The Kitchen and Bath Market Index (KMBI) has just been released, and while sentiments among industry professionals have certainly cooled since the start of the year, there is still a lot to look forward to on the horizon, according to the report. Despite the overall index being down 4% quarter over quarter, the record-breaking growth of the industry in Q2 has fueled a promising growth prediction of 12% leading into 2022 and beyond.
“The latest results fall slightly short of the very strong projections from Q2 but are a positive sign that the Kitchen and Bath industry will finish the year strong,” said Bill Darcy, Chief Executive Officer, National Kitchen and Bath Association (NKBA). “Persistent challenges such as supply chain disruptions, cost of materials and availability of skilled labor are hampering the industry’s ability to take full advantage of strong demand.”
These issues, it seems, have at last caught up with the early eagerness of many consumers. As a result, homeowners, now less lenient when it comes to delays in schedules, are pushing projects back into 2022 in hopes the market will correct itself.
“The positive news is that despite the ongoing challenges, the report found that consumers are opting to delay their projects rather than cancel them. When customers do decide to execute on the remodel, they tend to gravitate towards higher-end products, as well as lumping several rooms into one overall project, helping fuel a projection of 9% growth in 2022, positioning the sector for another strong year.” continued Darcy.
Key Findings for the Kitchen and Bath Industry
Positive Close for 2021 Projected
Despite ongoing challenges, the industry continues to see a rather healthy expansion, with NKBA members rating it 78.7 overall, slightly lower from the 79.8 and 82.3 scores registered in Q1 and Q2 of this year. Still, the year has been incredibly successful, and the sector is on track to end the year on a high note according to the report.
Vendor-Agnostic Relationships and Domestically Sourced Products
The increasing demand for the sector has led to many prioritizing product availability above relationships and other factors. Traditionally underused brands are now seeing greater adoption to circumvent global supply issues. Manufacturers are also prioritizing high-value products to protect profit margins while stockpiling excess materials to help ease lead times and overall constraints.
Supply Chain Shortages Continue to Affect Production
Port congestion is further compounding strained supply chains while labor shortages continue to cause delays in the transportation industry. Lead times domestic and foreign raw materials have also skyrocketed to 6+ weeks and has many within the sector struggling to keep up with demand in today’s economy. As a result, product backlogs extend well into 2022 as these difficulties prevent those in the industry from staffing full production schedules.
Continued Growth Seen into 2022
With the consideration of ongoing issues, the industry remains cautiously optimistic due in part to the resilience of suppliers, manufacturers and construction teams. Members have rated their overall sentiment a 7.9 out of 10 in the KBMI Q3 report.
The delays in projects offer only a small insight into the movements of the industry overall, as demand continues to rise for building and construction projects with 84% of firms reporting low postponement rates as well as 90% reporting low cancellation rates relative to their overall project volume.
When consumers do start their projects, they’re trending toward higher-end products with 73% of retailers reporting price points shifting toward high-end products. Overall, members still expect full-year sales growth to be positive in 2021 and are projecting solid full-year sales growth in 2022 of 9.1% as some deferred projects are expected to resume.