ASID's 2012 annual report provides in-depth look at U.S. interior design industry
Susan Dickenson -- Home Accents Today, November 1, 2012
WASHINGTON, D.C. - Randy Fiser, executive vice president and CEO of the American Society of Interior Designers
Randy Fiser, EVP/CEO, ASID
Fiser's presentation included data from a similarly titled ASID report, in which an extensive overview of the industry's health, size, scope, operations and influence is presented. The report reflects the results of several ASID surveys, and incorporates findings and statistics from the U.S. Bureau of Labor Statistics, and from Interior Design magazine's 2012 "Top 100 Interior Design Giants" and "2010 Universe Study of the Interior Design Profession."
"Just as improved product design transformed the IT industry, more thoughtful interior design is benefiting companies, institutions and government agencies that recognize its impact on people, productivity and performance," Fiser said in his address. "At ASID, we see design as a strategic investment for increasing the economic, social and environmental potential in the built environment, and we are doing everything we can to make it prosper and flourish."
Fiser began by discussing the role of design as being more than the process of turning a built space into a "pleasant container for people and things." As a strategic investment, good interior design can help reduce costs and increase productivity in workplaces, schools and hospitals. Design solutions, Fiser said, help hold down healthcare costs by reducing patient stays and secondary infections, and by providing better conditions for healthcare workers. Space planning, noise control and designs that give greater access to daylight and natural views will improve student focus and concentration. Workplace designs that foster collaboration, knowledge-sharing and innovation can enhance competitiveness and productivity. Retail spaces that draw customers and visually convey a brand story will entice consumers to buy. And, he said, re-envisioning and redesigning public spaces such as libraries and museums help revitalize communities.
The ASID State of the Industry Report provides a look at the current scope and size of the interior design industry, revealing the following;
U.S. Bureau of Labor Statistics data indicates there were approximately 40,950 employed interior designers in the U.S. in May 2011, a drop of about 25% from May 2008.
Among employed designers, about 40% work in interior design firms, and another 20% work in architectural firms. In 2011, the number of designers working in furniture stores and home furnishings stores increased slightly, less than one half of one percent each.
Office design edges out residential design as the specialty most often practiced, with hospitality running a distant third, followed by health care, retail and education/government/institutional design.
Nearly four in ten interior designers work in one of four states: California, Texas, Florida or New York.
More than half of ASID's members identify themselves as owners or principals in a firm, and a large number are women-owned businesses.
Interior design billings, inquiries on the rise
In 2008, at the onset of the recession, ASID began conducting periodic surveys of its members to gauge how their practices were being affected by the changing economy. In November 2010, the Society launched a monthly interior design billings and inquiries survey, similar to the American Institute of Architects Architectural Billings Index (ABI).
The survey asks interior design firms from every state, and panelists from related enterprises, to report on their current billings relative to the previous month's, and report on recent business inquiries. The results of the survey are compiled into diffusion indexes which help indicate changes in the direction of economic activity. The ASID indexes are centered on 50% -- a number above 50% indicates industry expansion, and below 50% indicates contraction.
After a burst of activity in the first quarter of 2011, billings declined for most of the year, hitting their lowest point in July and August. Concern about the Eurozone economy, the stalemate in Congress over the national budget, and a rash of natural disasters appeared to deflate client confidence, affecting both billings and inquiries for much of 2011.
Residential billings began to pick up in October 2011 and, except for a slight dip in December, have remained positive for the past nine months. While the ASID Billings Index dropped by 6 points to 56.5 from its March 2012 high (62.5), June 2012's score marked the sixth straight month that revenue has risen.
On the contract side, renewed activity in the hospitality and retail sectors have helped sustain gains in 2012. Office and healthcare design performance has been more uneven, while education and institutional appear to be feeling the pinch of tightening government budgets.
Billing methods, wages, employment numbers vary
The ASID's findings show that about half of all interior designers vary their billing method depending on the type of project. The most common method is to charge at an hourly rate, somewhere between $100 and $300. Average markup is between 10 to 35 percent. Designers who charge by the square foot commonly charge $5 to $6 or more, while flat fee is based on the specific project's size, complexity, estimated time, etc.
According to the Bureau of Labor Statistics data, the mean annual wage for an interior designer employed in an interior design firm rose 3.5% between May 2008 and May 2011, from $51,020 to $52,870. Nonetheless, many designers report they've experienced reductions in earnings during the past several years due to wage cuts or freezes, reduced hours and furloughs. Designers working in architectural and engineering firms earn more on average ($57,950) than those working in other types of businesses, including interior design firms.
In 2011, interior design firms employed 58,000 workers, of whom about one in four was a designer. Combined, these firms had a total payroll of over $2.2 billion. That same year, they paid out an additional $3.5 billion to contractors, craftsmen and tradespeople.
Also in 2011, the interior design industry generated over $9 billion in revenue: $7.3 billion from interior design firms, $1 billion from approximately 17,000 self-employed designers, and another $1 billion in design revenues from architecture firms.
Purchasing power nearly double that of 15 years ago
The State of the Industry report also discusses the extent to which interior design industry drives sales of products and materials.
In 2009, interior designers specified an estimated $46.3 billion worth of products. Within the past decade, their purchasing power has increased dramatically, from 46% of all products purchased in the A&D industry in 1997 to 83% in 2009.
On average, product sales account for 60% of a design firm's total revenues, at about $2 million a year. Many self-employed designers and small firms specify less than $500,000 a year, and some large firms specify $10 million of product or more annually, according to the report.
"Our research and other studies have shown that smaller firms and larger firms proportionately specify similar types and volumes of product by category: paint, carpeting/flooring, countertops, fabrics, wall coverings, lighting, ceilings, window treatments, furniture, appliances, kitchen/bath fixtures," Fiser said in Tuesday's briefing.
Fiser said he and ASID's directors, expect, and are preparing for, the design industry's expansion as the economy improves and the demand for good design continues to increase.
"In the months ahead, we will be bringing together experts and thought leaders from all parts of the building industry to get a more complete picture of where the industry is heading and how designers can best contribute."
To that end, ASID is exploring new and emerging business models for designers, developing professional education, and expanding its legislative activity to include a broader range of business-related issues. In collaboration with the ASID Foundation, the group is also furthering research that examines the impact of design on the human experience.
For more information about ASID or the State of the Industry Report, visit the Society's website at www.asid.org.
CREDITS: Graphs, U.S. map from ASID 2012 State of the Industry report; photo of Randy Fiser by Home Accents Today
Uttermost and Surya at the Dallas Market Center