Key Takeaways:
- Designers predict negative sales for 2022, a steep drop from Q1 forecasts.
- Builders, retailers and manufacturers also project declines, but remain in positive territory.
- Higher-income households are driving project demand, increasing average project size.
By Dianne M. Pogoda
As generally the first contact for consumers embarking on substantial renovations, designers have felt the impact of drooping consumer confidence, the cooling housing market and rising interest rates perhaps more immediately than other kitchen and bath professionals surveyed by the Q3 NKBA/John Burns Kitchen & Bath Market Index.
Designers in the most recent KBMI survey projected sales falling to -2.8 percent for 2022, a dramatic 11.3 percent swing from Q2 when they forecasted full-year sales of 8.5 percent. They were even more optimistic in Q1, with a projection of 15.8 percent industry growth for the year. Q3 2022 marked the third consecutive quarter that designers reported a deceleration in sales growth on a year-over-year basis.
Q3 2022 marked the third consecutive quarter that designers reported a deceleration in sales growth on a year-over-year basis.
Growth forecasts for the other three professional segments tracked by KBMI — builders, retailers and manufacturers — also fell, by around 6 percent each, but they remained in positive territory.
The overall index continues to drop, with the Q3 rating coming in at 63.2, down from 70.4 in Q2 and 77.9 in Q1. In addition, full-year 2022 sales growth has been drastically revised downward to just 1.3 percent. The good news: 47 percent of all those surveyed are confident that they will weather the storm.
41 percent of designers noted a slight shift to higher-priced items, mainly among high-income households opting for better appliances and finishes.
This downward trend — and why designers seem to be softest in their predictions — can be attributed to a few factors:
- With consumer confidence sagging as a result of rising interest rates and inflation, the appetite for K&B projects has waned.
65 percent of designers report an increase in project cancellations and postponements, up from 48 percent at the start of the year.
- Designers say affordability is a big concern among clients, and report that smaller backlogs are an indicator of decreased demand.
- 31 percent of design firms expect new project requests in Q4 to decelerate from Q3, attributing this to clients focusing on non-discretionary projects.
- 41 percent of designers noted a slight shift to higher-priced items, mainly among high-income households, who have cash on hand and are spending it on better appliances and finishes.
To battle the affordability and availability issues, 52 percent of designers are recommending new brands for better pricing and lead times, and 51 percent say they’re unsure when they’ll return to their usual brands. About a quarter of designers have diversified their cabinet offerings and 13 percent are using different countertop brands to stay within budget. Additionally, designers say they’re cutting back on bonus features and simplifying design elements where possible.