Kitchens, Baths, Additions Most Common Projects: NARI Survey

A survey of remodeler members of the Des Plaines, Ill.-based National Association of the Remodeling Industry paints a picture of small, efficient remodeling firms doing a lot of work on kitchens, bathrooms and room additions to existing homes. The 2012 NARI Member Profile Study, completed earlier this year by Fred Miller, president of Consumer Specialists, also helps the association provide products and services members need most.

“NARI is committed to providing what members need,” says Tom O’Grady, CR, CKBR, chair of NARI’s Strategic Planning and Research committee and owner of O’Grady Builders in Drexel Hill, Pa. The survey was sent to all contractor members of NARI, not manufacturer or supplier members.

Results reveal that the typical NARI member profile is consistent with that of last year, which is a smaller business structured as either an S corporation or limited liability corporation, as opposed to a large firm, O’Grady says. “The number of employees at most firms has been lowered in recent years, because those that survived the dark days of cutting back on staff are now using specialty subcontractors to get work done rather than hiring staff. I believe it’s going to be a while before remodelers expand their number of employees back to what they had prior to the recession,” he adds.

“NARI members are quite adept at diversifying and adapting to market trends in order to remain successful. The research suggests the majority of NARI businesses are operating on a sophisticated level, with ongoing evaluation of revenues, sales margins, overhead, income, performance, shifts in housing and consumer demands as the basis for decision making,” O’Grady says.

In terms of work done by NARI members, renovation of existing spaces is most common with a focus on kitchen and bathroom remodeling. Room addition activity is lagging behind other types of jobs, and members believe consumer concerns about the economy’s recovery have them holding onto their money more than they did prerecession, O’Grady says.

“Additions are down slightly, which has to do with financing, and basement work is not something homeowners feel they must do right now, either. Rather, they are taking the dollars they have and doing kitchens and baths. They can get more immediate livability benefits from doing kitchen or bath work than providing a grand basement space,” O’Grady says.

The basement trend is a little surprising, O’Grady notes. Ten years ago, he says, refinishing of basements into luxury family rooms, playrooms and man cave rooms were big-ticket items that have really dropped off. “In the next survey, something we’re going to see is an uptick in the use of electronic specialties, as well as more aging-in-place projects,” he says.

The survey data shows slight growth in the number of NARI member company locations, in-house design work, dedicated salespeople and types of services offered. Following are additional highlights of the results:

• NARI members report a 14 percent boost in average sales.

• 38 percent report more than $1 million in annual sales.

• 82 percent offer more than one remodeling service.

• 3 percent disclose an uptick in dedicated sales employees.

“Though the recession took its toll on many small businesses, NARI members seem to have prevailed,” O’Grady says. “Many of us are taking time to refresh our operations and responsibilities in preparation for growth over the next couple of years.” In fact, 93 percent of NARI members predict future sales to be as good or better as in 2013, according to the report.