Episode 85
Understanding the Downfall of Cabinet Giants: A Cautionary Tale for Home Remodelers
The recent disintegration of several prominent kitchen and bath cabinet companies, notably American Woodmark, serves as a poignant reminder of the volatility within the remodeling industry. Profits have plummeted dramatically, with American Woodmark experiencing a staggering 78% decline in gross profits, indicative of broader market challenges. In light of these developments, my co-host John and I delve into strategies for effectively marketing during the holiday season and other periods of diminished consumer activity. We contend that the forthcoming holiday season presents an opportune moment for kitchen and bath remodeling professionals to engage with homeowners, capitalizing on their heightened awareness of home functionality amid holiday preparations. By addressing the prevalent pain points faced by consumers during this time, we can significantly enhance our outreach efforts and drive business growth.
The kitchen and bath remodeling industry is currently facing considerable turbulence, as evidenced by the alarming financial downturn of American Woodmark, a leading cabinet manufacturer. The hosts, Eric and John, scrutinize the implications of such corporate failures, particularly how they reflect broader economic trends affecting consumer behavior and confidence. With American Woodmark reporting a staggering 78% decrease in profits, the discussion highlights the precarious state of entry-level cabinet brands, which are vital for many remodeling projects. This raises critical questions about the overall health of the remodeling sector, as contractors may find themselves grappling with reduced demand and increased competition for a shrinking pool of clients.
In light of these challenges, Eric and John pivot to explore effective marketing strategies that can be leveraged during the holiday season—a period often perceived as slow for contractors. They argue that this time of year should be seen not as a hindrance but as a prime opportunity for engagement. By addressing the specific pain points faced by homeowners during the holiday season, such as the need for functional kitchen and bathroom spaces, contractors can craft targeted marketing messages that resonate with their audience. The hosts encourage a shift in perspective, urging contractors to reach out to homeowners who may be feeling the strain of holiday preparations, thus positioning their services as timely solutions to immediate problems.
Moreover, the conversation delves into the necessity of adapting to modern marketing paradigms, particularly through digital channels and the utilization of AI technologies. The ability to respond swiftly to customer inquiries and maintain an engaging online presence is no longer optional but essential in ensuring success in a competitive marketplace. Eric and John conclude by asserting that proactive marketing during the holiday season can yield significant benefits, urging contractors to seize the moment and enhance their outreach efforts. Through strategic positioning and timely engagement, contractors can not only survive but thrive, even in the face of industry challenges.
Takeaways:
- The recent financial struggles of major kitchen and bath cabinet companies reflect broader industry challenges.
- Effective marketing strategies during slow periods can capitalize on consumer pain points, particularly during holidays.
- Targeting homeowners during peak stress times, such as holiday cooking, can yield higher engagement and leads.
- Digital marketing and automation tools are essential for modern contractors to remain competitive and responsive to clients.
- Using humor in advertising can help alleviate holiday stress for potential customers while promoting services effectively.
- A strategic approach to marketing during off-peak seasons can significantly increase job acquisition and business growth.
Links referenced in this episode:
Companies mentioned in this episode:
- American Woodmark
- Home Depot
- Lowe's
- Master Brands
- Aristocrat
- Birch
- Decora
- Diamond
- Dura
- Fieldstone
- Homecrest
- Kemper
- Kitchencraft
- Mantra
- Mid Continent
- Omega
- Shrock
- Starmark
- Ultracraft
- Urban Effects
Mentioned in this episode:
Its time to upgrade your website with Site Hype Designs!
Be one of the first to grab the 10 spots available for Site Hype Designs special holiday sale! Message John at John@Sitehypedesigns.com and use promo code Johnny Claus in the subject line and see if you qualify!
Transcript
Foreign.
Speaker B:Welcome to the around the House Pro Insider.
Speaker B:This is the podcast for trades pros, carpenters, contractors, interior designers and innovators building homes, renovating spaces, or creating the next big thing.
Speaker B:Let's dive in with your host, Eric.
Speaker C:G. Welcome to the around the House Pro Insider.
Speaker C:This show is for you guys out there in the trades, whether you're building a house, putting an H VAC system in, maybe you're an inventor, designer, remodeler.
Speaker C:This show is for you.
Speaker C:I'm Eric G. And.
Speaker C:Hey, John Dudley.
Speaker C:How are we doing, brother?
Speaker A:Doing good, man.
Speaker C:Another day, another day pre Thanksgiving day here.
Speaker C:It's crazy out there.
Speaker C:It's like, where did the summer go?
Speaker C:Now I'm cold and it's raining and it really feels like Thanksgiving.
Speaker C:So it's like, all right, here we are.
Speaker C:But I wanted to talk today, brother, about some of the challenges we're seeing out there in the remodeling industry and even new construction.
Speaker C:I was looking around and this is the time of year we start to see companies saying how well they did.
Speaker C:And American Woodmark is one of the bigger brands out there.
Speaker C:It's in every Home Depot, it's in every Lowe's.
Speaker C:It's one of those kind of main entry level brands across the country and they just came out with their quarterly net income and everything.
Speaker C:Holy smokes, dude, they got creamed.
Speaker C:Not looking good.
Speaker C:So fiscal second quarter ended October 31st, profits plunged 78% to 6.1 million on a 12.8% decline in net sales to 394 million.
Speaker A:Dude, I didn't go to MIT or anything, but I think that's bad.
Speaker C:78% drop in gross profit.
Speaker C:Not good.
Speaker C:Not good.
Speaker C:That's not good.
Speaker C:And here's the other thing for you cabinet people, remodeling people out there, there's a whole other thing going on where American Woodmark went in and bought master brands.
Speaker C:And probably as many people, unless you're in the cabin industry specifically, go, who's that?
Speaker C:That's Aristocrat, Birch, Decora, Diamond, Dura, supreme, who I worked with for years.
Speaker C:Fieldstone, Homecrest, Kemper, Kitchencraft, Mantra, Mid Continent, good entry level brand, Omega, Nice high end stuff.
Speaker C:Shrock, Starmark, Ultracraft and Urban Effects.
Speaker C:So we're going to have 20 plus brands out there under one single umbrella, which is going to be interesting.
Speaker A:That could go a bunch of different ways, right?
Speaker C:Can and I don't know how it's going to go.
Speaker C:As long as it's being run by cabinet people, you're okay.
Speaker C:Yeah, the Problem we see is when these, with cabinet companies, when they get purchased by bigger companies or especially when you get investment firms involved that are just looking at stock price.
Speaker A:Yeah.
Speaker A:You've got accountants and controllers trying to tell you how to do your industry.
Speaker A:And.
Speaker A:Yeah, yeah, it's like having an actuary running a motorcycle shop.
Speaker C:You're like, yeah, yeah.
Speaker C:It's like the vegan run in the butcher shop.
Speaker C:It's not going to work.
Speaker C:It's just, I just look at it and go, this isn't going to go well.
Speaker C:The problem is you can see, see they're not moving enough boxes.
Speaker A:Yeah.
Speaker C:And they got tariffs in there too.
Speaker C:And these guys are some of the brands that you see that have been shipping things overseas to cut the plywood of particle board or.
Speaker C:And then ship it back.
Speaker C:Now I got a feeling with the tariffs they're going to have to be building some buildings to put a few more automated CNCs in which don't take that much space.
Speaker A:I'm sure they got made sense before.
Speaker A:It makes even more sense now.
Speaker C:Yeah, it's crazy.
Speaker A:We're talking gross profits.
Speaker A:It's a bigger issue than just the tariffs.
Speaker C:That's.
Speaker A:You guys aren't selling cabinets.
Speaker A:Yeah, yeah.
Speaker C:You're not keeping, you're keeping the lights on.
Speaker C:Barely.
Speaker C:We're talking gross.
Speaker C:Really?
Speaker C:To have $6.1 million in net income for a quarter.
Speaker A:Yeah.
Speaker A:For a company that size.
Speaker C:No, that's not good.
Speaker C:I mean it's, it's pretty rough.
Speaker C:So I think, here's the thing.
Speaker C:This is what I wanted to say about this.
Speaker C:It really is giving us a snapshot of what's going on out there.
Speaker C:And these guys are an entry level cabinet company.
Speaker C:This isn't high end stuff.
Speaker C:So if the entry level guys aren't going to.
Speaker C:Yeah, that tells me that we've got a lot of entry level homes that aren't being touched, whether it's new construction and.
Speaker C:Or remodeling.
Speaker C:So that's a big one.
Speaker C:Now my secrets here, brother.
Speaker C:This to me is one of the best times of the year to advertise for kitchen and bath remodeling.
Speaker A:We talked about this.
Speaker C:We've talked about this.
Speaker C:I will have marketing agencies look at me in the face and go, you're insane.
Speaker C:No, it's the message.
Speaker C:If I had a kitchen, a bath company that was open right now and I was trying to get my business for January, February, March going, I'd start out and just be very blunt and go, are you in the middle of cooking for the holidays?
Speaker C:And say, I can't do this another year.
Speaker A:Yep.
Speaker C:Have some fun.
Speaker C:Say, I know the family's irritating, but really, can you cook in that kitchen one more time?
Speaker A:Yeah.
Speaker C:You know, you set the trap.
Speaker A:As I said before, man, I always get, I always seem to get my best responses and my most work when everybody else is sleeping, Right.
Speaker A:Everybody else is doing Thanksgiving, doing the holidays, looking forward to their days of rest and days off.
Speaker A:And so the herd is thinned.
Speaker A:It's the best time to get in there and speak your message.
Speaker A:And the other thing you just noted, right, you're hitting these homeowners at pain point time.
Speaker A:They're stressed out, they're like, I'm not.
Speaker A:Just like you said, I'm not cooking this kitchen one more year.
Speaker A:Blah, blah, blah, blah, blah.
Speaker A:Tired of this small house.
Speaker A:Can't have people over that.
Speaker A:There's a million things, right?
Speaker A:The bathroom, plugging up that.
Speaker C:Yep.
Speaker A:It hits them on all fronts.
Speaker A:And you're the one guy out there opening your mouth saying, tax time's coming sooner than you think.
Speaker A:And when you do get that return, what are you going to do with it?
Speaker C:Yeah, that'd be a great deposit on your new kitchen.
Speaker C:And so that's where the money is.
Speaker C:And you and I both have gone, really have done a lot in this.
Speaker C:And it's one of those things that when you're really looking at it, nobody else is advertising, like you said, everybody else is sleeping, kind of going, oh, it's downtime.
Speaker C:And I get that.
Speaker C:But if you're trying to build your business or build it off the backs of other people that are sleeping on you take it.
Speaker C:And I think the more cheeky, the more fun you make it.
Speaker A:If you're trying to relieve some of that holiday stress, at least make people giggle and go, yeah, don't get heavy.
Speaker C:I can't fix your husband from taking out the trash, but what I could do is make sure that when he does.
Speaker C:You got a double oven this year.
Speaker C:Haven't you always wanted a double oven and people.
Speaker C:Yeah, yeah, I want a double oven.
Speaker A:Fix your mother in law from shoving the turkey down the curves disposal.
Speaker C:Here we go.
Speaker C:You brought it back around again.
Speaker C:Well done, sir.
Speaker C:Well done, sir.
Speaker C:That was nice, but really you can't fix that.
Speaker C:But if you can fix those pain points and just hit them because they're.
Speaker C:It's top of mind right now and what not a better time.
Speaker C:If you can get them a couple times on the radio.
Speaker C:The podcast people are hanging around right now because guess what, they're paying attention to what the traffic and the weather are.
Speaker C:What's the traffic over by the mall?
Speaker C:Hey, is that road even closed or what's the weather going to be here in 20 minutes?
Speaker A:Yep.
Speaker C:Use it, Use it.
Speaker C:And I'm not a big print person, but I tell you what, on the interwebs and on air, this is the time of year to do it.
Speaker C:And you can get a pretty good deal at the end of the year from stations as well because many people have cut back, which means that opens the door for you.
Speaker A:Yeah.
Speaker A:Like I said, man, when the herd is thinned, get your voice out there.
Speaker A:That's the time to make the impact.
Speaker A:It works for me every time.
Speaker A:I'm all, yeah, including weekends.
Speaker A:Right.
Speaker A:If you start sounds bad, but if you're paying attention on the times when everybody else isn't, you will win more jobs, period.
Speaker C:Yeah, yeah.
Speaker C:Here's what.
Speaker C:If you and I were still in business, what would we do?
Speaker C:We would have a big van like you used to have and on the side of it, it would say, call us for a quick quote.
Speaker C:We know he's not going to finish the job.
Speaker A:Can we have reindeer pull it?
Speaker C:Absolutely.
Speaker C:You know what I mean?
Speaker C:If you do something like that again, some of these old school things work.
Speaker C:And you park that in the Home Depot right in front of the exit door.
Speaker A:Yeah.
Speaker C:Take your slow walk through the store.
Speaker C:That way you don't get harassed.
Speaker C:But that's sitting out there between 10 and noon on a Saturday morning.
Speaker C:People are paying attention, numbers taken down.
Speaker C:Yeah.
Speaker A:And again, you got a lot of people running to the Home Depot right now because thermostat's not working or that pilot light went out on the.
Speaker A:Whatever.
Speaker C:Charcoal briquettes for the turkey, whatever.
Speaker C:Right.
Speaker A:Yeah, yeah.
Speaker C:So that's the key right there.
Speaker C:I think that's where you can really dive in and that.
Speaker C: rying to get theirs back from: Speaker A:Yeah.
Speaker A:I wish some of those folks had listened to me.
Speaker C:Here's the thing.
Speaker C:It's.
Speaker C:And this is one thing that I've noticed.
Speaker C:There's, as we know, there's so many great business owners in the trade out there.
Speaker C:Some of them are so scared to change anything.
Speaker A:Yeah.
Speaker C:That they don't want to get out of their comfort zone.
Speaker C:I know my website's not great.
Speaker C:I know you can't find me on the Internet.
Speaker C:If you're going to go out and spend a bunch of money putting money on trucks and wraps and Everything else like that.
Speaker C:Why don't you fix the basics first?
Speaker A:Everybody's, look, man, we all carry a phone around all day, every day, and the first thing we do is look people up online.
Speaker A:So first thing we do, you know, yeah, I need cabinets or I need a kitchen or I need a goat.
Speaker A:You go to the Internet and, yeah, so many contrastors don't really seem to care.
Speaker A:Put any attention into digital marketing, having a website that looks presentable and professional.
Speaker A:Like you said, it looks like it was built on Netscape when.
Speaker A:Yeah, you know, in 96 or something.
Speaker C:Oh, and what's so interesting is so many people go out and go, hey, I'm going to wrap my trucks.
Speaker C:Guess what?
Speaker C:I was working, working a few years ago with a pest control company.
Speaker C:They're like, eric, how do we market around this?
Speaker C:We don't have the fancy trucks that are all wrapped and everything else.
Speaker C:I'm like, you're a pest control company.
Speaker C:Let's embrace it.
Speaker C:And so I said, let's do some ads.
Speaker C:You know, the pests in your home.
Speaker C:Do you really want your neighbors to know?
Speaker C:Do you really want them to know that you've got a rat problem, Worry you call us.
Speaker C:We'll show up in a nondescript white van.
Speaker C:We could be the refrigerator repair person.
Speaker C:We could be the H vac tech.
Speaker C:We are not going to ever advertise to the neighbors and embarrass you that you've got a pester rodent problem.
Speaker C:Don't worry.
Speaker C:Call us now.
Speaker C:Your secrets with us.
Speaker A:Yeah, that's a good pivot on that one.
Speaker C:Okay, so you don't have 5,000 bucks per truck to go put a wrap on it.
Speaker C:So what?
Speaker C:Embrace it.
Speaker C:Make it.
Speaker A:When's the last time a wrapped truck drove by you and you wrote down the number?
Speaker C:None.
Speaker A:Yeah.
Speaker A:Okay.
Speaker C:Yeah.
Speaker A:When's the last time you got online and looked for something you needed, whether service, product, or otherwise?
Speaker A:Five or minutes ago.
Speaker C:Yeah, actually, 12 minutes ago when we started this.
Speaker C:But yeah, really, that's what it is.
Speaker C:And it's just like building a house.
Speaker C:You got to get the.
Speaker C:You got to get the site work and the groundwork done before you show up at the concrete truck.
Speaker C:But so many people like to show up at the concrete truck first.
Speaker C:When it comes to marketing, there's so.
Speaker A:Many things you can do now, and digital marketing as a whole is so, so much more efficient and so much cheaper than it used to be.
Speaker A:And now we got AI coming in the whole mix, and it's ridiculous the things you can automate you can be selling jobs while you're out on a job and AI is doing it for you.
Speaker C:Absolutely.
Speaker A:And you know, for a few hundred bucks a month, you can put a system in place, people can go onto your website.
Speaker A:It looks professional, you look like an expert in the industry.
Speaker A:They can put in some information.
Speaker A:It will immediately spit them out a bid, spit them out an email, spit them out a contract, send them a payment link and directly ping your phone while you're on the job.
Speaker A:It says, hey, one just came through.
Speaker C:And you've been building such a cool tool for that, brother.
Speaker C:And, guys, we're not releasing it today by any means.
Speaker C:But let's put it this way, Dudley's got a cool tool for everybody's websites out there.
Speaker C:That's a contractor that he's been going through and building up.
Speaker C:And I'll just leave it at that.
Speaker C:But if you want to get a sneak peek of that, send us a message over at around the house online.com and he can show you what it is.
Speaker C:But it is trick and it's going to save all you guys out there in the bidding estimating stuff.
Speaker C:It's going to really help you weed through the people that are serious and the ones that are just the tire kickers or dreamers that have no chance of writing you a check today.
Speaker A:Yeah, it's amazing, and I don't even quote me on exact numbers, but literally like the difference between immediate response within five minutes or waiting 15 to 20 minutes, success rate, close rate, 60 to 70% difference.
Speaker A:Somewhere in that range that's they've moved on in 20 minutes.
Speaker A:They have moved on to the next guy that they can get ahold of right now and get a price.
Speaker C:So I tell you what, I did this when I was looking for somebody to replace some glass panes in my windows here in my old house.
Speaker C:I called around, got into their voicemail system, right?
Speaker A:Next one out of five might call you back in a week.
Speaker C:Yeah, nobody called me back except for one person that called within probably 30 seconds.
Speaker C:And I worked all the way through the quoting process through them.
Speaker A:That's exactly why I'm building this tool.
Speaker C:I was just like, that's why I'm.
Speaker A:Building this tool, man.
Speaker A:For a few hundred bucks a month, you guys could triple the amount of leads you're closing.
Speaker A:Like, that's silly.
Speaker A:People still won't do it.
Speaker A:Yeah, people still won't do it.
Speaker A:That's what I get so frustrated, dude.
Speaker A:Do you want to grow your business or do you really not?
Speaker C:Yeah, I mean, It's.
Speaker C:I don't understand it.
Speaker C:It's like really, I don't understand the hang up.
Speaker C:But it's out there.
Speaker C:It's out there.
Speaker A:Yeah.
Speaker A:Anyway, good point.
Speaker A:Anybody who's interested in that, hit us up, send us an email, man.
Speaker A:We're happy to give a free tour and free trial, so to speak.
Speaker A:And, and we'd love to, we'd love to hear your thoughts because anything that we're missing or I'm not thinking of, we want to get added to that and I call agent is going to be a piece of that as well.
Speaker A:But blah, blah, blah, blah, blah.
Speaker C:Yeah, super cool.
Speaker C:Super cool, brother.
Speaker C:We got to go.
Speaker C:I got a turkey I got to go get ready for since we're doing turkey day tomorrow here in the states and you can have a turkey sandwich down there.
Speaker A:Dudley, maybe.
Speaker A:They're hard to find, are they?
Speaker C:I was going to ask.
Speaker C:Colombian food is not known for its turkey.
Speaker C:I bet.
Speaker A:No, you got to.
Speaker A:You can go buy lunch meat at the store.
Speaker A:But that's a turkey sandw here.
Speaker A:Yeah, exactly.
Speaker A:We do have a subway here and there.
Speaker C:Okay.
Speaker C:I'm not even sure if that's turkey.
Speaker A:Yeah, yeah.
Speaker A:Close enough.
Speaker C:Absolutely.
Speaker C:All right, guys, thanks for tuning in today and we'll see you next week.
Speaker C:Have a great Thanksgiving.
Speaker C:Thanks for tuning in.
Speaker C:Tuning in here to the around the house pro insider.
Speaker B:Thanks for tuning in to the around the house pro insider.
Speaker B:We are happy to be back.
Speaker B:Make sure you subscribe so you know to catch the next episode.
Speaker B:We will see you next time.
Speaker A:Want to get it back.
Speaker A:In the balance and where it's at, Man?
Speaker A:I need to focus now.
Speaker A:What is that?
