Bucking the Headwinds – Kitchen & Bath Design News

Sales leads and project requests are robust, and revenue forecasts are bullish, but profit margins are reportedly being squeezed, COVID-19 remains a concern, and kitchen/bath dealers and designers continue to face supply chain snafus, product price hikes, a skilled labor shortage, and other headwinds to more robust growth in the months ahead.

That’s the primary consensus of a series of surveys conducted by Kitchen & Bath Design News and other industry sources attempting to get a handle on 2022 business prospects, following a year in which the kitchen/bath market witnessed sharp growth in both its remodeling and new-construction sectors, while COVID-19 continued to reshape the nation’s housing landscape, incomes and saving accounts rose, design trends and homeowner demographics evolved, and larger, more multi-functional homes continued to remain a focus of consumer spending. 

But the pace of market growth, while projected to be palpable, has tapered off in recent months, and is expected to cool even more in the months ahead, as inflation scythes through the economy, product and labor availability continue to hamstring design/remodeling firms, housing affordability remains at historically low levels, and uncertainties tied to the coronavirus continue to loom.

According to the National Kitchen & Bath Association, surveyed members are projecting an approximate 9% revenue growth in 2022, after a growth rate of more than 18% yielded a record revenue of $167 billion in 2021. At the same time, though, many companies in the residential construction and remodeling sectors are reporting steady increases in project backlogs, along with struggles to catch up with heightened demand, as they navigate supply chain challenges, higher costs for raw materials, and labor availability issues, according to the latest Houzz Renovation Barometer.

KBDN’s nationwide survey of dealers and designers, conducted at the tail end of 2021, mirrors those findings.

Specifically, an overwhelming majority (86+%) of those surveyed by KBDN said they expect their company’s revenue to either increase or remain roughly the same in 2022 compared to 2021. In contrast, less than 14% said they anticipate a revenue decline in 2022 (see Figure 1). Revenue gains are anticipated for both new and remodeled kitchens and baths, although dealers and designers are more bullish about revenue growth from kitchens (34.2%) than they are from baths (7.9%).

Dealers and designers also report that sales leads and project requests are up dramatically compared to the same time a year ago – understandable given how the current confluence of COVID-related demand, savings growth, home appreciation, government stimulus and other factors continue to spur homeowner spending. Specifically, a whopping 65+% of survey participants report their current sales leads are either somewhat or much higher now compared to a year ago, while only about 15% report that sales leads are lower and about 19% say they are about the same (see Figure 2).

But while sales leads are strong, and revenue is generally expected to increase, surveyed dealers and designers paint a different picture when it comes to anticipated profit margins. For example, while 33.6% of those surveyed expect 2022 profit margins to increase, 14.2% expect margins to decline compared to 2021, and more than half (52.2%) expect margins to remain the same (see Figure 3).

Other survey findings include:

With the COVID-driven emphasis on health and wellness, work-at-home arrangements and families sheltering in place, increases in client requests are being reported for products that range from universal design, smart appliances and aging-in-place elements to outdoor kitchens, anti- microbial materials and home ventilation (see Figure 4).

Pricing is apparently not a major factor for clients, many of whom seem willing to spend whatever it takes to get the kitchens and bathrooms that they want. For instance, while roughly 60% of the dealers and designers surveyed by KBDN say that pricing is either less important to clients or about the same as it was a year ago, far less (40%) say that pricing is more critical to clients now.

While 51% of the design professionals surveyed say they are either extremely, very or somewhat concerned about COVID-19 negatively impacting their business operations and profits in 2022, more than half (54%) say they are “not very” or “not at all” concerned, even in light of the new Omicron variant impacting the nation.

While less than 5% of survey respondents report clients postponing or canceling projects, nearly 44% report they are experiencing longer lead times for product deliveries and/or production and shipping delays (see Figure 5). ▪


httpss://www.kitchenbathdesign.com/bucking-the-headwinds-2

Ninjay H Briotyon

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