KBIS may have seemed smaller this year, but the message emanating from the 2012 State of the Industry Address by Globe Union’s president and CEO, Michael Werner, was anything but – with a heavy stress on how technology is affecting the world and the way people buy and sell products and services.
Werner started off by breaking the ice with a creative entrance about how he was just car shopping online with his wife (during the intro speech), and then captivated the audience’s attention with an action scene clip from Luc Besson’s 1997 film “The Fifth Element,” depicting a glimpse of a crazy New York City cab ride in the future of flying cars – a metaphor for our journey into technology. Werner added that this future journey will be “one part familiar, one part new and one part a very exciting and wild ride.” He immediately stressed that technology and the internet are likely to impact us all in the future, an ongoing theme for this address, and we couldn’t agree more.
The state of our industry
As can be expected with any State of the Industry Address, we were reminded of recent years, which were terrible in the housing market. But, Werner gave us hope for the future by bringing us good news of the market having recently stabilized with gradual improvement and assured us that, “the future is starting to look very, very bright.”
Werner then gave us an overview of his speech, which was divided into three important sections. The “See” section represents the industry as we now know it (where we were and are today and where we’re heading in near term). “Change” is the section which Werner described as exploring new technologies that are creating exciting opportunities for the kitchen and bath industry, and will transform our marketplace. Lastly, “Connect” summarizes how we can all benefit by leveraging the internet to, “not only connect the industry but literally create a new business model.” “Our industry is on the cusp of an exciting transformation,” were some enlightening words spoken.
The housing numbers
Werner presented us with inspirational charts, graphs and data predictions that blew a refreshing cool breeze our way. Here are a few key points that were mentioned:
- According to Hanley Wood, 2012 housing prices should grow by double digits – 14%.
- Housing experts such as Ivy Zelman are also projecting that by 2015, residential housing starts will recover to 2007 levels – 1.2-1.4 million.
- With so few current starts, new home inventories will continue to be at record lows further augmenting the resale market, especially as foreclosed homes continue to be absorbed over the next few years.
More kitchen and bath data points from Werner’s speech
- Employment is finally moving in the right direction. Four million jobs have been created since 2009.
- While banks aren’t exactly loose with credit, loans are getting more plentiful for credit worthy borrowers, and rates will remain at record lows.
- 49% of future sales will be high priced homes.
- 80% of markets see stable housing prices.
- Consumer confidence has also been steadily growing as the housing labor and financial markets have each improved. 72% Feel now is a good time to buy a house.
Werner then reviewed some demographics which speak to a “robust future housing market.”
- NAHB estimates More than 2 million homes of pent up demand – people not yet ready to go out and buy.
- An increase in home re-sales will also contribute to recovery and remodeling – many undertake projects within first 2 years of buying existing homes.
- Although 300 billion dollar remodeling market fell 25% during the housing crash, it’s rebounding and projecting to grow at a 3.5% compound rate for several years.
- As consumers stay in their residences longer, especially the 60% of baby boomers who plan to age in place, they’re eager to improve their homes.
- Kitchen and bathroom remodels consistently top the list as most desired projects with more than $40 billion spent annually.
- Remodeling activity will also be driven by the increasing age of US housing stock – which, at a median age of 37 years, is now the oldest in history.
And a favorite statistic from the speech: “Nearly 80% of homes are at peak remodeling age.”
Looking forward
After reviewing the past, we then took a dive into the future. This section was very inspirational, as Werner incorporated futuristic video clips of Microsoft’s kitchen of the future, a shopping experience of the future, and even a clip on 3D printing. He also introduced us to augmented reality and haptic technology, which may be years away, but are coming faster than we know it. The point? The future holds a great deal of opportunity, but things are going to be different, so we all have to be prepared to embrace technology in kitchen showrooms as well as online.
We cover the second half of Michael Werner’s State of the Industry Address in Part 2. Check out part two here: KBIS 2012 State of the Industry Address Summary – Part 2.
