BASELINE: A New Podcast from ThinkLab

0:02Hey, DNA listeners. Today, we're trying something new. We're sharing an episode from our new podcast, Baseline. Think of it as Design Nerds Anonymous' fast-talking sibling, while DNA helps us think big and plan for the future. Baseline zooms in on what's happening right now, so we can react, adapt, and make decisions with confidence in the face of economic uncertainty. Baseline pairs a survey and podcast to crowdsource and share real-time intel, delivered in quick, 10-minute episodes. Each one answers one key question and gives you quotable stats to help guide your client conversations. Now, this replay today shares survey data from a mid-year check-in with the interior design giants of design layered in with new baseline data to see how the biggest firms are tracking against their 2025 forecasts and where the market's throwing curveballs.

0:58If you like it, and we hope you do, be sure to follow Baseline wherever you get your podcasts.

1:11Welcome to Baseline, your starting point for insight into the built environment. Each week, we take one timely question, one real data point, and unpack what it means for product brands and their distribution partners. Now, much of what you'll hear is drawn from ThinkLab's quarterly Baseline survey. While we'll spotlight specific insights here, the only way to access the full report is to take the survey. Simply put, you give, you get. There will be a link to take the survey in the show notes. I'm Amanda Schneider, founder and president at ThinkLab. Today's question is, how are the interior design, giants of design, tracking against their 2025 forecasts?

1:53To help answer that, I'm joined by our data storyteller and resident giants analyst, Alison Ruhn. Hey, Amanda, super excited to be back here on Baseline with you. Wonderful. So to level set, where did the Giants think 2025 was headed at the start of the year? Good question. So at the beginning of 2025, the Giants projected a slight decline from 2024. But, and this is important, right, that was still above pre-pandemic 2019-2020 numbers. So the overall mood was cautious, but it wasn't negative. Interestingly, though, smaller giants firms were slightly more optimistic than the larger ones heading into the year.

2:38Interesting. So now we're mid-year. And I'll say anecdotally, I'm hearing that 2025 for many firms started off great. Some even feel that they're ahead as of July of 2025. but as we look at the full year, maybe a little bit more cautious. So what is the data saying? Well, nobody expects to greatly exceed their forecasts, but here's the data nerdy numbers. 13 % of giants say that they might outperform their original projections. And that lines up really closely with the baseline data that we're tracking, where a similar percentage told us that they feel, quote, better than normal about 2025. So the majority of giants, I would say 65 % roughly, say that their slightly down forecast is still accurate.

3:29And 22 % now say that their outlook is actually worse. Okay. So we're seeing slightly more firms saying things are worse than they expected rather than better. But it sounds like there's still some optimism remaining. Yeah, you're exactly right. And that matches to what we're seeing across the baseline. survey. There's more of what I'd call nervous caution than optimism right now, especially as we look at the back half of the year. Okay, so let's dive in. Let's get a little bit more specific. Let's talk sectors. Where did the interior design giants of design think growth would come from at the start of the year?

4:10And then we'll move on to if that's actually accurate. So leading into 2025, they were identifying a few things. Hospitality, first and foremost, the tech sector, professional services in corporate, outpatient healthcare, behavioral health, higher ed, and then mixed-use residential were their biggest growth bets. And has that played out? Well, not exactly, right? It's always hard to predict. So mid-year data does show some surprises. Sectors that are doing better than expected actually include cultural and sports projects, as well as health care. So sectors that are performing as expected, then, would include transportation, life sciences, manufacturing, and corporate workplace, which I know you're going to be talking about in an upcoming episode.

5:01And then we have sectors that are underperforming, unfortunately. So no one wants to think about that. But those are government and civic, education, retail, residential, single family residential, mixed use and, yes, hospitality. Man, we keep hoping that one will take off. I know. So I'll say that the very sectors that the Giants were most hopeful about are now, in some cases, some of the weakest. But let's unpack why. What are we seeing in terms of, you know, our questions around what's being delayed or canceled? Sure. Good question. So across both the interior design giants of design and the baseline respondents, we're seeing a consistent list.

5:46And the researcher in me loves the consistency, right? So federal, university and the NGO projects are being delayed or canceled due to political and funding uncertainty, right? That's not a big surprise to a lot of us following what's happening. Hospitality and senior living, they mentioned struggling with the tariff impacts and the construction costs, most of all. And then when we get to corporate and mixed-use residential projects, they're facing some financing issues and then just the general economic caution. So I would say that it's not a full stop, right? That's not what we're hearing. But many clients are they're either slow to start, they're cautious or they're waiting for more clarity on the tariffs, the inflation and just the broader geopolitics that are impacting us right now.

6:35Right. So, so interesting with the uncertainty, I think. And you're going to find pockets of people that agree with this. And we definitely have seen some comments written in that don't agree with this. But with all this volatility, let's look at staffing, because I think staffing helps us see, you know, putting their money where their mouth is. Are they growing? Are they shrinking? What are we seeing in the staffing numbers? Yep. So for the interior design giants of design, their data shows that 15 % of those firms have reduced staff. And again, it matches our baseline survey almost exactly. But here's where it gets interesting.

7:13So 38 % of the giants say that they're hiring. And that's more optimistic than baseline, where most firms are in a holding pattern. And so 47 % of giants say that their staffing is unchanged. Mm-hmm. So slightly more positive than baseline with these large firms, which is interesting because that almost counters what we started with, where the smaller firms were seeing more optimism coming into the year. So I think that's probably exciting that the interior design giants have dined are still investing, especially in talent. And I feel like that echoes something we saw in a lot of write-in responses on the baseline survey as well.

7:52Even amidst uncertainty, many firms are pushing ahead and really trying to think strategically. Right. You know, there's still momentum, which is great to see. And while the tariffs and the high interest rates are slowing decision making, there's continued investment in technology, in business development, and we're even seeing new office locations open up. That's great. So let me just try to sum this up a little bit. what we expected from 2025 hasn't quite materialized, but we're not so far off. And a reminder that in baseline data for a lot of the product side, 2025 is actually starting better than expected.

8:32So while uncertainty reigns, the industry most definitely is not at a standstill. And I'd say how 2025 plays out is probably still a mystery. Exactly. You know, if anything, firms are learning to balance caution with long-term strategy, and they are pushing through to find the bright spots. And I would say the more real-time data we can gather, the better we can adapt. Exactly, which is why we're doing this whole baseline initiative. So let's close out with some advice. I love to close each episode with advice specifically to the product side of the industry. So based on what you see on a daily basis, you have one of the most interesting jobs.

9:12Based on what you're seeing in all that data, what's your advice for the product side of the industry? So she says I have one of the most interesting jobs, and I would agree. My title here at ThinkLab actually gets to be data storyteller, which is exactly what we're doing right now, right? So from that perspective, I would say this. My advice, which is really for product, I would say, and service providers like A &D firms. So one of the clearest signals that I think we're seeing right now, Amanda, is that clients are craving both clarity and flexibility. So amidst stop and go projects and constant pivots, they're looking for product and service partners who reduce friction, not add to it.

9:54Right. We've all got enough of that in our life. So while we know many firms are set up for this stop, start, pause, pivot approach to their projects, we're seeing a clear opportunity here for innovation. So this is the moment to double down on helping to reduce risk and be really consistent with your communication. So what they need from you, product service partners, is a partner who can adapt as quickly as the project demands. That, to us, that's what we're seeing, is going to build trust right now. Couldn't agree more. And we will be diving much more deeper into that need for flexibility, specifically in the corporate sector at our end user event on July 31st.

10:37So more on that to come. We're going to dive deeper into our data on the corporate sector next week. But if you want more information on how you can be in that room live July 31st in Chicago to hear our latest research with these corporate end users, simply reach out to me, Amanda Schneider, on LinkedIn, and I'll be sure to share the details. or be sure to tune into next week's episode where we'll be sharing specific data on that sector. So Alison, thanks so much for joining us. As always, thanks for having me. Awesome. And with that, I'm going to read us out. That was your baseline. A first layer of insight designed for product partners serving the built environment.

11:15This is just the base. If there's a question you'd like us to explore next or if you want to contribute to the next report, Simply take the survey now and help shape the conversation. You'll find the link to take the survey in the show notes. Or again, you can always reach out to me, Amanda Schneider, on LinkedIn. We love your input. It helps shape our research and what we present on this show. So on behalf of all 16 of our baseline partners, we'll see you next week as we share more data specific to the corporate sector. See you then.

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