US Kitchen And Bath Market Sales Expected To Grow 9.1% In 2022
The National Kitchen and Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) recently released their Kitchen and Bath Market Index (KBMI) for the third quarter of 2021. The KBMI shows that while market demand continues to be strong, the challenges of the epidemic are having a cooling effect on a very positive full-year outlook, with the overall index down 4% year-over-year.
The kitchen and bath industry is emerging from record quarterly growth in the second quarter, which drove full-year sales growth forecasts of about 12 percent year-over-year. Many members remain encouraged by future growth in 2022. According to the report, despite the challenges, the kitchen and bath industry will continue to show healthy expansion. The overall member rating of 78.7 is slightly lower than the 79.8 and 82.3 scores for the first and second quarters of the year. While the projected reduction in sales growth in 2021 appears to be detrimental to the industry, it has still been incredibly successful this year. The industry is expected to end the year on a growth trend.
The latest third-quarter results are slightly below the very strong second-quarter forecast, but it is a positive sign,” said NKBA CEO Bill Darcy ( Bill Darcy). It suggests that the kitchen and bath industry is poised for a strong year.” “Continuing challenges such as supply chain disruptions, material costs and the availability of skilled labor are hindering the industry’s ability to take full advantage of strong demand.”
The kitchen and bath industry was able to thrive early in the epidemic, as homeowners enjoyed higher levels of home equity and were eager to renovate. Historic growth was achieved as they continued to spend more time in their homes. However, the ongoing challenges of the epidemic lowered the rating of the industry’s health by nearly 4%. Their willingness to face rising material costs in the early stages of the epidemic. They are now increasingly inclined to wait until 2022, hoping that prices will stabilize. As a result, respondents are more cautious in their measures of current and future business conditions – down 6 percent and 3 percent, respectively. Member companies expect more consumers to delay demand until 2022.
The global supply chain is one of the main areas of concern for members. According to the report, shortages in the global supply chain are forcing companies in the kitchen and bath industry to shift to sourcing more U.S.-made products. They are taking advantage of more previously unincorporated brands to circumvent global supply chain issues. Manufacturers are prioritizing high-value products to protect margins while stocking excess materials to help reduce lead times and overall constraints. The kitchen and bath industry is also demonstrating its resilience by developing creative solutions to mitigate the impact of retailers packing up their overstocked storage facilities and buying in bulk when possible. Construction companies add additional upfront time for kitchen and bath products to reduce delays. Manufacturers stock up on raw materials and focus on reducing production lines to streamline production.
The report notes that the U.S. kitchen and bath industry will continue to suffer from supply chain challenges. Port congestion further exacerbates the strained supply chain. These supply chains are still recovering from the effects of Winter Storm Uri and Hurricane Ida, while labor shortages are causing delays in the trucking industry. Meanwhile, domestic and international raw materials are taking well over six weeks to be delivered. As a result, product backlogs will continue into 2022, as these difficulties prevent the industry from scheduling complete production schedules.
In the face of the current difficulties, the report remains cautiously optimistic about the health of the kitchen and bath industry, which NKBA member companies gave a score of 7.9 out of 10 in the KBMI’s third-quarter report. Despite kitchen and bath renewal projects being pushed to 2022, the industry continues to see demand for building and construction projects as 84 percent of companies report low deferral rates. 90 percent of companies report low cancellation rates relative to their overall project volume. When consumers begin their projects, they tend to use high-end products. 73% of retailers report a shift in price point to high-end products.
Overall, NKBA member companies still expect positive full-year sales growth in 2021 and project 9.1 percent full-year sales growth in 2022 as some deferred programs are expected to resume. “The good news is that despite the ongoing challenges, the report found that consumers are choosing to defer rather than cancel items,” D’Arcy said.