The U.S. housing market has changed dramatically in the five years since Splash Galleries opened for business in Raleigh, NC. At that time, new construction made up as much as 75% of business for Splash Galleries and its sister company, Raleigh Plumbing & Heating.

Still, new residential building has fared better in Raleigh than in many markets around the country. New homes, particularly those on the high end, make up 60% of Splash Galleries’ sales; remodeling accounts for the other 40%.

“New construction has held up pretty well,” says Gary Phillips, a plumbing contractor who owns both companies. “Remodeling has gotten stronger, although it’s a different market. It was more high end before.

“I would say both remodeling and new construction jobs are smaller now. The average high-end home used to be $1 million and now it’s $750,000. For remodeling, homeowners are spending less but more people are doing them. Instead of selling the house and worrying about getting the price they want, they are remodeling what they already have.”

Phillips has observed other changes in his customers, including their growing interest in environmentally friendly green products. He has adapted his two companies’ product offerings and services accordingly.

One element that hasn’t changed, however, is the advantage that Splash Galleries gains over its competitors from the technical expertise of its owner and staff. The showroom sells about 45 high-end and functional lines of plumbing products, decorative hardware and related items backed by the installation expertise of a plumbing contracting company.

Green Direction

“My plumbing experience is an advantage, more so than ever with the technology we’re seeing today,” Phillips says. “Especially with all the green items: solar water heating, recycled and reclaimed water and toilet-flushing technology.”

Both builders and consumers are expressing their interest in sustainable technologies, he says. Splash Galleries’ 3,000-square-foot showroom provides Phillips, two full-time staff and three backup employees from the plumbing company an excellent setting in which to sell the benefits of green products.

“Tankless water heaters are generating big interest,” Phillips notes. “When we have a captive audience in our showroom, we gain our customers’ trust in talking about tankless hot water heaters and hot water recirculation systems to go along with their spa and shower systems.

“We’re selling the recirculation systems as green because they conserve water, and they save on their water bills too. We tell customers: ‘You don’t have to wait two minutes for hot water, so you’re not wasting water.’”

Low-flow faucets are popular now as well, Phillips says. So popular, in fact, that Raleigh Plumbing now offers a service to replace aerators on higher-flow faucets in addition to the low-flow faucets Splash Galleries sells in the showroom.

Many builders are taking advantage of the retrofit service, which costs $5 per faucet, he says. The new aerator reduces the water flow from 2.2 gallons per minute to 1.5 without a noticeable change in the flow on most faucets.

More manufacturers, he notes, are producing high-efficiency toilets, which flush with less water than 1.6 gallon-per-flush models. Although, as a plumbing contractor, he recalls some bad experiences from the early days of the low-consumption toilets, Phillips sees HETs as the wave of the future.

“The flushing will be fine, but what happens after the flush is what worries me,” he says. “Having enough drain line to carry away the waste won’t be a problem in most houses. Big commercial buildings with long runs could be a problem.”

Shortly after Splash Galleries opened, Phillips spent about 85% of his time in the showroom and the remaining 15% with Raleigh Plumbing & Heating. Those percentages have evened off to the point where he spends about 60% on his contracting company and 40% on his showroom operation. The common denominator is how much time he spends researching green-related issues and discussing them with customers of both companies.

“I’m spending more time educating myself on water conservation for apartment buildings, for example,” he says. “It’s a whole other market just sitting there waiting to be tapped.

“I really love spending time with customers — sharing my knowledge of the plumbing industry of why systems work, how they work and how they can work better. We don’t want to be order takers. We want the customers who ask questions. The customers with the most questions are our favorite customers.”

Turn On Your Imagination

This attitude toward customers plays well with Splash Galleries’ tagline, which is “Turn on Your Imagination.”

“We tell our customers, ‘If you don’t use the tub, don’t put your money there. If you spend time in the shower, put your money there with a rain-style showerhead and steam unit,’” Phillips says. “We try to get our customers the most product for their budget. We really work with people.”

Showroom employees are not paid a commission for selling a particular brand, he says. Instead, they are trained to pick the best quality product for the customer’s budget.

Raleigh Plumbing & Heating, which is run as a separate company with 40 employees and 25 trucks, accounts for about 20% of Splash Galleries’ sales. Annual sales of the two companies add up to $5 million.

The remaining 80% of showroom business comes from builders and consumers. Splash Galleries’ location attracts walk-in traffic, which is helped by a granite distributor just down the street, Phillips says. Walk-in customers are both consumers and trade.

Phillips recently has turned on his own imagination to devise services to build business among both groups of customers. A new Web site, www.kitchenandbathfixtures.com, targets consumer sales while a tub-protection service focuses on contractors.

For $65 to $85 a bathtub, the company will spray the tub with a liquid that hardens to a rubber-like coating, which protects it on the jobsite. When the tub is installed, the coating is peeled off.

“Different contractors use tubs on the jobsite as garbage cans,” Phillips says. “We’ll go to the building sites and do the service for builders. It sends a message to the builder’s customers that he cares about their product where the other guy doesn’t. It helps create a professional image.”

The new Web site will target consumers by offering online purchases of many, although not all, of the lines sold in the Splash Galleries showroom. Along with bathroom fixtures, the site will sell bathroom furniture, faucets, sinks, cabinets, door hardware and accessories.

The showroom buys direct from manufacturers for almost all the products on display. If manufacturers don’t want their products to be sold over the Internet, Phillips says, then kitchenandbathfixtures.com will not sell them.

Many of the products that will be sold online are bath accessories such as towel bars and toilet paper holders, Phillips says.

“What we hear from our customers after a long consultation in the showroom is that they’re so focused on the plumbing fixtures, they don’t want to talk about accessories,” Phillips says. “That’s a lot of lost sales. Now we’ll send them to the Web site. We’re going after those sales.”