2011 could be the comeback year the luxury plumbing industry has been anticipating
BY JEFF BURTON
Special to The Wholesaler
If most of the decorative plumbing showroom dealers are correct and the manufacturers of decorative plumbing products and their respective representatives are even close to their predictions about the anticipated business climate in 2011, then I’ve got good news for you. But before I sprinkle around these fairy dust results, I must address the past few years.
Some time in 2008, the downward economic slide began, worming a path deep into the core of almost every decorative plumbing showroom business in the U.S. First, a slight fall in sales, then the disappearance of our “counted on” and “usually guaranteed” client base.
Soon, with what sales were still being made, margins eroded with the logic that by reducing pricing upfront, more sales will be made on the back end. But this thinking quickly went stale.
Before we knew it, the play clock wound down, and the game was over.
“What hit us?” we asked, as if no one saw anything coming. Now, on the eve of 2011, we’re asking, for the third straight year, if this downturn creep will continue and eat away at our asset base. Have we hit bottom? Has the blood-letting subsided?
While looking at 2011, I wanted to find something that could reassure me that it would be a better year. Everything I found, though, was inconclusive. And without a host of reliable facts, numbers, studies and the like, nobody in their right mind would want to make a serious prediction.
We used to look at the price of raw copper and brass and accurately predict a pricing percentage increase or decrease of finished products. We could look at other factors, like the consumer price index (CPI) for the last few quarters or energy and transportation projections, and predict with some certainty which way the pricing of goods would go. But no longer is this true.
There are just too many outside interfering influences that make prices waver, thus making accurate predicting impossible. So we look for other indicators like housing starts or remodeling loans, but fluctuating unemployment numbers and crunchy home values numbers undermine accuracy here, too.
Without firm data to analyze, I did the very next best thing. I went hunting in the fertile grounds of the decorative plumbing (showroom) world in search for “gut” feelings about 2011.
Some may say gut predicting is no substitute for quantitative data, and the creditability can certainly be questioned. I agree to a point. But without factual data, I think those in the trenches slugging it out every day for the past three years, witnessing the economy firsthand, seeing what’s going on in the basement of their businesses, talking it up and turning over every stone looking for evidence about what is ahead for us can be just as accurate.
I will rely on that true-grit, gut feeling every day. And can’t you agree that many times our gut instincts are usually right no matter the circumstances? What’s the difference here?
I got on the phone and for a long and fascinating eight hours, I was able to reach more than 30 fellow Decorative Plumbing Hardware Association (DPHA) members. I asked one question: What is your prediction for your business for this coming year? Then I listened and listened more until my ears were ready to fall off. But I was wearing a smile on my face when the last of the calls ended. My task was not over, but their answers and positive mood were uplifting. Of the 30 contacts I made, 11 were from various manufacturers, 14 were decorative showroom dealers and the remaining five were manufacturer reps.
2011 a ‘keeper’ year
Why was I pleasantly surprised by the general consensus of the respondents? Because more than 90% feel 2011 will be a “keeper” year, albeit a little weak, but better sales and better margins were anticipated — better than they’ve seen in years. Again, a gut feeling but very calculating at the same time.
Among the remarks of my colleagues were:
• “We are already seeing an uptick in remodeling.”
• “I am looking forward to the rebound that just started this past quarter and will probably continue.”
• “Our customer count is way up, which I haven’t seen for two years now.”
• “We are bringing in some new products so we are seeing a new group of customers checking things out. They aren’t buying yet, but I can see it in their eyes and hear it in the questions they’re asking. They are really close to buying.”
• “Our luxury side is outpacing the moderate price range items, and we are doing well in that position.”
• “My market is growing. Every week, we can see improvements.”
• “Slow but steady.”
• “Our volume is up, but our margins are down (or creeping back up), but we’re working on them.”
• “The people are out there, and they’re starting to come in.”
• “2011 will be an up year for us, something I haven’t seen since 2007.”
• “We’ve seen a bunch of new plans come through the doors.”
• “My transaction count is up by over 10%.”
Keep in mind these comments were from those with showrooms. “Cautiously optimistic” was absent from every single respondent. I hope this will put to rest this worn, cop-out and overused phrase over the last three years. Hats off to these dealers.
The manufacturers also reported a positive outlook for 2011. I logged their remarks and looked for a common thread. Multi-unit projects are making their way back onto the table, and more showrooms are starting to spruce up their displays in anticipation of an up market for 2011.
One decorative plumbing manufacturer said, “Our volume is increasing, the spikes are settling down and we’re really able to plan now.”
Another reported, “We see that the economy is picking up just by the day-to-day orders coming in, and this has been increasing each and every month for the last five months.”
Other manufacturers reported changes they’ve observed and mentioned that these changes wouldn’t be happening if the market wasn’t anticipating a good rebound. They referred to the new materials being introduced in the manufacture of tubs, sinks, shower floors and the like. Also, new designs in the faucet arena and the introduction of electronic and digital into the bath and kitchen should bring in a new crop of clients. These introductions would still be on the drawing boards or still buried somewhere in the design phase if the economy wasn’t slated for a pickup.
What’s good about all the manufacturers’ comments is that they are all quantifiable, not gut, but factual.
The reps responded with luke-warm enthusiasm. At least their doom-and-gloom proselytizing days are coming to an end. I found that the three reps that were positive about 2011 were probably of that famous group of 20% that accounted for 80% of the sales. And they were the ones setting goals for next year.
Did I say goals? Yes, dealers, manufacturers and reps are all setting goals again for next year and not sitting back, hoping and praying that things will work out like many did for the past few years. This is great news, too. Welcome back.
2011 will work for all of us, but it will take work and hard work at that. We are already trained to purchase well, as dealers, and sell well, as manufacturers. Now, we have to look at the rest of our business model and make the proper adjustments.
So go into 2011 with a market-leader mind set, own your territory like never before and set the standards high enough to keep your competition in your rearview mirror. Work with your reps and manufacturers and form a bond like never before. See you in 2011, the comeback year.
Jeff Burton, president of The Bath + Beyond, San Francisco, Calif., served as president of the National Kitchen & Bath Association (NKBA) and was the founding president of the Decorative Plumbing and Hardware Association (DPHA). He has also served on several industry boards. Burton has written many articles and has been a featured speaker for a variety of industry seminars for the K+B industry. He founded The Bath + Beyond in 1986 and successfully built it into a nationally known bath showroom.