The recently released NKBA/John Burns 2021 Q3 Kitchen & Bath Market Index (KBMI) report shows that despite a continued strong market, ongoing industry challenges are having a cooling effect on what has been a very positive full-year outlook.

Overall Kitchen & Bath industry continues to show healthy growth for the year, but the overall index is down 4% quarter over quarter due lingering issues caused by the pandemic.

Despite this, the industry is coming off of a record-breaking quarter of growth in Q2, which has fueled projections for the year at around 12% growth in sales year-over-year, with many members still encouraged about future growth in 2022.

Top-line takeaways include:

• Positive Close for 2021 Projected: The Kitchen & Bath industry continues to show healthy expansion despite ongoing challenges, with members giving it a 78.7 overall, slightly down from the 79.8 and 82.3 scores registered in Q1 and Q2 of this year. While the reduction in projected 2021 sales growth may seem like a negative for the industry, the year has still been incredibly successful with the sector on track to close the year on a high note.
• Sector Adjusting to the New Norm: The difficult business environment has forced the industry to become supplier/vendor agnostic – prioritizing product availability above relationships and other factors. The industry has also moved toward sourcing more domestic-based products, utilizing more brands they previously haven’t incorporated in an attempt to circumvent global supply chain issues. Manufacturers are prioritizing high-value products to protect profit margins while stockpiling excess materials to help ease lead times and overall constraints.
• Supply Chain and Material Shortages: The Kitchen & Bath industry continues to feel the pains of the ongoing supply chain challenges. Port congestion is further compounding strained supply chains that are still recovering from the effects of Winter Storm Uri and Hurricane Ida, while labor shortages are causing delays in the trucking industry. Meanwhile, lead times for domestic and foreign raw materials are well over 6+ weeks and has many within the sector struggling to keep up with demand in today’s economy. As a result, product backlogs extend well into 2022 as these difficulties prevent those in the industry from staffing full production schedules.
• 2022 Projects Continue Growth: In the face of ongoing issues, the industry remains cautiously optimistic about the health of the sector with members giving it a 7.9 out of 10 in the KBMI Q3 report. Despite projects being pushed into 2022 the industry is continuing to see demand for building and construction projects as 84% of firms report low postponement rates and 90% report low cancellation rates relative to their overall project volume. When consumers do start their projects, they’re trending toward higher-end products with 73% of retailers reporting price points shifting toward high-end products. Overall, members still expect full year sales growth to be positive in 2021 and are projecting solid full-year sales growth in 2022 of 9.1% as some deferred projects are expected to resume.