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Possible Changes In The Interior Design Industry Structure As We Know It!

December 15, 2009

If ever there was a time to make your voices heard, members of the design community, it is now.  All around you there are discussions going on, serious discussions.  Look at some of the comments on this blog.  Here are the “HOT” topics.  They are NOT Donghia policy or Bergamo policy, but all of these are under active discussion all over the place.  It is time for you to weigh in with your opinion on one or more of these issues! 

What do you think of these ideas?  Do you even care?  What alternate solutions could you offer?

1. Transparent billing by designers- the idea that designers need to change their fee structure to a flat % on top of goods purchased and then pass the invoices through at cost to the client.  This is being driven by the clients, not the suppliers.  Suppliers by definition can and should have no control over how designers charge their clients – or what designers charge their clients.

2. Saturday as a retail day in the Design Centers-  the idea that the industry adjusts to Saturday hours and sells retail to consumers directly.  This is NOT being driven by suppliers but is very much being discussed.

3. The idea of retail pricing on all goods in showrooms with a  discount for designers, but with the understanding that consumers can now buy at that retail price.  No more 5/10 code or anything else.  Each manufacturer establishes their own retail price and corresponding discount, as in Europe.  Lots of discussion going on.

4. The idea of expanding the Design Center DOC (Designer On Call) programs everywhere for clients who only want access and limited design support. Access is not really “value-added” after all, the skill and knowledge anbd experience of the professional interior designer is what is most important!

5.  The fact that designers can sell retail to their clients and can shop at retail stores for their clients to meet budgets.  Why is that OK when suppliers are constrained to only sell through the design community? Shouldn’t suppliers be able to sell actual customers too? But think of the mistakes the end-user clients will make without professional designers involved!!

WHAT DO YOU THINK?   The Interior Design business is suffering and continues to suffer.  This affects the entire supply chain that supports the interior design community.   All of your suppliers are suffering.  Lots of ideas are floating around.  Like voting, you can’t complain if you didn’t vote, so use this blog to make yourself heard.  WHAT DO YOU THINK?

Again, this is my blog, and is not Donghia or Bergamo’s policy.  But we are following these discussions actively, as is every single supplier and design center.  Change is in the air, ladies and gentlemen.  Now would be a good time to say something.

13 Comments leave one →
  1. September 14, 2010 11:29 pm

    I just wanted to revive this thread a little and see how things have change since last year…lets hear it designers!

  2. Suzanne Lovell permalink
    February 3, 2010 7:32 pm

    The key is that good designers will always be needed, but if we as an industry do not become fully transparent and allow direct sales to the consumer, we will soon have nothing to sell! Fabric mills and furniture makers cannot survive without the now very knowledgeable consumer. Consumers will always and forever need good designers who shepherd great ideas!

  3. January 7, 2010 12:59 am

    I have been running my own business for almost 27 years, and have done a lot of purchasing. Transparent billing is the only way I have been doing . However with the economy the way it is, I can empathy with the suppliers who are paying high rent in the design centers. I am not opposed to the idea of selling retail to the end users however in the same time protect the designers by giving us a good designer discount such as 35% to 40% off from retail.
    This way I think everyone will be taken care of. And I think this way we can bring foot traffic into the designer center, which is pretty sad at the moment.

  4. marky permalink
    December 22, 2009 8:15 am

    Either you are a trade supplier or you are not.

    Every retail sale you make potentially damages your channel (the trade).

    If you keep damaging your channel it will vanish then ultimately you will become a retailer with all the additional associated issues/problems associated with that.

    The reality is that many, many ‘trade only’ suppliers do supply retail and have done for years – despite what they say officially.

    Savvy retail customers can organise trade accounts easily enough if they put in some effort.

  5. Dianne Gambino permalink
    December 21, 2009 10:27 am

    I have always shown the net pricing and my fee on my invoices so this is nothing new for me.

    I think the issue of liability is going to be a big question. Currently, with designers purchasing from suppliers, the designer bears a lot of liability if the client is unhappy for any reason. If the client is purchasing from the vendor, then the vendor will be responsible to the end client, not the designer. Do the vendors really want to deal directly with an untrained client who may be purchasing a sofa that is too large or won’t fit through a door….I can’t imagine the implications that will have on the industry.

    The reason designers charge fees is because they are supposed to be responsible for these types of things. If designers need to change their fee structure in order to promote business, that is something they will need to make individual decisions on.

    Another thing I have done in my small business is screen clients, trying to figure out who would be problem and may not pay for things that are put into work. Will the vendors take on this responsibility?

  6. December 20, 2009 9:14 pm

    First of all, thank you for addressing these issues in an open forum. The home furnishings industry is going through a major shift because of the economy, the Internet and consumer behavior. The Internet has changed the way every business operates, and the way every consumer buys products and gets information. How can interior designers, design centers and manufacturers adapt and survive?

    Interior designers offer creativity, service and problem-solving skills – that’s our point of differentiation. We’ve sold trade only products in the past because it allows us the ultimate expression of our creative vision, and it allows us to make money, and yet, consumers are becoming more resistant to buying what they see as high-priced “commodities.”

    Many consumers do not understand the difference between a sofa at Crate and Barrel and a high-end Donghia sofa with its unique style and quality. If we continue to follow the traditional model of hourly billing and a mark-up on products, we have to find that small percentage of the population (about 4% of the population uses interior designers according to an ASID statistic) that has the money to afford our services, appreciates quality custom products and is willing to pay us to handle all of the details including purchasing.

    Many designers have made a significant part of their income from selling products in past years, but it will be more difficult in the future with the options that are available to consumers. On top of that, many clients balk at our hourly rates, and if you were to survey most designers, they have had at least one client that hasn’t paid all of their time bills. Many designer friends are worried that if they can’t make money from a mark-up on products that they won’t make enough money to stay in business.

    Selling products is becoming a real friction point with some clients. Consumers are so savvy these days that they will try and often do buy products without our help. If you offer trade only products on a client’s behalf, they can check your prices online. For instance, Decorati offers purchasing assistance for trade only products to consumers at “retail.” Consumers can completely bypass designers. Is that a bad thing? Probably not because these particular consumers want to do it themselves and save money.

    If you’re not aware of Decorati, you can list your interior design company on their site, and they will even source products for you as a designer. You can display your portfolio and hope that consumers like your work and then contact you for your design services.

    I’m not saying that consumers won’t use interior designers, but the old way of doing business isn’t working for many of our colleagues. There are many consumers that won’t work with designers anyway. They watch HGTV and do their own projects because it is fun (our competition is really the consumers more than our colleagues).

    Here is another issue: ASID did a study a few years ago and over 70% of consumers want flat fees, yet the majority of designers still bill by the hour. Consumers may hire us to create their personal vision, but they may want to purchase their own products without our mark-up, and that means a significant reduction in income for most designers.

    We can be transparent with our billing, but will that work for us if the consumers aren’t willing to pay the premium to purchase through us? (A small percentage of the affluent will pay for the service because they don’t want to do it themselves, but that number is declining.) Suppliers may not suggest what we charge, but the availability of products on the Internet gives consumers control and access like never before.

    This may not be a popular comment, but I think that many manufacturers, design centers and showrooms have tried to preserve the old model of doing business to support interior designers and their own profit margins for good reason. I appreciate and applaud this effort as an interior designer, but if the consumer can get the same products on the Internet, how can we all keep fighting this battle? I think it is inevitable that for design centers, showrooms and manufacturers to survive, they will have to open and sell to the public.
    Designer on Call programs seem to work for some designers and design centers, and should continue.

    Consumers also have the opportunity to hire designers online through Decorati and Ava Living through their “productized” services. Other sites will follow their lead. Even interior designers are offering packages of services online. This will increasingly commoditize our interior design services, but it will also expand our ability to offer services outside of our market area.

    What does this mean for our industry? The model has turned upside down. Consumers are now driving the way we serve them. We may not like it and it may be scary, but aren’t we there to provide a service to our clients anyway? Aren’t we supposed to find out what they want and give it to them? It’s time to think differently and adapt…or we won’t be in business.

    What is a designer supposed to do to stay in business? This is such an important issue that at Design Success University, we created a Value Based Fees series to address the changes in consumer behavior and demand and how to have a different conversation and relationship. (One of the sessions is an interview with Vicente Wolfe about how he works and he is extremely candid.)

    I personally believe that for our profession to be viable, we have to adapt to what we cannot change. Consumers want what they want when they want it, and they want control over the costs and the purchasing experience. I’m not saying we can’t make money on product sales, but I do believe we need to change the conversation with the client so they value what we offer them.

    I’ll share your post with our readers and ask them to contribute their thoughts. Just in case your readers would like a complimentary copy of our 2009 Interior Designer Fee and Salary Survey, they can go to our link listed above.

  7. December 17, 2009 4:26 pm

    It’s interesting that the issue of transparency is now being discussed. I have had my own design firm for the last 20 years and have had transparency from the very beginning. I bill my clients my trade, net price, show a separate line item for my commission, and always give them the backup documentation from the vendor.

    I have always felt that it made for a better client relationship to have everything relating to money out in the open.

    Money can, and often does, get in the way of many types of relationships. I have always thought it best to be up front with clients, and have felt that between my firm’s hourly fees and commissions that we were being fairly compensated.

    I think trust is a big issue. I’ve always asked myself “How would I want to work with a designer…what would I be comfortable with as a financial arrangement?” The answer has always been that I wouldn’t want to be presented with “blind” items…I’d want transparency.

    We are all entitled to make a profit. I have found that being honest, open, and having it spelled out in our contracts, and then itemized on our invoices, maintains integrity. It keeps everything above board and everyone comfortable in the relationship.

    I know the practice of transparency has always worked for me, my firm and my clients. I am glad it is now being raised as a serious topic for discussion.

  8. December 15, 2009 6:11 pm

    The design industry has been changing drastically for the last 25 years. Especially, since the 80’s when the “house wife” decorator was out in force trying to buck the system by calling themselves a designer or by friends using other friends resale numbers for personal use. Everyone wants a bargain and even more so today with the state of the economy. I have been in the luxury item business for over 25 years and still believe people who have the money to buy luxury items will continue to do so but finding most consumers are trying to do it on their own instead of hiring a designer. The biggest challenge that I have as the director of both the buying and referral program is trying to convert a purchase made for a consumer into a possible referral client for one of my designers in the program. Consumers are bold enough these days to either visit a showroom to see if they can buy direct or they go on the internet to find more information about the manufacturer. It’s pretty much up to the manufacturers and showrooms to decide if they want to sell retail to the consumers while trying to maintain the integrity of the industry or what’s left of it. I will say the buying service can be a win-win situation for both the consumer and the showroom; the showroom gets the sale and the consumer gets what they want however it does impact the designers. It’s a tough call but consumers are not going to stop at trying to get the best deal they can especially a luxury item.

  9. December 15, 2009 5:56 pm

    It’s cool that you guys are sending this out- I’ve wondered what your direction would be on some of these issues as I’m always reminded by your “To the Trade” decal on your showroom doors whenever I come in… As one of very few design firms who is actually growing and not closing, I think I have an interesting point of view on some of these…

    1. Now that I’ve let go of my design partner and partnered with my contractor, we’re changing our business to Design/Build instead of just Design. If a client insisted on transparency, we would do it- in fact that’s how I’m working on our 15mill dollar project on Maui, but mostly because it’s easy to do when you have a project of that size; everybody still makes plenty of money just because there is so much of it. On smaller project, I would be hesitant to offer full disclosure and would rather “bid” the job- then the client knows what they are spending up front and I can make as much as I can make by get multiple bids on everything I do for the client. In the past, we offered transparent billing to every client and most of them hated it- they really don’t want to see how much the mark up adds up to.

    2. This is a great idea. As long as there IS separate retail and wholesale pricing, designers will be happy and will continue to buy from suppliers. A lot of my working class clients aren’t able to go shop with me during the week as it is, Saturday would just be one more way for suppliers to offer product- whether to designers or the public.

    3. This should have been done a long time ago- every savvy client knows the 5/10 code by now anyway. If suppliers have to come down on their discount for designers, so be it- designers should be making money of their services as much as mark-up. There’s no reason for any designer to get 40%+ mark-ups on goods, if they are talented, then a client will pay for services (either hourly or with design fees).

    4. This is great for designers who are starting out or who have lost their “referral train”. I think it is a value for the public and for certain designers and is a good way to introduce new buyers to a supplier’s line, but I doubt it would ever be used by the upper tier of qualified designers.

    5. I think most designers have no issue with a supplier selling retail, as long as there are two clear pricing tiers- a problem would arise when a supplier sells at the same level (or too close) as the pricing for the designer.

  10. Lee Winterstein permalink
    December 15, 2009 3:09 pm

    We have already received calls from designers in LA with opinions on these timely subjects. Hopefully these opinions will be posted to add to the discussion! Lee Winterstein / Donghia Los Angeles

  11. Nicole Kristensen on designer on call permalink
    December 15, 2009 11:26 am

    The designer on call program is somthing we have implemented in our design center and i have to admit it is a double edge sword. on the one hand we are really geting our name and product in front of the client. this is somthing that is very new to us. we are also giving our designers that sign up exelent exposure which they really appreciate. there are two major issues that we have run into in our DOC experiance, on is that some designers and firms,(especially ones that are too far away to participate in our program) feel that we are back stabbing them by selling to the end users and that our mark up may be less than theirs. the other issue we run into is some “slick” clients see the designer on call program as a chance to side step a designer they are allready working with. so far we have detected these people and managed to notify their designers, however i can see this causing a major problem eventually. over all I think this progam works better at smaller design centers where we know whos client is whos. i personally would not have implemented the program at my center if i had the choice.

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