HACKETTSTOWN, NJ — Despite rising costs, supply chain disruptions and an uptick in project deferrals, appetite for big-ticket renovations remains strong and confidence is high regarding near-term demand for kitchens and baths.
Those are the key findings of the Q4 2021 Kitchen & Bath Market Index (KBMI), a quarterly gauge of current and future market conditions produced through a partnership between the National Kitchen & Bath Association and John Burns Real Estate Consulting. The latest KBMI, released today by the Hackettstown, NJ-based NKBA, resulted from a survey of more than 850 NKBA members in four market segments: design, retail, building and construction and manufacturing.
“NKBA members (note) more downside risk in Q4 2021, noting concerns over cost inflation, lead times, and product/labor shortages,” the KBMI noted. “Consumers and NKBA members are increasingly ‘agnostic,’ putting availability and quality of products above brand. (At the same time), product availability has changed today’s shopping ecosystem, shifting consumer shopping behavior in favor of e-commerce.”
According to the KBMI, sales in 2021 grew 12.1% year-over-year across the entirety of the kitchen and bath industry, with the KBMI reaching its second-highest rating in history, at 82.1 in Q4 (on a 100-point scale, with 50 being flat growth).
NKBA members reported that appetite for remodeling is high, but the number of consumers unwilling to pay or unable to afford higher prices is slowly ticking up. Demand remains steady against volatile supply chains and continuing labor shortages. Availability and product quality remain the major challenges, with backlogs stretching for months.
“NKBA members are confident they can raise their prices by double digits in 2022 but note that shifts in consumer shopping behaviors may keep pricing in check,” the NKBA said. “Product and material shortages continue to plague the industry (and) NKBA members are resorting to second- and third-choice options to keep project timelines and sales intact,” the association added.
Among other KBMI conclusions:
- Decreasing price gaps between low- and high-end products, coupled with a focus on quality, is fueling requests for high-end design. In addition, lead times and general availability continue to be the main driver for new brand adoption, while product/material shortages continue to cause deferrals, extending backlogs well beyond three months.
- Average retail foot traffic was nearly flat in the fourth quarter of 2021, as retailers experienced an increase in online shopping. Retailers also reported that product availability remains consumers’ top priority, but quality of product is a close second. In addition, product costs continue to climb, forcing retailers to raise their prices.
- Manufacturers continue to “rationalize SKUs and discontinue product lines for added capacity and better margins,” the NKBA reported, added that sourcing remains a point of contention for manufacturers, as lead times extend beyond 10 weeks.
- Building and construction firms are delaying project starts until all products/materials arrive on site. At the same time, firms continue to increase labor rates by double-digit percentages to retain employees, and subcontractors are increasingly difficult to find.