12 Things to Think about in the Kitchen and Bath Industry over the next 5 Years Part II
Amazon’s big Push to get Deeper into the Kitchen and Bath Industry
By Thad Whittenburg
The “12 Things” was by far the most read blog that I have written. I think this is for good reason since people are already seeing the many changes that are taking place in our industry with much more to come and at a faster rate.
The 1st big news is that Emerald Expositions, who helps to manage KBIS, has invited 2019 exhibiting suppliers to a conference in September on how to sell their products through Amazon. Zowie!! If that doesn’t strongly indicate the direction of where our industry is moving, I’m not sure what would.
Now I know a lot of folks will say other kitchen and bath products are already for sale on-line and that cabinets through the internet will be very limited. I think that could be true when it comes to the major manufacturers because they will be hesitant to disrupt their large dealer base. Bear in mind that a lot of these manufacturers are currently struggling to take market share. If this continues, they will certainly be looking for other channels to grow their business. This could include private label cabinets that could be sold direct to other customer segments, entities such as Amazon or to dealers for on-line sales. Cabinet manufacturers and dealers alike will need to adjust their selling strategies in the future.
I personally feel that these manufacturers should spend more time and resources trying to help their existing dealers grow. This could be achieved by providing support with education, technology, and sales strategies. Cabinets seem to be trending more towards being a commodity product since there are so many similar offerings out there. The manufacturers who really embrace this idea and focus on building strategic partnerships with their dealers will be the ones to experience market share growth not only for them but for their customers as well.
I do think it’s more important than ever for traditional kitchen and bath companies to power up their websites and consider becoming a hybrid business for the future. This doesn’t necessarily mean selling individual items on-line but more in the realm of total projects. It could be as small as a vanity, top, and faucet sale or as large as an entire kitchen. Please keep in mind that most kitchen remodels are pull and replace and do not involve moving walls.
Another thing I’d like to address is the point I made about cabinet margins dropping an average of 3-5 points over the next 5 years. The main thought is that with more and more low-cost models selling on-line, they will have an impact on overall cabinet margins. Sales of cabinets through showrooms may only experience a 2- point drop in margin because of the continuing value they are bringing to their customers.
Lastly, keep in mind that the use of better processes, systems, and technology will fuel more productivity by Designers and Salespeople. This could easily increase their sales by 30% or more. Businesses who are worried about the impact on their bottom line shouldn’t be if they stay ahead of the curve. In fact, they should be able to have more profit percentage based on their growth and gained efficiencies. (if your return on sales is less than 5%, we should probably talk)
Thanks so much for checking out this blog and as always, I’d love to hear from you. firstname.lastname@example.org
Stay tuned to next week’s Part III where we will explore other items in the 5-year forecast.