Kitchen & Bath Market Index (KBMI)
National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting have partnered on the Kitchen and Bath Market Index (KBMI), a barometer of the business health of the industry
This quarterly industry index gauges the economic pulse of the kitchen and bath market, examining current conditions and future expectations in the industry. It also monitors issues and challenges industry professionals are facing in their businesses. The KBMI surveys and analyzes the sentiments of designers, manufacturers, retailers and building/construction firms who are members of the NKBA.
“As the leading trade association and advocate for the kitchen and bath industry, we continuously invest in research to provide guidance on performance, projections and challenges in the sector for our members and the market. We’re pleased to see that despite a softening in housing, the KBMI indicates positive growth and an optimistic sales outlook in the kitchen and bath sectors,” said Bill Darcy, NKBA CEO. “John Burns Real Estate Consulting is the preeminent research analysis partner in the housing space and we embarked on this joint venture to provide a reliable and frequent metric of industry performance and business health to our members and the market.”
“We are thrilled to partner with NKBA to monitor this important segment of the economy,” said Todd Tomalak, Senior Vice President of Research for John Burns Real Estate Consulting. “We view Kitchen & Bath as a critical gauge of discretionary consumer spending, and this new index will allow analysts to monitor the segment with more confidence than ever before.”
Quarterly Distribution (Q2 2020 Report Available for Download)
Fill out the form below to download the full Q2 2020 Kitchen and Bath Market Index (KBMI).
Q2 Kitchen and Bath Sales Decline, but Full-Year Outlook Improves
Amid a global pandemic the kitchen and bath industry contracted again in Q2. Our survey shows declining demand and industry revenues, but significantly improving optimism regarding future business conditions and an overall improving view of industry health.
Our Q2 2020 survey shows:
- Q2 sales declined. The kitchen and bath industry contracted in Q2 2020, as the KBMI rated a 44.2 on a scale of 0–100, with 50 being flat sales growth. Q2’s KBMI is more than 30% lower than last year’s rating of 65.4 but nearly 10% higher than last quarter’s rating of 41.0 as companies adjust to the new normal. The industry continues to view economic uncertainty, US economic recession, fear of a second wave of COVID, lack of consumer confidence and stock market volatility as major underlying challenges.
- Future industry outlook has turned optimistic. The industry is now considerably more positive on future conditions (61.9 index reading) than on current conditions (31.3 index reading), and 2020 sales growth expectations have strengthened as businesses have adapted to changes and challenges in the marketplace.
- The industry now expects a -4.4% full-year sales decline in 2020, a significant improvement from the -13.7% full-year sales decline expectation reported by NKBA members last quarter.
- The industry says the COVID-19 pandemic is still having a significant impact on the business environment, but signs of optimism exist across the industry. Companies in all industry segments report strengthening demand-side fundamentals, especially among younger consumers and in markets where construction remains an essential industry. Supply-side issues continue to negatively impact the industry’s ability to consistently operate and grow, but most companies are adapting to these challenges by shifting sourcing strategies and fulfilling demand in both the new construction and remodeling segments.
- Across industry segments, NKBA members describe how the COVID-19 pandemic and related government-led shutdown measures continue to impact their businesses in Q2.
- Designers, although significantly challenged by current demand conditions as consumers and companies cut back on design services, are reporting a significant improvement in project statuses quarter over quarter. Eighty-six percent of designers report making “some level of progress” on existing projects, enabled primarily by virtual meeting and e-design platforms. Signs of improving demand fundamentals also exist as one in three designers report demand for bids are higher in Q2 than in Q1 (where only 8% said they saw higher bids).
- Building and construction companies saw sales declines of high single-digits during Q2, but collectively expect robust sales growth next quarter given strong project pipelines and bid activity. Companies cite shift to smaller project sizes and lower price points as headwinds to revenue growth but two in three companies now report the majority of their projects are back on schedule.
- Retail sales companies say showroom closures and supply chain management were significant challenges and barriers to sales growth during Q2; however, among all industry segments, retail sales is the only segment expecting positive sales growth for the whole year. Companies point to improving foot traffic and an influx of demand from younger consumers as primary sources of optimism.
- Manufacturers also collectively report lower sales in Q2 compared to prior year as supply and demand slowed due to market shutdowns across the US. Compared to prior quarter, however, manufacturing companies report strong re-hiring efforts in addition to improving utilization rates, pointing to potential for sales growth in Q3 and beyond. Capital expenditure plans, a strong gauge of medium to long-term vitality, also improved as manufacturers re-introduce allocations and invest in their businesses to achieve growth goals.
- Although challenges exist, the industry is clearly pivoting to capitalize on the high level of pent-up demand that exists for new kitchens and bathrooms across end markets.
The Q2 2020 survey results include 624 responses from manufacturers, retailers, building and construction companies, and design firms who are members of the National Kitchen and Bath Association.
About NKBA and John Burns Real Estate Consulting
About the National Kitchen & Bath Association and the Kitchen & Bath Industry Show
The National Kitchen & Bath Association (NKBA) is the not-for-profit trade association that owns the Kitchen & Bath Industry Show® (KBIS), as part of Design & Construction Week® (DCW). With more than 10,000 member companies representing tens of thousands of members in all segments of the kitchen and bath industry, the NKBA has educated and led the industry since the association’s founding in 1963. The NKBA envisions a world where everyone enjoys safe, beautiful and functional kitchen and bath spaces. The mission of the NKBA is to inspire, lead and empower the kitchen and bath industry through the creations of certifications, marketplaces and networks. For more information, visit NKBA.org or call 1-800-THE-NKBA (843-6522).
KBIS® and NKBA® are registered trademarks of the National Kitchen & Bath Association.
About John Burns Real Estate Consulting
John Burns Real Estate Consulting is an independent research provider and consulting firm focused on the housing industry. John Burns founded the company in 2001 because he saw a need for better analysis on the housing market. The company has grown to a highly passionate team of research analysts and consultants in offices across the country, who work together to provide the most trusted source of US housing analysis. John Burns Real Estate Consulting’s research subscribers receive the most accurate analysis possible to inform their macro investment decisions, and the company’s consulting clients receive specific property and portfolio investment advice designed to maximize profits.