The National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting have released the 2019 second-quarter Kitchen and Bath Market Index (KBMI) report. With a KBMI of 65.7 and scores above 50 indicating growth, the industry remains strong, demonstrating an optimistic view of sales, which are expected to grow by 4.7 per cent in 2019. The report reveals that increases in consumer spending are being driven primarily by rising material and labor costs, as opposed to customer discretion.

Conducted quarterly, the index gauges the economic pulse of the industry by examining current demand and future expectations in addition to monitoring sentiment among designers, manufacturers, retailers and building/construction firms.

“As the leading trade association and advocate for the kitchen and bath industry, one of NKBA’s goals is to arm our members with market insights, as well as to raise awareness about impactful industry challenges,” said Bill Darcy, NKBA CEO. “Although NKBA members are still optimistic about current and future kitchen and bath business conditions, there are signs of changes in the marketplace that we are monitoring closely.”

The availability of skilled professionals, cost of materials and trade issues top the list of overall challenges for the second consecutive quarter. Lack of skilled workers is the chief concern among building and construction firms, while designers point to a slowing luxury market and shift to lower price points as the biggest barriers to growth. Still, the report shows 57 per cent of customers have increased total spending since 2018.

• 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.

See the full report here: NKBA report