HACKETTSTOWN, NJ — The kitchen and bath industry experienced a “successful” first quarter, growing 12.6% in the first three months of 2022 compared to the same quarter in 2021, with industry professionals reporting that they expect additional growth as the year unfolds, according to the latest in a quarterly series of market studies conducted by the National Kitchen & Bath Association.
According to the Kitchen & Bath Market Index (KBMI) for Q1 of 2022, demand for kitchen and bath remodeling projects “has stayed strong, enabling the industry to continue to grow in the new year,” even in the face of rising price points and other market headwinds.
The NKBA’s KBMI Q1 report found that all kitchen and bath industry segments reported high single-digit sales growth year-over-year except for manufacturers, who reported double- digit sales growth of 10.3%. Not only were sales numbers up compared to 2021, but quarter-over-quarter (QOQ) sales accelerated for all segments of the industry, the Hackettstown, NJ-based NKBA said.
“As the world shifts toward a ‘new normal,’ we’ve seen the kitchen and bath industry continue to adapt to the times by evolving e-commerce practices, stocking up on available products, and turning toward historically underutilized brands to fulfill customer needs,” Darcy added.
According to the NKBA, 2022 full-year sales growth expectations have increased in recent months, with professionals anticipating +15.1% growth for the year, up from the 9.4% reported just three months ago. In the latest KBMI report, the kitchen and bath industry rated future business conditions a 78.6 on a 100-point scale, displaying cautious optimism about the future of the industry, the NKBA said.
“Rising interest rates and low resale inventory have been tailwinds for big remodeling projects as consumers leverage home equity and other discretionary income to ‘trade up in place,’” the association said. “Despite additional inflationary pressures potentially pricing out some homeowners, the industry reported a healthy number of backlogged projects, allowing the sector to feel confident about the road ahead,” the NKBA added.
Among the KBMI’s other key findings were:
- Material shortages causing delays and cancellations: As the ongoing worldwide material shortage continues, kitchen and bath industry professionals have reported serious delays to their projects. Forty-three percent (43%) of building and construction firms report most of their projects were behind schedule in Q1 2022. Firms have tried to get out ahead of projects by pre-ordering as often as they can, however, industry-wide backorders and shipping delays prevent them from maintaining timelines. A further consequence of these material delays has been client cancellations due to long timelines, as 46% of building and construction firms had clients cancel and/or postpone projects in Q1. While this is a slight improvement from Q4 2021’s 50% cancellation/postponement rate, the trend continues to be a concern for the industry moving forward.
- Luxury products in demand but come with longest lead times: The KBMI for Q1 2022 found that luxury products once again are the most popular category for consumers. However, these products also come with the longest wait times. An increasing number of industry professionals (55%) report differing lead times across luxury, mass market and entry-level products/materials. Seventy-nine percent (79%) of those indicating a difference say lead times for luxury products/materials are the longest. Consumers choosing to move forward with big project remodels are often opting for high-end products, associating quality and durability with the higher price tag.
- Labor remains elusive and expensive: Industry professionals reported labor availability as having a significant impact on their businesses and their ability to keep up with demand, rating the overall impact a 6.7 on a 10-point scale. Industry professionals continue struggling to find qualified labor, raising rates by 18% on average to retain and/or attract talent. Seventy-six percent (76%) of designers are increasing labor rates 21% on average to retain existing employees, saying competition for qualified labor is fierce. ▪