The Slowdown in The Kitchen And Bathroom Market Is Expected To Continue Until 2023

NKBA: The slowdown in the kitchen and bathroom market is expected to continue until 2023

According to the NKBA/John Burns Kitchen & Bath Market Index (KBMI) for the third quarter of 2022 at 63.2, the market index is the lowest level since the third quarter of 2020, while the future situation rating is 55.4, the highest since the first quarter of 2020 minimum level. These two figures indicate that the situation of the kitchen and bathroom industry is not optimistic.

The KBMI for the third quarter of 2022 also reflected a 1.3% decline in full-year sales expectations for 2022, compared with a full-year growth forecast of 9.4% reported in the second quarter - after two years of strong growth, the NKBA said result.

NKBA's latest KBMI was compiled from a survey of nearly 600 industry professionals from four key industries: design, building and construction, manufacturing and retail. The KBMI assessment is the overall situation of the current quarterly and future market, as well as the problems and challenges faced by industry professionals. On a 100-point scale, a KBMI rating above 50 indicates industry growth, and below 50 indicates industry slowdown.

Although the ratings for the third quarter of 2022 are still above 50, their deceleration suggests that industry conditions are falling below expectations as consumer demand slows and recession fears mount, the NKBA said.

NKBA Chief Executive Bill Darcy said: "There is understandable concern about current and forecasted economic conditions and the potential impact on the kitchen and bathroom industry through 2023. However, over the past two years, we have They all learned a lesson, that adapting to changes in the industry situation is the key," Darcy said. “For example, we are seeing design firms now taking advantage of new brands to gain better lead times, and some businesses believe they are well prepared and equipped to meet the challenges of a slowing economy.”

Darcy added that industry professionals "are actively adjusting their business strategies" due to current trends. Design firms have changed the materials used in projects; architecture and construction firms have limited estimates to 30 days, and retailers have reduced orders from manufacturers.

The third quarter 2022 KBMI report also found that Fears of recession are real. 

Industry professionals report that "fear of recession" is what keeps them up at night, with 24% citing it as their top concern. This is followed by 20% who are concerned about skilled labour and costs and 17% who are concerned about material costs.

For the fourth quarter of 2022, 31% of design firms expect fewer new projects. Additionally, 75% of architecture and construction firms and 65% of design firms report that project cancellations/delays are at their highest rate in 2022.

Despite steadily rising inflation affecting nearly every product category, 61% of industry professionals report that profit margins are flat compared to a year ago. However, as consumers become more constrained in their budgets, they begin to resist price increases or put retrofit projects on hold, which may lead to weakening pricing power.

In the face of a constantly changing economic environment, agility is critical. 47% of kitchen and bathroom professionals are very confident in their recession preparedness. With inflation and interest rates rising, their forecasts for a downturn in 2023 are disproportionately high.