NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q1 2020

NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q1 2020

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Ryan Lance

NKBA/John Burns Kitchen & Bath Market Index (KBMI) – Q1 2020

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We are pleased to release the Q1 2020 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 industry has begun to contract in response to the COVID-19 pandemic. Our survey shows clear signs of slowing demand and declining optimism as current and future business conditions both rate below the prior four quarters. Our Q1 2020 survey shows:

  • Declining sales growth. The kitchen and bath industry contracted in Q1 2020, as the KBMI rated a 41.0 on a scale of 0–100, with 50 being flat sales growth. Q1’s KBMI is more than 40% lower than last quarter’s rating of 69.8. The industry points to economic uncertainty, fear of recession, consumer confidence and stock market volatility as underlying challenges.
  •  Future industry outlook is pessimistic. The industry is now considerably less positive on future conditions (19.8 index reading) than on current conditions (46.9 index reading), and 2020 sales growth expectations have weakened as a result of the COVID-19 pandemic and its related economic impacts.
    • The industry now expects -13.7% full-year sales decline in 2020, down notably from +10.8%expected growth reported by NKBA members as recently as Q4 2019.
  • The two biggest challenges and concerns of the industry are economic uncertainty and fear of recession. NKBA members now cite consumer confidence and stock market volatility as tied for the third biggest challenge. Concerns about repair and remodel demand are increasingly reported as the COVID-19 pandemic deters some U.S. consumers from undertaking major new projects.
  • The industry says the COVID-19 pandemic is having a significant impact across all market segments. COVID-19 related shutdowns and social distancing measures are expected to reduce Q2 2020 sales by more than 50% among builders, dealers and consumer-facing segments of the market, while manufacturing firms expect a still sizable 40% drop relative to pre-COVID sales expectations.
  •  Across industry segments, NKBA members describe how the COVID-19 pandemic and related government-led shutdown measures are impacting their businesses.
    • Designers, citing broad impacts of the pandemic across their business activities, face the highest shares of cancelled/postponed projects and anticipate the steepest fall-off in 2020 sales. They tend to be more pessimistic on the timing of the recovery as well. More than half of design firms have temporarily closed their brick and mortar locations and 75% report lower demand for bids/proposals.
    • Building and construction companies report widespread project delays, postponements and cancellations. Even so they are more optimistic than designers about resuming activity.
    • Retail sales companies say showroom closures and declining foot traffic are causing major declines to their sales and revenue for 2020. Many describe seeing declines in discretionary remodeling expenditures as a result of consumer uncertainty and fears related to the pandemic.
    • Manufacturers broadly cite layoffs and other COVID-related labor disruptions as reducing their production capacity. Nearly half reported facing order cancellations, yet other manufacturers still forecast significant increases in sales in certain categories.
  • Many industry members report supply chain disruptions, particularly for cabinetry sourced from manufacturers that closed due to COVID-related shutdowns, but also for appliance parts, vanities and light fixtures.