Design Center Makeover

During the height of the housing boom, home builders invested heavily in elaborate design centers. Professionally staffed and featuring thousands of options, these centers were a competitive advantage. Design centers are a luxury now that homes sales have declined and inventories have risen. But they're still necessary. What changes should be made to maximize their value given the current market conditions?

Several factors are spurring change in design centers. First, visits to design centers are naturally way down. Second, the new realities of the U.S. economy are driving down the sizes of new homes and number of amenities desired. And third, an increasing number of home buyers are looking to move quickly. Many home buyers are simply trying to reduce the risk of buying and want to sell their existing home first. This means quick closings (often within 30-60 days) are the only way to go, resulting in fewer options.

Indeed, spec homes will continue to account for most new home sales for some time. That's why it's imperative that home builders pay close attention to design trends and research.

Some observers liken what's happening in the home building industry to what occurred in the automobile industry years ago. It used to be possible to have a car built specifically for you, with only those added features and options you wanted; now cars come standard with the most popular features, and any additional options are presented in packages.

To make this shift, automakers had to determine what standard features, colors and styles would please most buyers. The same thing is now being demanded of home builders. They need to pre-build what research tells them buyers want. That's the challenge.

For years, despite its size, John Wieland Homes [1] in Atlanta has been able to compete with custom builders largely because of smart designs and right choices available through its design center. In fact, its design center was a major factor in the company's being rated No. 1 in customer satisfaction and garnering an Avid Award in 2007. But even John Wieland has had to revamp its industry-renown design center to respond to market forces by focusing on options buyers really want. As Jeff Kingsfield, senior vice president of sales, explains, "We are focused on delivering what buyers really want, and high-end cabinets are where our buyers want to customize the most."

As John Wieland and other builders are learning, design centers are still important. However, their success won't be measured in how many options they make available but rather how many "right" ones they do.