The Latest Impact of COVID-19 on K&B
Over half the respondents say pipelines are larger now than in Q3 2019
By Robert Isler
The situation is fluid and can turn on a dime, especially as covid cases rise, but member feedback from the latest NKBA/John Burns Kitchen & Bath Market Index (Q3 KBMI) was encouraging.
Overall, 53% cited higher demand vs. the year-ago period. Ironically, the pandemic has been the driving force as consumer behavior has shifted due to greater availability of discretionary funds as well as pent-up demand. The increase has not been enjoyed equally by segment, as Manufacturing reported a 64% improvement vs. just 41% for Retail Sales. Meanwhile, Design and Building & Construction were near the industry average.
When asked to quantify COVID’s impact on business, the trend has clearly been favorable. Q3 had an overall rating of 5.9, with 10 being the most significant impact. This is an improvement over the 6.4 in Q2, and vastly better than the 8.0 for Q1. Once again, responses varied by segment. Both Design and Manufacturing showed a steady decline of concern since Q1, while Building & Construction leveled off from Q2 to Q3. Retail Sales actually backtracked, with respondents saying the impact of the pandemic increased, from 6.0 in Q2 to 6.3 in Q3.
24% of respondents said they expect COVID-19 to shut down the economy again while 37% said they don’t believe it’ll shut down again and 39% not being sure.
Demand shifts were largely unchanged from those noted in Q2. Price-points (18%) and project size (15%) were cited most often for major changes, followed by demand for repairs/replacements, wellness products and DIY assistance, each at 12%. Two-thirds of the price-point shifts were for lower prices, while 53% of the major changes in project size were directed toward smaller jobs. The latter figure was encouraging since the demand for smaller projects seems to be abating. Meanwhile, demand shifts for repairs/replacements, wellness and DIY assistance continue to be overwhelmingly higher. Regarding overall business demand, half the respondents indicated that it has returned to normal.
As we move further into Q4 and cases of COVID-19 continue to rise, respondents were asked whether they expect the economy to be shut down again some time this quarter. Overall, 24% said yes and 37% said no. The most common response, cited by 39%, was that they weren’t sure. The split by industry segment was revealing. Designers, at 26%, topped all groups in believing there would be a shut down, while those in Building & Construction, at 18%, were least likely to feel that way. A majority of Manufacturers (55%) felt the economy would not be shut down, far exceeding all other groups, who placed that likelihood in the 30’s range. They were easily the most optimistic, while Designers appeared to be the most wary.
Respondents from all four groups spoke of contingency plans they would likely implement in the event there was a future shutdown. One manufacturer offered that while every employee who can work from home would do so, they would “continue to operate by running a skeleton crew in the warehouse to process orders.” A respondent in Building & Construction spoke of the need to conserve cash and then to “minimize all capital investments in Q1 and Q2 of next year.” A participant from Retail Sales said “We’re opening up an online business right now, just in case,” while a designer offered “I would end the lease for my showroom and move my business to my home.”