Wren Learned the Hard Way. Dealers can't afford to.

Wren may end up being one of the clearest warning signs this industry has seen in a while.

They came into the U.S. market with a big-showroom model, big displays, big teams, big overhead, and a big belief that the model that worked somewhere else would work here too.

Then the market handed them the bill.

That is the funny thing about business models. They can look impressive right up until the math starts clearing its throat.

Wren learned the hard way that the future of kitchen and bath is not about carrying the biggest showroom, the most displays, the largest staff, and the heaviest fixed-cost backpack in town.

The future is leaner.

Smarter.

Faster.

More connected.

And a lot less forgiving.

That does not mean showrooms are going away. It does not mean people do not matter. It does not mean relationships are dead. In fact, the best dealers will still win with trust, expertise, service, and local presence.

But the bloated version of the old model is going to have a problem.

Customers do not need every cabinet, color, finish, and countertop sitting under one roof. Salespeople do not need to manually chase every detail. Owners do not need to run blind. Teams do not need to keep solving the same problems over and over because nobody is tracking where the leaks are.

AI, technology, process improvement, analytics, and better systems are going to tighten the business.

The question isn't whether these changes are coming—it's whether you'll figure them out alone or alongside other dealers who are navigating the same transformation

They are going to check work before it becomes rework.

They are going to show where margin is leaking.

They are going to help salespeople sell more with less wasted motion.

They are going to make the old expense model look like a guy hiking uphill with a refrigerator strapped to his back.

And that brings us to the real question for kitchen and bath dealers:

Are your expenses built for where the industry is going?

Or are they built for where the industry has been?

That’s the crazy thing about industries.

They can be completely different in the products they sell, but very similar in the way they operate. Case in point, let’s pick some off-the-wall industry like kitchen and bath dealers.

Yikes. It already sounds scary.

For years, many dealers have run on people, paper, relationships, tribal knowledge, phone calls, rework, and a good amount of “we’ve always done it this way.”

And for a long time, that worked.

Then technology showed up and changed the math.

Suddenly, the old model did not just look outdated. It started looking unaffordable.

We have seen this movie before. Banking carried a heavy headcount model until ATMs, online banking, mobile deposits, and digital tools changed what customers expected and what banks could afford. Travel agencies took it on the chin when Expedia, Travelocity, Priceline, and the rest of the online crowd came in with chainsaws and restructured the whole industry.

The businesses that adapted survived. The ones that didn’t became campfire stories for the next industry that refused to listen.

So, back to kitchen and bath dealers.

If you want to compete and remain very profitable, your expense structure matters. A strong target for total operating expenses is somewhere between 18% and 22% of sales.

On $3 million in sales, that means:

18% expenses = $540,000
22% expenses = $660,000

That is a $120,000 difference before we even get into rework, missed charges, bad handoffs, service issues, and margin erosion sneaking around in the ductwork.

The expense target also depends on your gross margin. If you are running closer to 18% expenses, you may be able to produce a healthy return with margins in the high 20s. If you are running closer to 22% expenses, your gross margin probably needs to be 34% or higher if you expect the business to generate the kind of return it should.

The first place to look is usually direct selling cost, or DSC.

That includes salespeople, sales support, and maybe a sales manager. In many dealer businesses, DSC can represent around 45% of total operating expenses.

That is not a small slice of pie.

That is the slice that ate the rest of the pie and then asked who moved dessert.

To improve that number, you basically have two choices: reduce headcount or increase productivity. The first one is straightforward. The second one is where the real work begins.

Productivity improves when your salespeople spend more time selling and less time fixing problems. Referrals matter here. Salespeople with strong books of trade business, including remodelers, custom builders, and interior designers, usually hit better numbers because they are not starting from scratch every week.

If your business is living almost entirely off retail leads, that may be one of the biggest productivity opportunities sitting right in front of you.

Then there is the ugly little goblin called rework.

If 40% of a salesperson’s time is spent chasing problems, correcting orders, handling service issues, or cleaning up preventable mistakes, you do not just have a sales problem. You have a process problem. And probably a margin problem.

At some point, every dealer needs to say, “Every time this project costs one penny more than it was supposed to, we are going to track it, find out why, and fix it.”

That is how you start attacking margin erosion.

The next area is operations.

If you are not doing at least $4 million in business and you have your own warehouse, trucks, people, fuel, and delivery operation, that percentage may be way out of line. I am not saying you should never control your own operations. But it usually starts making more sense as you get closer to $6 million, and even more as you move toward $8 million to $10 million.

A good third-party operation might keep that cost closer to 1% to 2% of sales. Running it yourself can easily push that number to 4%, 6%, or even 8%.

That money comes right off the bottom line.

So, if you are planning to grow, add locations, and build a delivery model that supports the future, maybe owning operations is part of the long-term play. But if $4 million is not coming soon, third party may deserve a serious look.

This is where KPIs come in.

If you are not measuring closing ratios, referral ratios, gross margin per person, margin erosion, rework, lead sources, and productivity, how exactly are you steering the company?

Expenses have always been “what they are” because most dealers have been operating from roughly the same model.

But that is about to change.

As AI, technology, better systems, and stronger processes come into the dealer world, productivity could double over the next few years. Not because people are lazy, but because the current model is loaded with wasted time, manual steps, preventable mistakes, and too many expensive fire drills.

This is the greatest opportunity I have ever seen in our industry.

But it will take courage.

It will take leadership.

And it will take a willingness to remodel the business before the market does it for you