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Forecast By Anita Shaw Economic Clouds Seen Lifting for 2013 The business forecast for the upcoming year shows encouraging signs of growth and optimism, according to kitchen and bath dealers, designers and manufacturers. January 2013 Other for partial remodels (61%), as some homeowners begin to tackle smaller projects such as countertop replacements or appliance upgrades, rather than doing full-scale remodels. ���In today���s economy, homeowners are focusing less on large remodeling projects and more on single-room remodels or refresh endeavors to their kitchens or bathrooms,��� states David Randich, president of MasterBrand Cabinets, Inc. in Jasper, IN. While kitchens and baths are expected to be the hottest focal points, dealers and designers surveyed also expected to see smaller growth in such ancillary spaces as laundry rooms (22.8%), entertainment spaces (19.5%), home o���ces (17.1%) and mud rooms (15.4%). According to recently released articles from Moen���s Market Research and Insights Group, five areas of home improvements will top the trends for 2013. The trends Mo e n i d e n t i f i e d include: Digital Dwellings (the insurgence of technology into homes; Reinventing Aging (the growth of Boomers and the generat iona l d i fferences between Leading Boomers and Trailing Boomers; Cents and Sustainability (the new consumer mentality that green must be convenient, a���ordable and can���t s ac r i f ice p er forma nce; Cha n nel Surfing 2.0 (how ha nd s- on d ig it a l media tools have per2.4% 28 | Kitchen & Bath Design News 2. KEY CHALLENGES CITED BY DEALERS & DESIGNERS FOR 2013 Technology-Related Challenges ing back into the economy.��� In addition, the National Association of the Remodeling Industry reported that the remodeling industry doubled its growth in 2012. ���We believe that trend will continue in 2013, and homeowners will begin remodeling projects they may have previously put on hold,��� states Ann Rottinghaus, marketing communication director, Elkay in Oak Brook, IL. The state of the economy and the housing crisis has led to the pent-up demand that everyone has been waiting for, industry insiders believe. That pent-up demand is ���fueling a slow and steady growth in the remodeling segment,��� says Tim Maicher, director of marketing for Blanco in Lumberton, NJ. He believes that, as long as con- 7.3% Remaining the Same Supply Issues 18.6% 9.8% Decreasing 15.4% Finding Right Product Mix to Meet Client Needs 3.1% 16.3% Competition from Big Box Stores Don���t Know The survey also showed good news about growth areas for 2013, with 78% of those polled expecting to see increases in kitchen projects and 73.2% expecting to see increases in bath projects in 2013 (see Graph 3). Strong demand was also expected 20.3% Changing Tax Laws 8.5% FOCUS AREAS 26.0% Competition from Online Suppliers Increasing 45.5% Smaller Proft Margins 69.8% sense of optimism, according to KBDN���s survey results, dealers and designers still view price-sensitive consumers and the struggling economy as their top two challenges for 2013 (see Graph 2). Dealing with more savvy and demanding clients followed closely behind, as did issues with propt margins. Less frequently cited concerns from the survey included competition from online suppliers, changing tax laws and competition from big box stores. 46.3% More Savvy/Demanding Clients 1. HOW DEALERS & DESIGNERS SEE SALES FOR 2013 sumers remain positive and conpdent, the upward trend should continue into 2013. And Kevin McJoynt, v.p./ marketing for Danze, Inc. and Gerber Plumbing Fixtures in Woodridge, IL believes consumer conpdence is experiencing a nice rebound in recent months. ���People feel their jobs are a bit more stable, home values are stable or rising, etc.,��� he comments. ���Thanks to continued low interest rates, new buys will continue to emerge and new construction should keep growing,��� he adds. Consumers��� perceptions of their home values is key, states Sam Straub, v.p., Trade Segment Development, Delta Faucet Co. in Indianapolis, IN. ���After the declines of the last few years, the value of homes rose in 2012, and that has good momentum going into 2013,��� he notes. ���People are willing to invest in their homes if they feel the investment will help them in the long-term.��� There is still a great deal of caution, however, and R u s s W h e e l e r, president of Alpharetta, GA-based Hansgrohe North America, believes 2013 will continue to be challenging economically speaking, as there are still ���governmental challenges, economic headwinds and challenges in Europe.��� Kitchen and bath dealers and designers agree: While there���s a prevailing 56.9% Poor Economy ings reports for Wall Street show that banks are ���getting back to making money the traditional way, through mortgages and traditional loans, so money is circulat- 73.4% More Price Sensitive Consumers A fter struggling t hrough some of the worst economic years on record, things are finally looking up. That���s the consensus of kitchen and bath dealers, designers and manufacturers, who say the economic clouds are pnally lifting a bit, with 2013 showing real promise for the kitchen and bath industry. In fact, according to a recent Kitchen & Bath Design News survey of kitchen and bath dealers and designers, 69.8% believe sales will increase in 2013, in contrast to only 3.1% who see it decreasing ��� a show of optimism that hasn���t been seen since the economic decline began several years ago (see Graph 1). Steve Regele, v.p. of sales and marketing for Blum, Inc. in Stanley, NC notes that the improvements in housing starts are helping to fuel the positive news, ���and at the same time, remodeling continues to increase,��� he reports. David Krako���, senior v.p. ��� Americas, Sales Division ��� TOTO USA in Morrow, GA, comments that the housing industry recovery is accelerating, and construction is on the rise ��� up 42% year over year in October, according to the Trulia Housing Barometer as reported in Forbes magazine. Existing-home sales continue to show gains, and foreclosure rates have dropped to a post-economiccrisis low. The barometer notes that the combined delinquency and foreclosure rate is at its lowest level in four years. Steve Bissell, marketing v.p., Kohler in Kohler, WI, notes that quarterly earn-