Wow! I just finished reading, watching and then trying to digest the state of the industry address that Michael Werner, president and CEO of Globe Union Group, gave at KBIS 2012 in Chicago. I later followed that up with an interview with Michael via Skype.
My head is literally spinning with all of the great information that Michael shared. There were about 500 folks in attendance for the talk. I firmly believe that everyone in our great kitchen and bath industry should watch this presentation. A video of the speech is posted at www.danze.com/SeeChangeConnect. Although it’s an hour long, you won’t be bored and will love his multimedia approach.
When I started our business in the early 1980s, I felt we were cutting edge, even revolutionary. We adopted the strategy of “one-stop shopping,” plus being proactive in selling retail. I believed that the future of showrooms was to market to the consumer. It’s their home, their money, their styles, likes and dislikes, and they are the ultimate decision makers. All of this has come to pass. Almost every astute plumbing wholesaler that operates showrooms now markets directly to the end user.
If I still owned my showroom, I would have started to reinvent it several years ago. The new strategy would be to incorporate technology every way possible. We would have a virtual showroom tour online, and everyone that came through our doors would be given an iPad to use as they peruse the showroom to learn all about the many fine vendors and products we represent. And I would be all over the many extraordinary ideas that Michael talked about.
I met Michael last fall via our mutual interests in our great industry and bicycle riding. We are both avid riders and are trying to plan a couple of rides together. Plus, we’re talking about how we can work together on some of the exciting things covered in this article.
As President and CEO of Globe Union in North America, Michael is part of a young business that has grown to almost $800 million in worldwide sales. Globe Union is made up of a number of different brands, including Danze and Gerber.
With more than 40 years experience, there’s not a lot that surprises me or really gets me excited. But Michael’s insightful views have really gotten my attention. I’m convinced that the future success of showrooms will depend heavily on the use of technology. Keeping up with how rapidly it’s changing and integrating it into your business will be the challenge. I truly believe that it’s time to get on board or get out of the way. Doing business the way we have for the last 30 years just won’t cut it.
Enough of my comments. Here’s what I’m urging (no pleading) that you do. First, read what Michael is saying in the following interview. Next, go to the link above and watch Michael’s talk. Then go to the blog they’ve created - www.SeeChangeConnect.com - to better understand all the charts, graphs and YouTube postings. Finally, do what I did - digest it. Be sure you understand it. And start to rethink your business model - now!
Here’s my question-and-answer session with Michael.
HD: One of the takeaways from your address is the market is rebounding and leveraging technology is a key to realizing its potential…MW: We’re finally on our way back from this horrible housing depression. While it’s too early to uncork the champagne, things are getting better. Consumer confidence is growing, jobs are being created, housing prices have stabilized and builders are once again putting shovels in the ground. Remodeling is coming back as well, mostly due to the 37-year average age of U.S. homes. In fact, nearly 80% of houses are at peak remodeling age, but much of the work will be simpler and maintenance-based. Driven by changing demographics and the Internet, what consumers want and the way they shop has changed. They care less about traditional channels of distribution than getting the products and services they desire. We need to change as well, and to engage them when they will be most receptive to our help. At the same time, advances in information and display technology are fundamentally altering how showrooms will operate in the future.
HD: The Internet has been out there for decades. e-tailers have been established for a few years. The iPad isn't new anymore. Why now?MW: A technology-infused lifestyle is no longer aspirational - it’s life. Think of yourself as a typical consumer. I imagine you use technology very differently today than just a few years ago. Homeowners expect information how, where and when they want it, and our challenge is to deliver what they want. Consumers are savvier than ever. They walk into showrooms fully informed. They also want to envision products in their homes, which they can soon do using 3-D design, augmented reality and haptic technologies.
That’s why the time is now. Retail technology and the Internet are changing rapidly. And if we don’t get past the fear of what technology can provide, we’ll miss the market rebound. Simply put, those who change will prosper.
HD: You talk about working closely as a community for mutual benefit and for homeowners. How can we dispel the fear of competition? Many don't want to share information and work closely with others because they're afraid it will cost them business.MW: The kitchen & bath industry is a $40 billion market; there’s enough for us all to get a piece of the pie. I often talk about how we all have different strengths and weaknesses. By working more closely together, we can provide exactly what homeowners desire. And make more money too!
A perfect example: the Internet and showrooms – two channels seemingly at war with each other. However, if we combine the strength of the Internet, which is great at generating eyeballs, but horrible at closing sales, with the strength of showrooms, which are great at closing sales but poor at generating traffic, both would benefit. We are currently testing a new technology that does exactly this.
Quantum physicist Michio Kaku talks about the “caveman principal” in his book “Physics of the Future.” We are biologically wired to prefer face-to-face communication. Kaku believes there’s an ongoing competition between high tech and high touch. For example, homeowners will likely do much of their research online, but will ultimately go into a showroom to make the final purchase if the showroom can demonstrate a compelling value, which need not be price driven. Today, 80% of consumers research online, yet 95% of K&B purchases are local. We believe that technology offers the various players in our channel opportunities to sell more and better grade products and services.
HD: What progress do you hope to see by next year's KBIS 2013?MW: We can start implementing our vision of strengthening the K&B industry by leveraging the power of technology and the Internet. Here are a few of my goals as we look toward KBIS 2013:
First, we’d love to work with the NKBA and others to create a demonstration showroom of the future at KBIS. In my dream scenario, this showroom would include 3-D printing, 3-D design tools, augmented reality, glass displays and interactive kiosks. We’ve shared many ideas about what’s possible. I’d like to see them brought to life by working with leading software, hardware and other technology partners.
Second, I think we can make progress in creating vibrant online designer showcases – both on manufacturer’s websites such as www.danze.com and industry sites such as www.cultivate.com and www.houzz.com. Showcases will enable designers to work closer with showrooms and wholesalers while connecting them to consumers at the zero moment of truth in their K&B journey. Third, I hope to see great progress in the rollout of customer engagement tools by Danze and other companies. These tools will help drive sales and ultimately provide enhanced service to consumers as they enable designers and showrooms to develop more meaningful relationships with their customers.
As we connect the industry, we’ll collectively help everyone prosper. Yes, housing and remodeling markets will continue to strengthen, but we all have an opportunity to lead and to be active participants in fundamentally changing our industry for the better!
Another big wow! If this hasn’t stirred your brain I don’t know what will. I’m going to weigh in on their blog and suggest you also join the conversation at www.SeeChangeConnect.com. Visit every day to stay abreast of what’s going on and become one of the leaders. I have a serious concern that the “followers,” those who won’t change, won’t be around to enjoy the tremendous opportunities that lie ahead.
I’ll be very interested in your comments. Good selling!