Index Shows Market Firing on All Cylinders
HACKETTSTOWN, NJ — The kitchen and bath industry is currently “firing on all cylinders,” with growth being reported for each of the industry’s major sectors, and forecasts reflecting a positive outlook for the balance of the year.
That’s the key conclusion of the first-quarter 2019 “Kitchen and Bath Market Index” (KBMI), a major research initiative conducted in partnership between the National Kitchen and Bath Association and John Burns Real Estate Consulting, a Green Bay, WI-based research/consulting firm focused on the housing industry.
The quarterly index is aimed at gauging current economic conditions, as well as future expectations, in the industry. It also monitors the key issues and challenges impacting the businesses of NKBA-member designers, retailers, building/construction firms and manufacturers (see related Barometers, Page 8).
- Strong Q1 Growth: The kitchen and bath industry composite index currently rates at a 71, on a scale from 1 to 100 (with 50 being flat). The 71 reading, up from 69.2 in the fourth quarter of 2018, reflects growth in the three main components of the index: sales in the current quarter, a generally optimistic view of future kitchen/bath sales and a positive view of overall industry health (see Figure 1).
- Overall Health Positive: Surveyed professionals in four key industry sectors currently rate kitchen and bath industry health at a 6.8 out of 10. Retail sales professionals, building/construction companies and design firms are slightly less optimistic than the total industry.
- Positive 2019 Outlook: The outlook for the balance of 2019 remains positive, with the KBMI posting a reading of 76 compared to the current index reading of 68. More than half (56%) of surveyed industry professionals said they expect to see sales increase in the second quarter, while 38% think sales will be flat. Manufacturers and building/construction firms are the most optimistic groups.
- 56% of Surveyed Professionals Forecast Growth in Q2: Optimism is highest among manufacturers and building/construction companies.
- Labor Challenges Remain a Top Concern: The availability of skilled labor tops the list of industry challenges and concerns. The cost of materials, ongoing trade/tariff issues and economic uncertainty are also significant concerns among surveyed industry professionals (see Figure 2).
“Finding remodeling subcontractors who can perform is our biggest challenge,” one KBMI participant said. “I have a backlog of prospects that I have to ask to wait at least three months to start jobs. Some of them don’t mind waiting, but some do.”
“Skilled labor is my biggest challenge,” another survey respondent said. “Good trades are out there, but they’re so busy that it can be challenging to depend on them to commit to scheduling my jobs.”
Industry professionals said that overcoming consumers’ unrealistic expectations about remodeling projects is also a major challenge.
“Educating consumers to have realistic expectations regarding outcomes, costs and scope is our biggest business challenge,” one respondent said. “Most consumers don’t understand what we do as professionals, and why we should be paid what we charge.”
“HGTV and other TV programs make people think they can get a great kitchen or bath remodel fast and cheap,” another respondent commented. “We have to re-educate people about the level of complexity and the amount of coordination required to successfully complete a remodel, and it’s always a painful conversation.”
Surveyed professionals also identified five major product/design trends, as well as a similar number of emerging trends to watch in 2019.
Among the current key product/design trends are:
- White and gray remain the most popular cabinet colors;
- Subway tiles are one of the most popular kitchen backsplash and bathroom tile choices;
- Granite sales have shifted nearly entirely to quartz, as consumers opt for lower maintenance;
- There has been a shift in consumer preference from bowl- to apron-front sinks, with a preference for fireclay and stainless materials;
- Consumers are moving away from traditional flooring to luxury vinyl tile and plank for a variety of reasons, including design aesthetic, low price and easy maintenance.
Among the emerging trends to watch in 2019 are:
- Consumers are increasingly asking for dark blue or navy cabinetry;
- Brushed brass finishes are back, as new modern finish options appeal to younger buyers;
- A preference for clean, minimalistic design is driving demand for modern white-oak flooring;
- Matte-finish countertops with texture “could be next big thing;”
- Demand for induction cooktops, steam ovens and other smart kitchen products is growing. ▪