Firms are thinking differently about their business to succeed in the current environment.
By Elisa Fernández-Arias
Facing difficult market conditions that are resulting in decreased project leads and completions, as well as postponements and cancellations, design firms are pivoting with various strategies to advance their businesses, according to NKBA’s recently released Q3 2023 Kitchen & Bath Market Index (KBMI). From shifting marketing efforts to offsetting declining margins, the following are solutions kitchen and bath design firms are putting into place:
- Focusing on attracting more luxury clients. Many firms are increasing their marketing budgets and focusing their sales message to maximize leads in the luxury segment. Given that wealthier customers are often unfazed by higher pricing, many firms believe this will help them sustain or even increase their business.
- Looking to technology and machinery enhancements to boost productivity. As a result, K&B design firms believe they will be less dependent on labor, which is becoming harder to source and more costly — labor costs are outpacing inflation, and one in three businesses expect their hourly wages to rise by 6 percent or more in 2024.
- Outsourcing purchasing to customers. The “stress of inflation” has changed the mood among many customers, influencing how much they budget for their remodel. This solution makes it easier for clients to save, having them do some of the legwork to reduce costs, such as preliminary searching for materials, ordering and checking in on materials or communicating with vendors.
- Using various strategies to offset declining margins. These include getting supplier discounts, taking on larger projects and charging higher design fees and mark-ups. Many designers are also readjusting by focusing on design and consultation only, eliminating the need to “deal directly with material and labor costs.”
To download the Q3 KBMI report, click here.