Kitchen & Bath Business - February/March 2020 - 32

RESEARCH ROUNDUP
decreasing investments in capital equipment, and no large manufacturers
(with sales over $100 million) said they were decreasing capex levels.
The Q4 report is based on findings from 602 NKBA members across four
primary industry segments: designers, retailers, manufacturers and building/
construction professionals. Designers made up 43 percent of this quarter's
survey, with retailers at 23 percent, builders at 21 percent and manufacturers
at 13 percent. Although a smaller segment percentage-wise, manufacturers
typically are much larger companies and represent greater total revenue.

KBMI: A Big
Year Ahead

T h e i n d e x 's f o u r t h - q u a r t e r r e s u l t s s h o w
current strength and optimism for 2020

A ROBUST VIEW OF THE U.S. ECONOMY

BUSINESS IS LOOKING GOOD.The National Kitchen & Bath Association's Kitchen & Bath Market
Index (KBMI), a snapshot of current K&B market
conditions and expectations for the quarter and year
ahead, reported that business picked up steam in
the fourth quarter, and NKBA members projected
solid confidence for growth going forward.
At 69.8, the overall Q4 2019 KBMI rates higher than the third quarter and about as strong as one
year ago. The rating is out of 100, with 50 being
flat. Scores above 50 indicate industry growth,
while scores below 50 indicate slowing activity.
The Q4 index is now well above the prior three
quarters. The strong fourth quarter, however,
wasn't enough to fully make up for weakness in
the first nine months of the year, so across all segments, 2019 performance was slightly below the
prior year's rating of 70.1.
Conducted jointly by the NKBA and John
Burns Real Estate Consulting, the KBMI examines current kitchen and bath industry demand,
future expectations and issues and challenges industry professionals are facing in their businesses.
The overall composite index comprises current
conditions, future expectations and perceived
health of the industry.
NKBA members surveyed are generally optimistic about business conditions, and the industry has
high expectations for the upcoming year. Looking
at the quarter ahead, at 76.6, the industry expects
Q1 2020 sales to be higher than Q4 2019 sales.
Manufacturing companies are the most optimistic
(79.6),followed by retailers at 78.2,designers at 75.8
and building and construction firms at 74.7.
The overall health of the kitchen and bath industry is generally rated as strong, at 7.2 out of
10, with five being neutral. Building and retail
segments both rate the health of the business at
7.3, with manufacturers coming in at 7.1 and designers at seven.
Another signal of confidence is plans for capital
expenditures.The survey reported that 51percent
of manufacturers expect to increase capital expenditures in 2020 relative to 2019 levels, which
indicates most of the industry is planning for continued growth. Only 4 percent report they are

32
32_KBB_0220_ResearchRoundup.indd 32

By DIANNE M. POGODA

KBMI also polls about the general state of the U.S. economy, and 61 percent
of NKBA members surveyed rank overall conditions at a seven or higher out
of 10, indicating the economy is strong or extremely strong, which portends
well for home sales and remodeling projects. Just 22 percent rank the state of
the economy at a five or less.
The index revealed that countertops, stoves and cabinets are the top three
kitchen products where consumers most commonly splurge. Cabinet hardware, flooring, smart lighting and smart plumbing are at the bottom of this list.
In the bathroom, consumers are more likely to splurge on countertops,
vanities and medicine cabinets, with hardware, smart plumbing and smart
lighting similarly at the low end of these priorities.
As for the most significant challenges faced by the industry, the story has
been consistent for several quarters. The availability of skilled laborers tops
the list of concerns, rated at 7.7 out of 10. The cost of materials (7.2) and
cost of labor (6.9) are next among the industry's most significant challenges
and concerns. Concerns about the economy, trade policy and consumer
confidence remain near the top of the list but rank lower than in recent
quarters as trade tensions ease and the U.S. housing market rebounds after a
predominately slow first half of the year.
To receive a copy of the full report, visit store.nkba.org. NKBA members who would like to participate in the quarterly survey should email
marketresearch@nkba.org.


FUTURE BUSINESS CONDITIONS
At 76.6, the industry expects Q1 2020 sales to be higher than Q4 2019 sales. Manufacturing companies are
the most optimistic, while building and construction firms are slightly less optimistic than other segments.

Future Business Conditions
Sales next quarter vs. this quarter

Higher

100
90
80

76.6

74.7

75.8

KBMI

Building & Construction

Design

78.2

79.6

Retail Sales

Manufacturing

Stayed
the
same

60
50
40
30
20
10

Lower

Sources: NKBA; John Burns Real Estate Consulting, LLC (Data: 4Q19, Pub: Feb-20)

/ FEB.-MARCH 2020 / KBBONLINE.COM / The official publication of NKBA (NKBA.org) and KBIS (KBIS.com)

2/12/20 5:11 PM

http://www.KBBONLINE.COM http://www.NKBA.org http://www.KBIS.com

Kitchen & Bath Business - February/March 2020

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