical tool in gaining clients’ remodeling dollars. “If they are going to spend the money, they want to do it their way,” she says. “Clients are now open to new ideas – more so than ever before. They are no longer satisfied with the ‘cookie-cutter’ type kitchen designs.”

The high-end clients are more likely to take risks with their design concepts, according to Serra. “They are looking at more architectural elements, such as plywood arches and built-in benches. We are adding more comfort to the kitchen and more personal expression.”

Gail Drury, CMKBD, of Drury Designs, sees 2008 getting off to a slow start, but anticipates that it will pick up as the year goes on. Remodeling and additions seem to be dominating the business landscape, she notes.

“Currently, we are adding a lot of mud rooms,” she says. “We’ve been converting laundry rooms into more elaborate mud rooms with desk spaces and message centers. This is definitely a new trend in our area.”

Drury agrees that clients are now, and will be, more inclined to express themselves in their kitchen designs rather than just following the same basic trends. “People are spending the same amounts on their kitchen remodels – some 20 percent of the value of their home or more on a kitchen. They want to do it the way they want it. They are no longer worrying about resale value.”