Housing starts are expected to decline 23 percent this year and an additional 5.5 percent in 2008. Existing home sales are expected to fall 10 percent in both years. Mid-2008 is the soonest anyone is expecting the housing market to improve. So what do you do when your company’s new residential construction work dries up?
Remodeling, that’s what. Homeowners put a lot of time and money into bath and kitchen remodeling projects. Contractors can pick up that business and replace some of the new construction revenue they have lost.
That’s just what Frank’s Repair Plumbing did. Brothers Frank and John Willburn are co-owners of the Amarillo, Texas-based plumbing company. At one time, back in the 1980s, about 95 percent of their company’s business was in residential new construction. But when that slowed down, their employees had nothing to do.
“Now we try to keep a balance - one-third new residential construction, one-third commercial and one-third service and remodel,” Frank Willburn says. “Commercial work can drop off, but remodeling and service never go away. They may fluctuate, but they never go away.”
He admits that with the big building boom in recent years, the company’s new residential construction business surpassed the 30-33 percent range he tries to maintain. It’s difficult to turn away that kind of business. Yet, he made sure that his service and remodel business didn’t drop.
Currently, service/remodel is about 40 percent of the business. But if he could push that to 50 percent, the company would be more stable, he explains.
“There was a time when people would remodel more,” notes Melissa Willburn, Frank’s wife, who also works in the business. “Then we got into building these huge homes - not even homes that people needed, but homes they wanted. Now I think we’re seeing that cycle back to remodeling as people realize that they like where they’re at, that their homes just need ‘freshening up.’”
And the statistics seem to back that up. Back in May, it was estimated that Americans would spend $233 billion on home remodeling this year - a 1.9 percent increase from 2006, and an 8 percent increase from 2005 spending. According to the National Association of Home Builders, remodeling currently accounts for more than 40 percent of the home construction industry by dollar volume.
“We’re adding more homes each year than we’re tearing down, and these will eventually require remodeling,” notes David Seiders, NAHB’s chief economist. “Compared to other components of the housing industry, remodeling remains one of the few areas to show growth.”
And while contractors delve into the remodeling industry, the Willburns are noticing that builders in their area are doing the same.
“Some of the builders are making that transition into remodeling as well because they have to do something to stay in business,” Frank says. “We’re involved in about three or four large remodels for one of our biggest builder customers. And as far as I know, he hasn’t remodeled in the past.”
'See It, Feel It, Touch It'What the Willburns did about seven years ago went above and beyond what most plumbing contractors do when working in the remodeling industry - they started a showroom.
Now, the initial showroom wasn’t much - a few bath vignettes in a small room of the plumbing company. But it enabled their customers to see the products before they were installed in their homes.
“The Internet has opened consumers’ eyes a bit, but what people want is to go somewhere and see it, feel it, touch it,” Frank notes. “You can’t do that with a catalog or the Internet. You can definitely feel the difference between a good-quality faucet and one of lesser quality.”
In 2002, the showroom was expanded into part of the warehouse. But it wasn’t enough for what the Willburns had in mind, so they built a large showroom in the lot next to the plumbing company and named it Timeless Designs. With this building, which opened in February 2004, the showroom went from 900 square feet to 7,200 square feet.
Not only will Timeless Design clients see plumbing fixtures, but full working kitchens, appliances, and indoor/outdoor lighting.
“In order to make our showroom one that people would come to, we had to offer the things that would attract them to it - appliances and lighting,” explains Frank. “Plus, I had to have enough revenue to support a nice showroom. We couldn’t do that with just plumbing alone with the amount of people that live in our town.”
“Basically, anything in a home ties together one way or the other,” Melissa adds. “And while you’ve got a customer there to pick her plumbing, she’s exposed to everything else you offer. And even though the customer may not pick it that day, she knows you have it. You’ve got your foot in the door to get that option of selling that product to her.”
Having a good showroom manager is key to the success of any showroom, but the Willburns got an added bonus when they hired Stan Swearingen to manage Timeless Designs. He has a plumbing background - he took vocational training in high school, then started working in the industry after graduating.
Product ControlWhile the idea of providing customers a place to see, feel and touch fixtures is important, Frank Willburn admits that the main reason his company entered the showroom business was that he didn’t want to lose the sale of the plumbing fixtures, which is about one-third of his business.
“We’ve always believed the plumbing fixtures should be sold by the plumber; that’s the person responsible for installing that fixture and making sure it’s operating properly,” he says. “If there are any problems with that plumbing fixture, the first person that the customer is going to call is the plumber. So we wanted to maintain that control, not only to make sure of the quality of that plumbing fixture, but also to guide our customers to buy products that we think are less trouble.”
Amarillo has two plumbing wholesale showrooms - Ferguson and Morrison. When the Willburns first opened their showroom, Frank believes the wholesalers didn’t think it would have much of an impact on the market. But even that first year, Willburn’s showroom was in the black - about $900. Not a lot of money, mind you, but a profit just the same. And the showroom continues to be profitable, exceeding Willburn’s expectations.
Frank’s Repair Plumbing still buys all of its behind-the-wall plumbing from area wholesalers, so the relationships are still there. But Willburn is adamant about keeping those fixture sales for his business.
He also stresses the fact that Timeless Designs protects its contractor-clients profit margin. The showroom does not sell builder price or other discounted prices to people who walk in; they must be referred by a builder or contractor to get any kind of discount.
“We’re not a discount place for homeowners to come to,” he emphasizes. “We don’t want to be perceived that way at all. If someone walks in without a builder or contractor, they get charged full list price. If you don’t do that, there’s no value to the builder, remodeler or plumber.”
Showroom HighlightsShowing customers how things work is an important aspect of Timeless Designs. “Consumers have trouble visualizing,” says Swearingen. “They want to see appliances and plumbing fixtures in performance, compare brands and narrow in on what they want.”
Customers can see live demos of all the airbaths and whirlpools; there’s even a cut-away view of an airbath tub to show the agitation of the different settings. And of course there are working toilets, faucets and showers.
Every showroom has a faucet wall, but here a customer can take the faucet design she likes, walk over to a particular sink style she likes, and see how the two complement each other. Then she can choose the accessories, knowing that all the items work together to complete the room.
In the kitchen areas, all the appliances - refrigerators, stoves, ovens, dishwashers, microwaves - are working models. In fact, 10 of the top chefs in the area did a bake-off using the Timeless Designs kitchens, Swearingen says. And showroom personnel bake cookies every day for clients.
There is a new product wall, which collects in one area all the newest, innovative items to come into the showroom. The ceiling features a grid system, which makes it easier to change-out lighting fixtures, or move them around.
A corner of the showroom highlights lower-cost fixtures and appliances for low-end budgets - “There’s not a budget we can’t meet,” Swearingen states.
A research library is available for design ideas, and a play area keeps the kids busy while parents look at product. And scattered throughout the showroom are work areas, allowing clients to spread out plans and discuss options with showroom staff - or their plumbing or remodeling contractor.
Everything is broken into categories, making it easier for customers to find the particular products they need to select. “We try to keep things so the client can focus,” he says. “It’s important how clients perceive us and the whole experience - it doesn’t have to be stressful.”
And for you Wetheads out there - the showroom is radiantly heated. For those few interested customers (it is Texas, remember), showroom staff can take them into the mechanical room and show them the “radiant wall.”
“There’s got to be one plumber in every market that’s capable of building and maintaining a showroom,” Frank says. “Everyone thinks their market is too small or, for whatever reason, that they can’t do it. The only thing keeping them from doing it is themselves. But not every plumber in every market can do it.”
Survey: Bath RemodelingOur parent company’s marketing research firm, Clear Seas Research, recently conducted a survey regarding bathroom remodeling. Here are just a few of the highlights:
Eco-Friendly RemodelingThere is a growing demand for “green” remodeling by consumers these days. And kitchens and bathrooms are the two rooms of the home that most people remodel at least once. Research conducted this past spring by the National Association of Home Builders’ Remodelers shows that more than one quarter of remodelers surveyed saw demand for eco-friendly remodeling increase last year, compared to 6 percent reporting less demand.
The majority of respondents already incorporate energy efficiency into their work - low-energy windows, insulated exterior doors, upgraded insulation and high-efficiency HVAC systems.
These remodelers also use eco-friendly products - minimizing the harvesting of old-growth forests by using alternatives to dimensional lumber (such as engineered wood), and incorporating recycled or recyclable materials into their projects.
“The only way to bring green into 120 million existing households is through remodeling,” says Chicago-based remodeler Mike Nagel, chairman of the NAHB Remodelers. “Americans spent more than $230 billion last year in home remodeling, with energy-efficient and sustainable products representing an increasing share of the market.”
Five Tips To Make Your Bathroom ‘Green’: Homeowners can easily transform their bathrooms into more environmentally friendly rooms. The NAHB Remodelers offers these tips to add energy-efficient and sustainable products to your bathroom:
‘Greening Up’ The Kitchen: Energy-efficient and sustainable products in the kitchen can significantly reduce utility bills while still looking great.
These are just some of the options out there for consumers wanting a green remodel. With increasing demand of these products, and increasing numbers of homeowners planning kitchen and bath remodel projects, offering eco-friendly remodeling services is one way to differentiate your business and get a piece of this growing market. (For additional information on conservation techniques and environmental practices in bathroom remodeling, read “The ‘Greening’ Of The Bathroom,” March 2007’s cover story. Free site registration is required.)