Suppliers: Breaking Out of the Big Box Tom Swartz, CEO/president of J.J. Swartz Co. in Decatur, Ill., looked at the influx of home supply chains in his market and thought, “There is no way for me to compete.” He, like many remodelers at the time, was concerned that the installed sales offered by these big boxes would drive him out of business.
Former kitchen and bath remodeler and industry consultant, Jim Krengel, recalls members of the National Kitchen & Bath Association who were angry when the association began offering training to home supply chain employees. He told his peers that he was willing to put his showroom in the middle of one of The Home Depot’s parking lots. “There will be enough people not served by The Home Depot or those who do not want to buy in that atmosphere,” he says.
In the early ’90s, remodeler Scott Chatel had returned to college for his business degree while running Chatel Contracting in Deer Park, N.Y. He was so curious about The Home Depot that he wrote a paper on the company and the changes it was bringing to the industry. “The lumberyards in our area were big ones that were strong enough to survive the impact, but the smaller ones are gone,” he recalls. The suppliers that did survive had to offer more services and incentives for their professional customers. “Everyone had to come up with a better mousetrap,” Chatel says.
The firms that felt the strongest impact were specialty suppliers such as electrical, plumbing, and HVAC dealers that had to close because they could not compete on price against home supply chains that negotiated lower prices due to the volume of products they purchased.
Looking back at their initial panic over installed sales, most remodelers today acknowledge — with some relief —that the service they offer homeowners will always have a place in the market. “Large corporations have a hard time offering handholding. They will probably never be able to capture that,” says Tom Kelly.
Swartz says the chains are best suited for simple installations such as storm doors, shutters, and windows. In its annual ranking of the nation’s top pro dealers based on professional sales, REMODELING’s sister publication, ProSales, found that 73% of respondents offer installed sales, and 6% say they have future plans to offer installed sales. That is up from 70% in 2004 and 67% in 2003.
Krengel says chain stores raised the awareness of remodeling as an industry in the eye of the public. “Before, most people lived with their kitchen and patched it up as necessary,” he says. “Big boxes created a demand for kitchens because of their advertising and computer design. Homeowners wander through a chain and see Corian and granite and cabinet ideas and design. Even if they don’t buy there, it gives them the impetus to follow through.”
Products Proliferation: Made For You Manufacturers have not been able to ignore the growth of the remodeling industry over the past 20 years. Its jump from a $40 billion industry in 1980 to $250 billion today, and its projected growth to $350 billion in 10 years has garnered the attention of manufacturers. Because the remodeling industry included specialty replacement contractors, full-service residential remodelers, and small “dog-and-truck” remodelers, it had been difficult for manufacturers to define the market. In 1991, they took the first step at the first Remodelers’ Show in Pittsburgh, says Rick Strachan, REMODELING group publisher for Hanley Wood. “Before this show, it was hard for manufacturers to put a face on the remodeler.”
After that first show, in an editorial in Building Products, a sister publication of REMODELING, editor Paul Kitzke described how remodelers hit the floor running. “They were relentless and curious and inspiring, and they kept exhibitors on their toes all three days. At first, I was surprised at the unconventional scene on the show floor, but later I realized that residential remodelers have received less attention from manufacturers over the years than any other groups that buy and install products, including do-it-yourselfers. The Remodelers’ Show gave them the spotlight — a chance to learn — and they made the most of it.”
“Remodelers came from all over the country to share their ideas and perspectives and to learn from other craftsmen at a gathering that played a big role in shaping the remodeling industry we know today,” says Jay Lund, senior vice president of marketing and sales at Andersen Windows.
The show was just the beginning. As the market segment has grown, Strachan says manufacturers have focused on learning about the professional remodeler and more research has been done by the industry. Manufacturer associations have measured the growth. “It is documented that in some primary categories of building materials such as windows, cabinets, and roofing, there’s a higher sales volume in remodeling versus new construction,” Strachan says. According to a 2004 National Roofing Contractors Association survey, 61% of low-slope roofing work is re-roofing, 12% is repair/maintenance, and 25% is new construction. For steep-slope work, 56% is re-roofing, 11% is repair/maintenance, and 33% is new construction.
Jim Krengel says the remodeling segment of the industry is pretty well served by manufacturers today. “They have products and promotions set up that are clearly for dealing with remodelers,” he says, noting that luxury product manufacturers especially appreciate the one- and two-item dealer sales that add up to a strong bottom line at year’s end.
The good news is that the wider array of choices includes kitchen and bath faucets and fixtures, tiles, alternative materials, green products, engineered wood, and wiring and home automation. The flip side is that remodelers have to be more educated and serve clients by guiding them through the selection process.