NKBA - Kitchen and Bath Market Market Index (KBMI) 2020 Report Overview and Takeaways
The Kitchen and Bath Marketing Index or KBMI is a comprehensive marketing report that has been drafted and compiled by the National Kitchen–Bath Association (NKBA) in collaboration with John Burns Real Estate Consulting. The report contents are derived from the data and information pertinent to the fourth quarter of the year 2020 in conjunction with statistics of the preceding years. The key focal points of this report include examining the current kitchen and bath industry marketing statistics like:
Kitchen and Bath Market Index
The current KBMI stands at a position of 65 which is greater than the previous quarters of this year. Expanding from 41, 44.2, and 61.9 in the initial quarters, the current index is a clear reflection of a higher level of sales in these months. It also sheds light on the fact, that customer demand is growing, and the industry has brighter prospects for future growth and health. Separately too, each index of design, retail, manufacturing, and construction are all showing a positive rise in sales and growth. According to the analysis of NKBA professionals, an expected growth rate of 10.7 % is owed to the assumption that pending projects of clients will be resumed while new remodeling and building projects that were postponed will now be restarted.
The Current Business Conditions Index
This index represents sales of the last quarter in comparison with sales of the same quarter in the previous year. After recording a decline in the first and second quarters of the year 2020, the current business conditions index has been trying to recoup its fall. Overall the index stands at a current point of 59.8 which indicates positive growth in the industry. With all four sectors of retail, design, manufacturing, and construction hovering above the weighted average point of 50, every stakeholder is positive about future improvement and growth.
Future Business Conditions Index
This index represents the sales expectations of the next quarter in comparison with the most recent quarter. Undergoing a drastic fall when transitioning from 2019 to 2020 due to the Pandemic outbreak, the industry has been recording a positive growth and comeback ever since. In the current quarter, the future conditions index lies at a high point of 72.7, which heralds a bright prospect of future sales for the industry.
The Health Index of the Kitchen and Bath Industry
This index represents overall industry health where 10 is strongest while 1 is the weakest. The analysis of NKBA shows that in the current quarter the health index lies at 7.1, which is quite encouraging for industry stakeholders. There was a decrease in the first quarter but ever since then, all sectors are recovering nicely.
Top Industry Challenges and Concerns
After the COVID-19 pandemic, the industry has been facing several unprecedented challenges and concerns. However, with vaccines coming and markets getting more acquainted with the challenging environments, the industry has become more resilient. Here are the main areas of concern for the Kitchen and Bath Industry
- Supply chain disruption
- Cost of materials
- Concerns surrounding keeping COVID under control
- Availability of skilled laborers
- Cost inflation
- Political tension and legislative gridlock
- Slower than expected economic recovery
- Capacity shortages
- Consumer confidence
- Stock market volatility
- Trade issues (e.g. tariffs)
- Availability and cost of professional employees
- Competitive pressures
As per the survey and research conducted by professionals at NKBA, the top challenge for all sectors of the Kitchen and Bath industry remains the supply chain disruption caused by various factors of the pandemic and its global spread. Although there is an upsurge in clients’ demands for products and services, the underlying factors of increased raw material prices, labor shortages, and major unprecedented disruptions in the supply chain trigger an unwanted delay and lack of confidence. These supply chain issues are caused by prolonged lead times, product delivery backlogs, and strained production capacity in the industry. Among all types of supplies, the appliances and cabinets are two of the categories of Kitchen and Bath products and accessories that are facing the worst supply problems.
Covid Driven Shifts and Changes
The COVID Impact Index
This index has been formulated by NKBA professionals to represent the highest level of impact at 10 and the lowest level at 0. If we look at the data and figures of the entire year, the current impact index of 6.4 out of 10 might seem a little high but in comparison with the first quarter of 2020, it is still lower than 8.1. This shows that although the sales and growth prospects are bright the COVID pandemic continues to impact the kitchen and bath industry significantly. This impact is strongly triggered by the labor shortages and constraints of supplies.
COVID Impact on Volume of Goods and Services in the Industry
Surprising as it may sound, according to the NKBA survey almost 60% of all Kitchen and bath companies confirmed that despite an adverse impact in the beginning, the pandemic actually drove incremental demand in the industry. This is especially true for the 4th quarter that saw a major demand increase in business owing to this pandemic-driven incremental change. The consumer shift of spending more time at home fueled this enhanced business opportunity for kitchen and bath remodeling projects and plans.
Larger Pipeline of Projects
According to 58% of the surveyed companies, although they have higher incremental demand due to the pandemic, the number of projects in the pipeline or underway are much higher than the same period in the previous years. This change is owed to a large number of pending, postponed, or delayed projects. The constraints of labor shortages and supply barriers are not letting the industry players handle these backlogs effectively and efficiently.
The Types of Shifts in Demand
Like the previous quarters, the major types of changes and shifts in demand remain the same. The major type of changes according to their priority from 1 – 7 is given below.
- Price Points
- Project Size
- Demand for Remain and Replacements
- Demand for Wellness products
- Demand for DIY Products
- Changing Mix of Client Types
- Something Else.
Design Segment Update
According to design company responses, most firms confirm higher demand than pre-covid environments. This quarter has registered a very high demand for remodeling jobs and design projects as compared with previous quarters of the same year. The designers iterate that they did not face any project cancellations but only postponements in the fourth quarter. Almost 54% of designers surveyed expect a resumption of the postponed projects in the first quarter of 2021 which is quite an optimistic trend. Overall, there has been growth in the project quantity and project size in the Design Sector. With enhanced consumer confidence, the demand in the industry is also predicted to grow.
Retail Sales Segment Update
With the decrease in foot traffic due to the pandemic situation, retail store sales report a much higher volume of online sales. The demand has surged in the low and mid-price points while high-end products are still stagnant. Inflation and supply disruptions have been major points of concern for the retail sector.
Building and Construction Sector Update
Most of the industry players face labor shortages and supply disruptions. But despite these constraints they confirm that their started projects are on schedule without any unnecessary delays. Almost 58% of the companies surveyed showed that project cancellation or postponement requests in the fourth quarter of the year 2020 are zero. Overall, the shortage of labor and supply constraints aside, there is higher demand that is putting greater pressure on the industry players to complete projects.
Manufacturing Sector Update
The lead times of most of the products are on the higher side as compared with the pre-covid industry. This is especially true for wood products and appliances. The average lead time for most manufacturing projects is currently around 6 weeks. The production facilities have been working at an 81% capacity, which is lower than the previous quarter, where most of the companies were operating at 100%. Like other sectors too, the manufacturing sector is constrained by supply and labor shortages.
Things to Keep in Mind
This report was formulated by analyzing the responses of the companies operating in the United States. All the findings, recommendations, and conclusions of the report are based on industry information and have been drafted by careful analysis of experts in every field of the kitchen and bath industry.