How Large is the Remodeling Industry?
The premier bathroom remodeling franchise is poised to become the dominant national brand
The huge inventory of homes aging into their peak remodeling years, combined with the lasting effects of the Great Recession on the retail housing market, is driving the remodeling industry into what experts expect to be a period of record-setting growth. That boom is positioning Re-Bath bathroom franchise owners for a period of sustained profitability and growth.
The Joint Center for Housing Studies of Harvard University, a research firm dedicated to continual analysis of the housing industry, is projecting record numbers for the industry at large in 2015. In their annual report on the remodeling industry, entitled, “Emerging Trends in Housing Market,” JCHSHU reports that that the home remodeling industry is worth $300 billion. The industry, which was barely slowed by the Great Recession, is strengthening far more rapidly than the construction industry and retail housing market.
In the same report, JCHSHU states that homeowner spending, making up the majority of industry’s $300 billion, has remained fairly stable for the past 10 years. In 2013, homeowner spending on improvement and remodeling projects totaled $192 billion. Bathroom improvements make up 7.7% of the $192 billion, which equates to nearly $15 billion overall.
How the size of the industry translates into an enormous opportunity for Re-Bath
Re-Bath is well-positioned to capture an oversized share of the $15 billion dollar bathroom remodeling industry. With brands like Bath Fitter appealing to low-income customers and brands like DreamMaker appealing to the wealthiest demographics, the middle of the market is wide open. That creates an opportunity for a nationally known brand — Re-Bath — to conquer the space.
According to JCHSHU, the majority of the remodeling industry is composed of small-time contractors without any employees. Even as the nonprofit reports that the remodeling industry was primarily stable during the Great Recession, the “traditional dominance of small businesses in this industry has provided little opportunity for firms to develop skilled employees, which in turn has created a fear of a labor shortage as the market continues to recover.” These small-time general contractors do not have the infrastructure necessary to compete with a brand like our bathroom remodeling franchise.
By entering the full bathroom remodeling industry, as well as expanding our product offering to appeal to the middle and upper-middle class, Re-Bath is by and large without organized competition.
“We have found additional opportunity in the complete bathroom remodeling space,” says Marty Rasmussen, President of Re-Bath. “We’ve developed a comprehensive strategy to cater to the the middle- to upper-middle-class market. This is our sweet spot, because the market is so fragmented that it leaves room for a nationally known brand like Re-Bath to dominate. Customers are demanding more — not only in terms of service, but in terms of a high-end product offering. With the introduction of our natural stone product, as well as our development of training and support to sell this product and install it quickly and correctly, we’ve been finding a lot of success. Our franchisees have first-rate and continual training and support and uniform systems for installation. We offer the best warranties and financing options the industry has to offer. Those factors combine to make it very hard for any general contractor to compete with us. This, of course, has also helped our franchisees increase the amount of their average tickets.”
The future of Re-Bath is bright in the booming remodeling industry
The remodeling industry is well-positioned to grow for decades to come. This is largely, the JCHSHU projects, because all demographics of homeowners and property owners are investing in improving their existing property instead of buying new homes.
As the Baby Boomers move into their retirement years, their improvement spending already outpaces that of the preceding generation at similar ages, and it is expected that older homeowners will continue to play a significant role in the remodeling market for years to come. Meanwhile, members of the equally large Gen-X generation are now in the peak remodeling age group and represent a growing segment of the market. Finally, although off to a slow start, Millennials have similar aspirations to homeownership as previous generations. As a recent Fannie Mae National Housing Survey indicates, well over 90 percent of young people today expect to buy homes in the future, suggesting that members of the Millennial generation will ultimately represent a substantial force in the home improvement market. (JCHSHU, “Emerging Trends in the Remodeling Market,” 2015, pg.10)
Re-Bath is squarely targeting the middle class, capitalizing on our universally appealing product offering. With nearly 200 locations open or in development, Re-Bath is the world’s largest bathroom remodeling franchise, having remodeled millions of American bathrooms since our founding in 1979. We’ve recently launched a comprehensive growth strategy to double our number of locations in the coming years. Re-Bath, which now earns $145 million in annual revenue, expects those numbers to reach $300 million to $400 million.