First quarterly report indicates a growth of nearly 7% in the K&B sector this year. By Dianne M. Pogoda
NKBA and John Burns Real Estate Consulting have partnered on a new research initiative that will monitor the economic health of the kitchen and bath market.
The cobranded research initiative, dubbed the NKBA/John Burns Kitchen & Bath Market Index (KBMI), will be published quarterly and is based on responses from designers, manufacturers, retailers and building/construction firms who are members of the National Kitchen & Bath Association.
The research is intended to take the pulse of the kitchen and bath market and will examine current demand and future expectations in the industry, as well as monitor issues and challenges industry professionals are facing in their business.
“Until now, the only tracking tool specifically for the kitchen and bath industry was NKBA’s Kitchen & Bath Market Outlook,” said Bill Darcy, NKBA CEO. “We embarked on this venture to provide a reliable metric of industry performance on a more frequent basis. Our membership continuously requests guidance on performance, projections and challenges in the K&B sector, and we are confident this index will provide valuable intelligence to the industry and media.”
This index will fill a knowledge gap in the market and complement indexes that measure other areas in the construction industry, such as new housing by the NAHB/ Wells Fargo Housing Market Index(HMI), and overall residential remodeling by the NAHB Remodeler’s Market Index(RMI) and the Joint Center for Housing Studies of Harvard University’s Leading Indicator of Remodeling Activity (LIRA).
The KBMI will be computed using respondents’ answers to these three survey questions:
- Last quarter sales growth compared to same quarter prior year
- Expectations for next quarter sales compared to same quarter prior year
- Overall health of the K&B Industry
At 69.2, the benchmark KBMI suggests that NKBA members as a whole have a generally optimistic view of the kitchen and bath industry. This sentiment is consistent across all member segments —manufacturing, design, retail sales and building/construction. An index reading above or below 50 indicates expanding or contracting, respectively, on a 0-100 scale. NKBA members are slightly more positive on Future Conditions (an index reading of 70) than they are on Current Conditions (an index reading of 69).
Overall, NKBA members expect their kitchen and bath sales to grow 6.6% in 2019, up slightly over their actual growth of 5.6% in 2018. Retailers and manufacturers forecast growth of 7.2% and 7.1%, while designers and building/construction firms expect sales to spike 6.4% and 6.3%, respectively. (Note: This Q4-2018 inaugural survey is based on 563 company responses.)
The biggest industry challenges, according to the survey, include consumers sacrificing quality for low price; imports (mainly Chinese) pressuring prices and hurting American companies; material and labor cost creep; emerging concerns on the quality of new products; e-commerce disrupting prices in various distribution channels; consumers developing unrealistic expectations from renovation shows on HGTV and other media; the difficulty in finding skilled tradespeople, qualified sub-contractors and general contractors, and continuing uncertainty about the economy.