In 2020 we learned that the only certainty was things would be uncertain. That seems to be continuing into 2021. Still, there are a few things we can be certain of. Here are three.=
1. Homeowners Have Money
When bank robber, Willie Sutton was asked why he robbed banks, he answered, “that’s where the money is.” For plumbing, the money is in owner occupied homes.
The pandemic has been disastrous for bars, restaurants, retail, travel, hotels, salons, gyms, and other in-person services deemed non-essential by government types. Many of these businesses are closed or barely getting by. They are not spending on plumbing.
By and large, people employed in these sectors are tenants, not homeowners. Homes are owned by people with higher incomes who can work from home. Some are beginning to return to their offices, but many are not, and some will never return. Their homes are their offices.
It is still difficult to travel. Many states have travel restrictions and quarantine requirements. In states where these are not a factor, many employers have their own quarantine requirements for employees who get on a plane or cross a state line. Vacations have become staycations or camping trips, which explains the record sales in boats and recreational vehicles.
People are not traveling. They are not going out to eat as much. They are not attending sporting events or concerts. What are they spending money on? The answer is their homes. The big boxes are also reporting record sales and profits.
2. Home Values are Increasing
As people flee central cities with their draconian rules, contagious densities, increasing crime, and mostly peaceful destruction, homebuilders have been struggling to keep up with demand. Prices of existing homes have soared in lockstep with the increased demand. Zillow’s home price index shows the average home value increasing 8.4 percent across 2020. Zillow is projecting an 10.5 percent increase in 2021.
At the time this is written, the Dow Jones Industrial Average is up 6 percent, compared to a year ago and 15 percent in the last three months. Everyone’s 401Ks are looking good.
Combine rising home values with a rising stock market and you have a situation ripe for people to invest in their homes. They feel better about getting a return. And, where else are people going to spend money?
3. Marketing is Critical
The classical economist Jean-Baptiste Say wrote that supply creates its own demand. What Say meant was that people do not know what they want until they are aware it exists. This is the case with many products we enjoy today. Until they were invented, no one knew they needed a smart phone. Now, everyone must have one. It is the same with plumbing products. Show people the products and they will show you the money.
What are some of the products you offer that homeowners might not have considered, but might find essential? Given the nation’s newfound obsession with sanitation, try whole house water purification. Given the memories of toilet paper shortages, add bidet toilet seats. Given the rising cost of electricity, try tankless water heaters.
Remember, plumbing products are part of a home’s décor. A new sink and faucet will change a kitchen. Replacing the porcelain and brass in a bathroom can give it a complete facelift.
People are spending more time at home and they want their homes to be nice. They want them to be nicer. Show them ways they can be. Mail post cards with examples. Do not be afraid to give starting prices (e.g., “Starting at $499, depending on access”). Take out targeted social media ads. Buy cable spots, which are more affordable than you might think.
Homeowners have money. They are spending it on their homes. They do not know what they want until they see it and know it exists. Show them the products and they will show you the money.
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