Business for kitchen and bath design firms remains robust and is projected to continue on an upward trajectory as the impact of COVID-19 recedes and remodeling demand continues at record levels. But despite the bullish forecasts, dealers and designers remain hamstrung by several significant challenges – most prominent among them rising product costs and lingering disruptions in the kitchen/bath product supply chain.
Those are among the key findings of a major new survey conducted on behalf of Kitchen & Bath Design News by its exclusive research partner, the Research Institute for Cooking and Kitchen Intelligence (RICKI). The nationwide survey, conducted in mid-May, involved nearly 250 kitchen and bath dealers and designers, including those at firms that maintain a showroom as well as those who operate independently.
KBDN’s survey findings mirror those of other recent polls, which have found that demand for kitchen and bath remodeling is at an all-time high as COVID-19 vaccinations continue, previously postponed projects resume, and both permanent and hybrid work-from-home lifestyles prompt homeowners to reconfigure their residences. However, even as the pandemic’s impact continues to dissipate, project backlogs are reaching upwards of three to six months due to supply chain delays resulting from a combination of record demand and factory closures in the initial stages of the pandemic.
By far, the two greatest challenges that dealers and designers say they currently face are rising product/material costs (82% of respondents) and longer lead times on product deliveries (81% of respondents). Some 54% of survey respondents report that they cannot easily access installers, subcontractors or other labor needed to handle the projects they sell, while other challenges pale by comparison (see Figure 1).
Most dealers and designers (67%) surveyed by KBDN believe that supply-chain disruptions resulting from a combination of record demand and pandemic-related factory closures will last through 2021 and into next year. Far fewer see an immediate end to widespread lengthy product lead times.
Among the wide range of kitchen and bath product categories, supply chain disruptions are most severe in the cases of appliances and cabinetry, survey recipients say. And most surveyed dealers and designers believe that the supply chain disruptions won’t end anytime soon. Specifically, 50% of surveyed dealers and designers believe the disruptions will continue throughout 2021. Another 20% anticipate the disruptions will last only through this fall. On the other hand, a significant number (17%) believe the delays will persist into 2022, and 6% say they have “no idea” when the disruptions will end (see Figure 2).
“Lead times are out of this world,” a surveyed kitchen/bath designer told KBDN. “Our least-expensive offering used to ship in 28 days, and now we’re seeing lead times of more than three months. It’s causing tension among our builder clients, and even homeowners who don’t want to wait months for their cabinets.”
Similar sentiments are being echoed by dealers and designers from coast to coast, even as industry professionals report a concerted uptick in business. For example:
With kitchen and bath remodeling demand at record heights, a whopping 74% of surveyed dealers and designers report that project requests are either ‘much higher’ or ‘somewhat higher’ compared to the same time in 2020.
Three in four dealers and designers polled by KBDN report that project requests are currently higher than they were a year ago, when the impact of COVID-19 was far more pronounced. More specifically, 26% of those surveyed say requests are much higher, while 48% say they are somewhat higher. In contrast, only 5% say project requests are somewhat lower, and another 5% say they are much lower (see Figure 3).
Dealers and designers associated with a showroom completed a median of 31 kitchens in 2020 compared to a median of six kitchens among independent designers. The median complete kitchen price was $49,700.
Two in three dealers and designers surveyed say they expect to design and sell more kitchens in 2021 than they did in 2020, when the median number of kitchens completed was 14, with designers and dealers associated with a showroom completing significantly more than independents (an average of 31 versus 6). The average price for a complete kitchen remodel in 2020 was $49,700, with independents reporting a higher average price tag ($64,700 versus $44,000) than those associated with a showroom (see Figure 4).
Dealers and designers associated with a showroom completed a median of 18 baths in 2020, compared to a median of six baths among independent designers. The median complete bath price was $26,400.
More than half the survey respondents expect to design and sell more baths in 2021 than they did in 2020 when the median number of baths completed was nine, with designers and dealers associated with a showroom completing significantly more than independents (an average of 18 versus 6). The average price for a complete bathroom remodel in 2020 was $26,400, with independents again having a higher average price ($32,300 versus $23,500) than those associated with a showroom (see Figure 5).
Half the surveyed dealers and designers anticipate that their 2021 profit margins on the kitchens and baths they design and sell will increase compared to 2020. Half say project pricing is more important now compared to this time last year, while 43% say the importance of project pricing is currently about the same as in the past.
Impact of COVID-19
COVID-19 has had an undeniable impact on dealer/designer business operations in the past 18 months, and 55% of those surveyed say they believe that the global pandemic, in one form or another, will impact their business through 2021 and 2022.
Designers and dealers say the biggest change in the way they conduct business is related to the sharply increased use of technology for meetings and presentations.
As virtual connections have become critical to conducting business, almost half of the designers and dealers have added or plan to do more online meetings with clients or subs, and 44% say they have or plan to enhance their online efforts to present designs and proposals.
Two in ten dealers and designers laid off or furloughed employees in the past 12 months as a result of COVID-19. However, most (85%) have already rehired or have plans to rehire these employees.
“The biggest change for us has been in wearing masks,” one dealer told KBDN, adding that while some clients “have asked me and my subs to wear masks while in their homes, the majority of those that contracted work with us are okay with no masks.”
“Masks, barriers, online orders communication, web meetings and working to allow for supply chain interruptions,” one dealer replied when asked to list the greatest COVID-related changes to his business.
“It has been a greater challenge to develop personal relationships with potential clients,” the dealer said. “Online sales and virtual designing have (also) invited competition from sources that have no hands-on relationship with a project.”
“We have moved to a ‘by-appointment-only’ showroom,” another dealer said. “This is due not only to health concerns, but also because our designers are project managers and are spending more time out of the office.” Unexpectedly, the dealer said, the appointment-only showroom policy “has not decreased leads but has helped us qualify prospects, so we spend less time on unprofitable leads.” ▪