Key Takeaways:
- Traffic is up for 4th consecutive quarter;
- Nearly 9 in 10 customers who are shifting their price-points are opting for more expensive projects;
- 93% of retailers report vendor price increases in Q2;
- Average price increases for bathtubs and shower units, at 16% and 13%, respectively, are now higher than those of appliances.
By Robert Isler
Customers continue to return to K&B retailers, with Q2 2021 registering the 4th straight quarterly gain in foot traffic, according to the latest NKBA/John Burns Kitchen & Bath Market Index (KBMI) release. More than 6 in 10 retailers noted the increase, with average traffic up a significant 17% since Q1. The need to feel the materials and see the colors up close and in person is real. Additionally, nearly half of those in retail sales reported a shift in customer price-point demand, with an overwhelming 89% saying that the shift is to higher-priced project work. Current business conditions for retailers couldn’t be better. In fact, they are at all-time highs. At an 88.9 of a possible 100, only the manufacturing sector scored higher.
Unfortunately, along with this glowing picture are some major challenges that refuse to go away. An overwhelming 93% of those in retail sales reported price increases from vendors this quarter, with vendors passing along virtually the entire hit that they’ve been taking themselves. Half the respondents said that pricing on wood goods is impacting them most, although a silver lining is the clear evidence that prices have peaked and are beginning to pull back. Somewhat surprisingly, bathtubs (+16%) and shower units (+13%) have led recent price increases, with cabinets, countertops and vanities further back.
Some 54% of retailers said supply-chain disruptions are having a negative impact on sales, as extended lead times are driving customers away.
Despite higher project costs, many customers are hanging tough and reaching deeper into their pockets. As one retailer shared, “I’m seeing a shift to higher price-points for cabinets in all areas of the home. Customers are requesting high-end cabinetry for their laundry rooms and secondary baths as well.” Another noted, “People have money saved from quarantining and they’re deciding to combine multiple remodeling jobs into one large-scale project.”
As for supply-chain challenges in this segment, 54% stated that they were having a negative impact on sales, with half of that group saying the negative impact was severe, resulting in lost business as customers sought products elsewhere. One retailer shared that some clients were going to custom shops since his store didn’t have the desired product. Another lamented, “Lead times for cabinets are an issue. No one wants to wait up to 25 weeks!” Still another observed. “Projects are being put on hold. Customers are leery of months-long lead times for appliances.” Increasingly, members are looking to creatively circumvent issues plaguing the industry, but it requires constantly staying ahead of the game. As one explained, “I was having luck with American suppliers, but now their inventory is on backorder, too.”
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