Profiting from a Multi-Generational Ready Market Kitchen & Bath Profiler 2016 Brought to you by THE MEDIACENTER © 2016 THE MEDIACENTER. All rights reserved.

Raising the Roof for Remodeling Although 20% to 30% of homeowners are kitchen and bathroom DIYers, the rate of remodeling activity and the business health of remodelers and other professions and trades are what drive sales for kitchen and bath dealers. According to the Q4 2015 Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies of Harvard University, Q1 2016 activity will increase 4.3% over Q1 2015 and increase 7.6% during Q3 2016 compared to Q3 2015. In its 2016 State of the Industry Report, Houzz reported that 7 business types in the remodeling industry, including architects, interior designers, remodelers and decorating specialists, experienced double-digit growth during 2015, and 4 of them by 20% or more.

Powerful Growth Potential According to the National Kitchen & Bath Association’s (NKBA) 2015 State of the Industry Report, 60% of surveyed dealers and designers said their revenues increased during the year ending May 2015. Only 16% experienced a decrease. For the year ending May 2016, 69% expected revenues to be even better and only 4% worse. This prompted 49% of dealers and designers to say they would be adding kitchen displays and 32% adding bath displays to their showrooms. Another driver of this demand is data from the American Institute of Architects that the size of the average home architects designed during 2015 increased 20%.

Motivations for Bathroom Upgrades by Generation, 2015 Baby Boomers 44% 34% 19% 16% 13% 8% 6% Motivation Millennials 29% 35% 50% 7% 10% 11% 9% Generation X 44% 33% 24% 12% 8% Finally have the means Old bathroom deteriorated Purchased a home recently and want to personalize Inspired to make changes Adapting to recent changes in family/lifestyle To improve resale value to sell home Old bathroom became unsafe and/or unhealthy

Kitchen Style Preferences and Priorities According to the NKBA 2016 Design Trends Survey, a transitional style was also the top trend for kitchens, but with emerging contemporary features. Gray, white and off-white are the dominant cabinet colors and homes will have more outdoor kitchens. A July 2015 Kitchen & Bath Design News survey of 315 kitchen/bath dealers and designers revealed that their clients’ kitchen “must-haves” were full- extension drawers, 87%; trash/recycling bins, 83%, island, 77%; and more accessible storage, 73%. Remodeling’s 2016 Cost vs. Value Report found that the average cost for a mid-range major kitchen remodel will be $59,999 and will recoup 64.9% of the cost. The average for an upscale major kitchen remodel will be $119,909, with a 61.5% cost recoup.

Showroom Tech Trends According to a September 2015 Kitchen & Bath Design News survey of 243 kitchen/bath dealers and designers, 47% said “they had either added new technology to their showroom during the past two years” or planned to do so during the next 12 months. A number of dealers and designers said they were adjusting their showrooms to reflect consumers’ preferences, with more of a spa-like experience than a shopping experience and concierge service to personalize the selection process in a private space. The survey also found that kitchen displays receive the majority of showroom space, according to 67% of those surveyed, and bath products only 22%. Approximately 25% of showrooms have no full kitchen displays and 60% no full bath displays.

Advertising Strategies With Baby Boomers as TV’s largest viewership group, a dealer or designer specializing in remodeling/retrofitting homes for seniors could capture that market with a strong TV presence, promoting concierge service to cater to Baby Boomers’ upscale preferences. Using TV to build brand and social media for engaging content is the right combination for dealers and designers to create relationships with Millennials for years of repeat business. TV spots should feature a Millennial-age spokesperson and a youthful production style. Suggest a promotion with consumers receiving a discount when they choose to splurge on at least two of the kitchen products in the top five listed in the table at the bottom of page 2 of the Profiler.

Social Media Strategies Since kitchen and baths are very much a style choice, Pinterest is an essential social media platform for dealers and designers. Some pins can display choices of individual kitchen and bath products, but seeing them in complete room designs will be more compelling. Kitchen and bath projects are significant investments. Dealers and designers should use a blogs and visuals, such as videos (customer testimonials of how the dealer/designer kept their project on budget) and tables and charts, to explain costs and budgeting thoroughly. Dealers and designers can post photos, videos and customer comments about the tech features they add to their showrooms to enhance displays and to reduce product selection time, which will be appealing to Millennials as well as Baby Boomers.

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