Strong First Quarter for Kitchen, Bathroom Market
The kitchen and bath industry grew 12.6 per cent in the first quarter (Q1) of this year, and is expected to continue its upward climb through 2022, according to a National Kitchen & Bath Association (NKBA) report.
“Despite a number of ongoing economic hardships, from material shortages to higher labour costs, we’re excited to see our industry continue to grow and be optimistic about the future,” says NKBA CEO Bill Darcy. “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.”
While price points have continued to rise, demand for remodelling projects has stayed strong. In the Kitchen & Bath Market Index (KBMI) report, which is aimed at measuring the health of the kitchen and bath industry, all segments reported high single-digit sales growth year-over-year except for manufacturers, who reported double-digit sales growth of 10.3 per cent. Not only were sales numbers up compared to 2021, but quarter-over-quarter sales accelerated for all segments of the industry.
2022 full year sales growth expectations have also increased after a successful Q1, with professionals anticipating 15.1 per cent growth for the year, up from the 9.4 per cent 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. Rising interest rates and low resale inventory have been tailwinds for big remodelling projects, as consumers leverage home equity and other discretionary income to ‘trade up in place.’ 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.
“From manufacturers and designers to contractors and retailers, the entire kitchen and bath industry has had to adjust to the ever-evolving times that we live in,” says Darcy. “Despite the ongoing headwinds and potential unknown challenges ahead, all signs currently suggest that 2022 will be another strong year for the industry.”
However, as the ongoing worldwide material shortage continues, kitchen and bath industry professionals are reporting serious delays to their projects. Forty-three per cent of building and construction firms said 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 but 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 per cent of building and construction firms had clients cancel and/or postpone projects in Q1. While this is a slight improvement from the last quarter of 2021, the trend continues to be a concern for the industry moving forward.
Also among the report’s key findings, consumers are opting for luxury products, associating quality and durability with the higher price tag; however, they come with the longest wait times. Additionally, industry professionals reported labour availability as having a significant effect 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 to struggle to find qualified labour, raising rates by 18 per cent on average to retain and/or attract talent. Seventy-six per cent of designers are increasing labour rates 21 per cent on average to retain existing employees, saying competition for qualified labour is fierce.