By Robert Isler
Key Takeaways:
- KBMI market index far surpasses last quarter’s all-time record.
- Members expect torrid pace to moderate but remain strong.
- Sales are revised upward, and are now expected to exceed last year by 14.5%.
- Manufacturing is the strongest of the four K&B segments, based on index scores.
Last quarter’s NKBA/John Burns Kitchen & Bath Market Index (KBMI) results were clearly a hard act to follow, given that several all-time index records were broken. But the just-released 2021 Q2 report did just that, managing to top Q1 on two important variables. The overall score, based on member feedback across four major industry sectors, came in at 82.3 on a scale of zero to 100, comfortably ahead of last quarter’s 79.8. For perspective, it stood at 44.2 a year ago, which put the industry in the contraction range; anything over 50 means expansion, and below, contraction.
The current market index, at 85.7, is even more impressive, shattering the previous record of 78 — confirmation that the K&B industry continues at its rabbid pace.
At 82.3 of a possible 100, the overall KBMI score has plowed past last quarter’s all-time record.
Where the ratings falter, however, is in the score for future industry activity, which dropped to the current 72.6 from 82.4 last quarter. Still, there’s no immediate cause for alarm. It just means that members don’t believe the industry can continue to accelerate at the current blistering pace. More likely, that pace will moderate. Given the serious-supply chain issues, cost of materials and goods and uncertainties created by the COVID-19 Delta variant, it’s understandable that some homeowners are beginning to consider staying on the sidelines — at least for now.
A total of 510 members participated in the survey from the four key industry segments: design, retail sales, building & construction and manufacturing. Along with indices that were well within expansion territory was the encouraging outlook for full-year 2021 sales. Members expect sales to exceed 2020 by a healthy 14.5%, an upward revision from the 13.4% consensus when the same question was asked last quarter. They also believe Q2 sales will surpass Q1 by more than 11%. Unlike the previous four or five quarters, the impact of COVID is waning. On a scale of 1 to 10, it came in at 4.9 after exceeding 6 the previous two quarters.
Of interest are the scores for industry variables by segment. The pattern is unmistakable. For the overall KBMI score, manufacturing topped all segments at 87.6, while design trailed at a still-respectable 78.9. For current conditions, again manufacturing had the highest score, 90.8, while design lagged at 81.3. Finally, looking at expected future conditions, manufacturing was #1 at 83.8, while design was last at 70.6. It should be noted that although it lags for each variable, design scores are still quite strong when compared with previous quarters since the study’s inception. Manufacturing, though, has been off the charts. Why? While not every K&B project includes the services of a designer, obviously there is no way around the need for products to be manufactured. Additionally, when there is an industry lull, manufacturers feel it last since they are at the tail end of any project. Statements from the current survey are a good indication of where things currently stand for manufacturers. Among them: “We added some capacity, but it didn’t provide any relief.” “I’ve been giving bonuses to my staff for simply showing up. Labor is scarce.” And finally, “Demand hasn’t slowed. Materials are going through production as soon as they arrive.” Enough said.
Look for additional blogs based on this comprehensive study in the coming weeks. Topics to be covered include supply chain problems and solutions, current status of the design community, the building & construction boom and backlog, and client frustrations.