NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q4 2019

NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q4 2019

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Chris Dowling

NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q4 2019

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We are pleased to release the Q4 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 the National Kitchen & Bath Association and John Burns Real Estate Consulting.

The final quarterly KBMI of 2019 revealed a surprising reversal of industry health and sales conditions, after showing signs of slowing throughout 2019. Current business conditions rate higher than the first three quarters of 2019, while industry health and optimism about future business conditions are both at the highest levels since we launched this index in 2018. Our Q4 2019 survey shows:

  • Strong Q4 industry growth. The kitchen and bath industry expanded again in Q4 2019, as the KBMI rated a 69.8 on a scale of 0–100 (with 50 being flat sales growth). Q4’s KBMI is now well above the prior three quarters but remains slightly below the prior year’s rating of 70.1.

  • Despite a strong Q4, weaker business performance in Q1, Q2 and Q3 dragged total 2019 year-end revenues down slightly compared to 2018. Across all segments, the industry reported total revenues were down -0.4% YOY in 2019, compared to growth in 2018 (up +5.8% from 2017).

  • Future industry outlook, however, is very positive. The industry is now much more positive on future conditions (77 index reading) than on current conditions (67 index reading), on the back of strong new home sales and rising home prices that are driving an uptick in new construction activity and larger-scale kitchen and bathroom remodels.

    • The industry expects robust +10.8% full-year sales growth in 2020, up significantly from the modest mid-single-digit growth expectations reported by NKBA members throughout 2019.

  • NKBA members rate the current state of the U.S. economy as a 7, on a scale of 1–10, with 1 being extremely weak and 10 being extremely strong. Only 7% of the industry rates the economy below a 5, signaling that most of the industry is confident in underlying demand conditions.

    • 86% of manufacturers are maintaining or increasing current levels of capital investment, which suggests the industry is confident revenue growth will continue in the near term.

  • Consumers are most frequently “splurging” on countertops in their kitchens and baths, according to NKBA members across industry segments.

    • Among kitchen products, NKBA members say consumers are most commonly trading up to higher-end countertops, stoves/ranges, and cabinets, while fewer members report that consumers are “splurging” on cabinet hardware and smart lighting or plumbing products like faucets.

    • In the bathroom, NKBA members say consumers are also most frequently trading-up to higher-end countertops as well as vanities, medicine cabinets and tiled showers. Fewer members report consumers are “splurging” on bath accessories or smart plumbing products like toilets or faucets.

  • The two biggest challenges and concerns of the industry continue to be the availability/cost of skilled labor and cost of materials. Many NKBA members say lingering trade issues are a significant business challenge, particularly those in building and construction and retail sales companies.

  • 2020 should be another exciting year for the kitchen and bath industry, as most NKBA members report they are most excited about growing their businesses in a variety of forms. Half of the industry reports being most excited about either adding new customers or clients, selling new products, increasing their sales to the luxury segment, or improving their marketing reach.