U.S. Kitchen/Bath Market: Slowing Growth
BETHLEHEM, Pa. — U.S. kitchen-and-bath professionals foresee a continuing slowdown of the market, according to a new industry study.
The Kitchen & Bath Market Index (KBMI) for this year’s third quarter shows a pullback in confidence about current conditions and future growth. The study – offered through the National Kitchen and Bath Association (NKBA) still reflects a positive lookout on the market, although the results are less than a ringing endorsement.
The overall market index of 63.2 is the lowest since the third quarter of 2020 and down from a high of 82.3 in the first quarter of 2021. The future conditions rating of 55.4 remains well-above the first-quarter 2020 miasma of 19.8, but sharply down from the 78.6 reported in the first three months of this year.
Both the overall and future-condition indexes are indicative of industry professionals’ prediction that the current economic slowdown will continue.
The quarterly KBMI report assesses the overall health of the kitchen and bath industry, along with issues and challenges that industry professionals are facing with their businesses. On a 100-point scale, KBMI ratings above 50 indicate industry growth, while ratings below 50 indicate slowing activity.
While third-quarter 2022 ratings remained above 50 across all segments (Design, Building & Construction, Retail Sales. and Manufacturing), reduced levels are indicative of industry adjustments as consumer demand slows and recession concerns rise.
Additionally, the third-quarter 2022 KBMI indicated only a 1.3% increase in full-year 2022 sales expectations, versus full-year growth expectations of 9.4% only three months earlier – this after two banner years of gains during formidable obstacles.
The study also noted that 75% of building and construction firms contacted now report cancellations/postponements, up 29% from first-quarter 2022; 65% of design firms also note the same trend, up 17% from January-March this year.
As a result of current trends, industry professionals are proactively adapting their business strategies. Design firms have altered materials/finishes used on projects; building and construction firms have limited estimates to 30 days, and retailers have scaled back on orders from manufacturers.
Designers made up 41% of respondents in the recent study, followed by retailers at 22%, manufacturers at 20%, and building/construction professionals at 16%.
“While the index remains above 50, which continues to indicate expansion, there is understandable concern around current and predicted economic conditions, and the potential impact on the kitchen and bath industry leading into 2023,” said Bill Darcy, NKBA CEO.
“One lesson we have all learned over the past two years, however, is that adaptability is the key. For instance, we see it with design firms currently leveraging new brands for better lead times and availability – as well as those who feel their businesses are well-prepared and positioned to meet the challenges of an economic slowdown.”
The KBMI study is conducted jointly by the NKBA and John Burns Real Estate Consulting. ◙
