NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q2 2019

In oculis quidem se ipsam per se esse albam

Download Report
Chris Dowling

NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q2 2019

Chris Dowling
Download Report

We are pleased to release the Q2 2019 NKBA / John Burns Kitchen & Bath Market Index (KBMI), the industry’s definitive gauge of kitchen and bath industry conditions. This quarterly index is the result of a partnership between John Burns Real Estate Consulting and the National Kitchen & Bath Association.

The industry continues to grow, but our survey shows a clear shift in expectations for 2019. Our survey shows:

  • Expansion continues in Q2. The kitchen and bath industry expanded in Q2 2019, as the KBMI remained above 50 at 65.7 on a scale of 0–100, with 50 being flat. Q2’s KBMI is notably weaker than the previous two quarters’ ratings of 71.0 and 69.2, as industry members report rising costs and a shift in demand to lower-priced products.
  • Future industry outlook remains positive.The industry is still more positive on future conditions (69 index reading) than on current conditions (63 index reading), but 2019 sales growth expectations moderate downward due to declining per sale revenue and rising material and labor costs.

    • The industry now expects 4.7% full-year sales growth in 2019, down slightly from 5.4% expected growth reported by NKBA members last quarter.

  • Big shift underway: Rising costs are driving shift to smaller projects, more affordable finishes.

    • Increases in average customer spending are being driven by material and labor cost inflation.

    • Decreases in budget sizes are being driven by shift to more affordable, lower-priced options.

  • The big three challenges and concerns of the industry remain the availability of skilled labor, cost of materials, and trade issues.

NKBA members across manufacturing, building/construction, retail/sales, and design have highlighted their biggest barriers to growth, the impact it has had on their businesses, and how they are changing to overcome them.

  • Designers say higher total project costs and declining consumer confidence are causing consumers to shift to lower price point kitchen and bath products and finishes. Designers report they are offering more lower-price point big-ticket options like cabinets and fixtures to appeal to the increasingly price sensitive consumer.
  • Building and construction companies cite that the lack of skilled subcontractors in the market is preventing them from doing more projects. Remodeling companies say they are investing in project management software to create efficiencies as availability of trades worsens.
  • Retail/sales companies say flattening real estate values, economic uncertainty, and higher product costs are negatively impacting clients’ urgency and budgets.
  • Brick and mortar retailers also report it’s increasingly more difficult to compete with e-tailers, which is causing many of these companies to adopt new business models that enable bundling of more value-added services like design and construction.
  • Manufacturers report increasing labor and material costs are their biggest barriers to increasing capital expenditures. Many express a need to drive operating efficiencies to improve financial position and better compete and invest in their business.