Rose Colored GlassesIf you missed Karen Strauss’ state of the industry address, below are the key points from her presentation at KBIS.  And if you missed KBIS this year in Vegas, don’t worry — I lost a little bit extra this trip to cover you.

Karen started her presentation off with the term Facing Reality. Anything in quotes are Karen’s.

“It is a time for unflinching realism.  Not a time for rose covered glasses,” Karen said, as I quickly removed mine on the right (I was mortified but I don’t think anyone noticed). “This is no time to wait for everything to get better.  It’s a time to face reality.”

I almost stood up and cheered, yelling “Hey cabinet dealers, listen up.”  But I felt that would be awkward and a little out of place. Cabinet dealers who are still waiting for everything to get better as their marketing, sales and profits continue to decline should be reading this article and sleeping very poorly tonight.

Industry Facts and Figures

The first major part of her presentation was about the industry in general.  Here were the key points:

  • Two primary market drivers really stink right now: consumer confidence (sentiment) and unemployment.  Consumer confidence is still below pre-recession levels.
  • There is a cause for concern on inflation.
  • Momentum is picking up in the labor market with accelerated job growth
  • New construction is roughly 25% of the activity in our market segment with a 75% decline.  This segment is impacted heavily from the tightening of credit.  There are reasons for optimism, however, because there are “not a lot of new homes on the market today and we’ve been working through them quickly.”
  • The Housing Affordability Index is “the highest we’ve seen in many many years” and “new homes have never been more affordable.”
  • Repair and remodel is roughly 75% of our market segment.  “We’ve seen remodeling activity come back, but not so much on big ticket items. People are staying in their homes longer.  We see a sustainable rebound but there is some volatility.”
  • “Looking forward – it’s a mixed bag.”  Foreclosures will hold down new construction for a while. New homes have to compete with existing inventory.

An Optimistic Outlook

“On the positive side,” said Karen, “Builders have demographic reasons for optimism…Once the noise clears, normal long term housing demand should be in the 1.6M to 1.8M range.  Which is why we still see such optimistic projections for recovery in the housing sector.”

Three fundamental drivers are behind this optimistic recovery viewpoint:

  • Household formation
  • Immigration
  • Demand for second homes and replacements

The labor market is starting to absorb jobs that were lost during the recession.  Karen then talked about increased competition for higher priced items and how “we have to create a compelling reason to buy in our category.  The new consumer sees kitchen as a personal expression, an experience.  Products that make life better.  It’s all about the value – not necessarily the price.”  Hooray again!

Now if we can only get all kitchen designers equipped to sell on value and not price, we should be all set.

Social Media & Multi-Generations

Much of this part of the presentation was a repeat from data that was anywhere from two to five years old.  But suffice it to say that finally a cabinet manufacturer stood up and officially recognized the shift in the way we communicate.  LOL, OMG and LMAO were used as examples of a “new language.”  There was much snickering amongst the younger crowd, especially considering that LOL is so mainstream now that on March 24 of this year, it was formally recognized in an update of the Oxford English Dictionary. *grin*

“The desktop Internet connection is so yesterday…consumers are already there and are looking for us…long gone are the days where we push information out to them.”

I thought this was a crucial point in the entire presentation and one I hope dealers didn’t miss.  In translation, dealers need a social media presence and they need to convert their websites into lead generation engines — not presentation engines.  Customers walking in the door or visiting the website are of equal importance now, yet dealers still remain blind of the latter.

Karen’s 5 Critical Success Factors

This was my favorite part of Karen’s presentation.  But to be fair, that’s because much of her key points are directly related to our Aurora software (drive out costs), 4M Kitchen Sales Process (uncovering why consumers buy) and our overall message (make the buying and selling of kitchens easy & fun).

Below are Karen’s 5 Critical Success Factors to thrive in the new economy.

  1. Stay lean…Be agile. Nimble. Graceful.  Continue to drive out costs.”
  2. “Know your target customer and why they buy.  Know what’s bringing them into your showrooms.  Know their social networks and influencers.”
  3. “Innovate or risk becoming obsolete.  Be more open.  Partner and don’t go it alone.  No one cares about your product, they only care about how their lives will be improved.  How can we make the process of buying a kitchen easier, simpler and more fun?”
  4. “Tread lightly.  Make environmentally conscious decisions.”
  5. “Attract and develop people to carry on the passion of kitchens and baths.”  Karen pointed out that not one company in our industry made the list of the most admired companies for 2011.


My overall impression was that the content was good, but this speech should have been given to the industry 2 years ago by a major manufacturer like Masco.  I was excited that Karen took charge and drove home these points.  Could it be that cabinet manufacturers are finally starting to “get it”?

Time will tell.

One thing is for sure though, if the rest of the cabinet manufacturers don’t start “getting it” soon, I won’t be ROTFLMAO.