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The National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) have released the most recent Kitchen & Bath Market Index (KBMI) which is aimed at measuring the health of the kitchen and bath industry. The KBMI for Q3 shows that despite a continued strong market, ongoing industry challenges are having a cooling effect on what has been a very positive full-year outlook. While the overall Kitchen & Bath industry continues to show healthy growth for the year, the overall index is down 4 percent quarter over quarter as lingering issues caused by the pandemic seem to be catching up to consumer sentiment. Despite this, the industry is coming off of a record-breaking quarter of growth in Q2, which has fueled projections for the year at around 12 percent growth in sales year-over-year, with many members still encouraged about future growth in 2022.
"The latest results fall slightly short of the very strong projections from Q2 but are a positive sign that the Kitchen & Bath industry will finish the year strong," said Bill Darcy, CEO, NKBA. "Persistent challenges such as supply chain disruptions, cost of materials and availability of skilled labor are hampering the industry's ability to take full advantage of strong demand."
The Kitchen & Bath industry was able to thrive early in the pandemic, registering historic levels of growth as homeowners enjoyed higher home equity levels and were eager to renovate as they continued to spend more time in their homes. However, ongoing challenges are beginning to catch up with the sector as members rated the health of the industry nearly 4 percent lower compared to Q2 as consumers, who early in the pandemic were willing to face potential delays in their project timelines and rising costs to materials, are now becoming more inclined to wait until 2022 with the hopes that prices will stabilize. As a result, the measure of current and future business conditions saw a more cautious outlook from respondents – down 6 percent and 3 percent respectively with members expecting more consumers to continue pushing projects off into 2022.
Delays in the global supply chain is one of the main areas of concerns for members as lead times for domestic and foreign materials reportedly push well over 6-plus weeks, leaving them in a tough position to keep up with the demand. Showing its resiliency, the industry has developed creative solutions to mitigate the impacts with retailers packing storage facilities with excess inventory and buying in bulk whenever possible; construction firms adding additional up-front time to projects to mitigate delays and manufacturers stocking up on raw materials and focusing on fewer product lines to streamline production.
"The positive news is that despite the ongoing challenges, the report found that consumers are opting to delay their projects rather than cancel them. When customers do decide to execute on the remodel, they tend to gravitate towards higher-end products, as well as lumping several rooms into one overall project, helping fuel a projection of 9 percent growth in 2022, positioning the sector for another strong year." Darcy continued.
Among the report's key findings include the following:
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