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An Incomparable Spirit Dynamic leader and Kohler Co. Executive Chairman Herbert Vollrath Kohler, Jr. passed away on September 3, 2022, in Kohler, Wisconsin. He was 83. His bold ideas and hands-on leadership transformed the plumbing products manufacturer founded by his grandfather into a global and diverse family of businesses synonymous with unmatched quality, creativity, and Read more

An Incomparable Spirit

Dynamic leader and Kohler Co. Executive Chairman Herbert Vollrath Kohler, Jr. passed away on September 3, 2022, in Kohler, Wisconsin. He was 83. His bold ideas and hands-on leadership transformed the plumbing products manufacturer founded by his grandfather into a global and diverse family of businesses synonymous with unmatched quality, creativity, and bold innovation. He literally put his beloved home state of Wisconsin on the map as a global golf destination culminating with the Ryder Cup in 2021.

Herb Kohler’s personal mission was to create delight. For him, there was no halfway. To warrant the “KOHLER” nameplate, a product had to be more than durable, functional, and attractive. It had to be joyful and memorable.

“His zest for life, adventure and impact inspires all of us. We traveled together, celebrated together, and worked together. He was all in, all the time, leaving an indelible mark on how we live our lives today and carry on his legacy,” said his family.

He was admired by many as an accomplished, dynamic leader; independent-minded entrepreneur; courageous innovator; and passionate creative. Herb, more than anyone, lived and breathed Kohler Co.’s mission of providing customers with gracious living each day. He was a big personality who was steadfast in guiding Kohler associates in the relentless pursuit of the company mission, and he took immense joy in witnessing his customers’ delight firsthand.

“If I sell you a bathtub, there has to be something about it that gives you pleasure not only at the time of the transaction. Years later, we want you to think this is one of the best buys of your life,” he once said in an interview. “The same applies with everything we provide – an engine, generator, toilet, table, hotel room, spa service, golf course, you name it. If you think about it five years later and, inwardly or outwardly, it makes you smile and we can do this consistently, then we’re living up to our mission.”

Early Life

Herb Kohler – who preferred to use his first name but was so respected by Kohler Co. associates who addressed him as “HVK” or “Mr. Kohler” – was born in Chicago on February 20, 1939. His father Herbert V. Kohler, Sr., son of Kohler Co. founder John Michael Kohler, served as Board Chairman and CEO of Kohler Co. from 1940 until his death in 1968. His mother Ruth De Young Kohler was a historian and former women’s editor of the Chicago Tribune.

Herb was educated at the Kohler schools in Kohler, Wis., and at Choate Rosemary Hall in Wallingford, Conn. As a young man, he spent many summers as a laborer on the Kohler farms and in most of the manufacturing divisions of Kohler Co. After serving with the U.S. Army Reserve, studying at the University of Zurich in Switzerland, and launching a brief acting career at Knox College in Illinois, he completed his education at Yale University, graduating with a Bachelor of Science degree in industrial administration in 1965.

He rejoined Kohler Co. full-time as an R&D technician shortly after graduation. He became a Director of the company in 1967, and when his father died a year later, he became Vice President of Operations. He was named Executive Vice President in 1971, was elected Chairman of the Board and CEO in 1972, and President of the Company in 1974 – at the age of 35. In 2015, he became the company’s Executive Chairman, with son David taking the helm as President and CEO. He served Kohler Co. for 61 years.

Creative Passion and THE BOLD LOOK OF KOHLER

In the early 1970s, Herb created a force with THE BOLD LOOK OF KOHLER that forever changed the American bathroom and kitchen, transforming what were once utilitarian spaces into statements of design, style, sophistication, and craftsmanship. During his 43-year span as CEO, he also transformed his family-owned company into a world leader, with more than 40,000 associates and dozens of manufacturing facilities on six continents.

The National Kitchen and Bath Hall of Fame inducted him in its founding year of 1989, followed by the National Housing Hall of Fame in 1993. Ernst & Young named him National Entrepreneur of the Year in Manufacturing in 2002, and Junior Achievement inducted him into its U.S. Business Hall of Fame in 2006.

THE BOLD LOOK OF KOHLER began in 1967 as a unique program of beautifully designed toilets, bathtubs, sinks and other fixtures in unique colors supported by imaginative consumer advertising. But under Herb’s watch, it went beyond a corporate promotion to become a bold new guiding spirit for the company and its associates. It was a spirit that positioned them on the leading edge of everything they set out to do, while maintaining a single, high level of quality in the company’s products, processes, and services.

“We have the people, the products, the focus, the resources, and the passion to pursue our mission and compete successfully,” Herb once told associates.

That is exactly where he led them, based on three primary guiding principles. One, live on the leading edge of design and technology of product and process. Two, have a single standard of quality above the norm with everything the company does. And three, invest 90 percent of Kohler Co.’s annual earnings back into the company.

Herb invested in state-of-the-art manufacturing technologies, revitalized the company’s tradition of product innovation, and launched bold brand-awareness advertising campaigns geared toward consumers – taking the KOHLER plumbing brand to number one on a global scale and never looking back.

Always a hands-on executive who was full of ideas for improving products and processes, he involved himself in design decisions to a degree that was uncommon among CEOs. He thoroughly enjoyed the creative process – from reviewing 30-second television commercial storyboards to testing new products personally by soaking in a whirlpool bath or sampling a decadent piece of KOHLER chocolate. He designed many of the company’s products himself and held more than 200 design and utility patents.

He invested in new designs, products, manufacturing facilities, and distribution strategies. Realizing the opportunity to compete in the changing world marketplace, he gave the company and the KOHLER brand new global perspective and greater presence by adding production, distribution and marketing in Mexico, United Kingdom and Continental Europe, North Africa, India, Middle East, Latin America, Brazil, and the greater Asia Pacific region, including China, Thailand, South Korea, Australia, and New Zealand.

He took the company into new businesses with more than 48 acquisitions over his tenure. This began with Sterling Faucet Co. that joined the Kohler family of businesses in 1984, followed by French plumbing company Jacob Delafon in 1986, and U.K. shower manufacturer Mira in 2001. He formed the Kohler Interiors Group acquiring premium luxury brands Baker Furniture, McGuire Furniture Company, Ann Sacks Tile and Stone, Kallista plumbing, and Robern mirrored cabinets.

Herb invested beyond plumbing products to strengthen the company’s other core business – Power – and expanded the portfolio with a series of acquisitions including Italian diesel engine manufacturer Lombardini in 2007 and France-based generator company SDMO in 2005. Today, Kohler Co. is the third largest global power systems organization in the world.

In the late 1970s, Herb convinced skeptical colleagues to develop The American Club – originally built as an immigrant workers’ dormitory in 1918 – into a luxury spa and resort. The Board of Directors twice rejected the idea, but he persisted. Today, The American Club is the Midwest’s only AAA Five Diamond Resort Hotel, a member of the National Trust for Historic Preservation’s Historic Hotels of America program, and among a handful globally to have both the AAA Five Diamond and Forbes Five-Star designations. In 2018, Historic Hotels of America and Historic Hotels Worldwide recognized Herb as the recipient of its annual Steward of History and Historic Preservation award for The American Club.

With The American Club serving as the anchor property, Destination Kohler was formed and today includes the 500-acre wilderness preserve River Wildlife; a second hotel, Inn on Woodlake; the Kohler Waters Spa; multiple casual and fine dining restaurants and pubs; Sports Core health and racquet club; Yoga on the Lake; Bold Cycle; Riverbend private membership club; Kohler Original Recipe Chocolates; the Kohler Design Center and a host of home furnishing and specialty shops. Destination Kohler paved the way for the Hospitality & Real Estate Group. Another hotel called LODGE KOHLER opened in 2017 and is an anchor property within the Green Bay Packers’ Titletown entertainment destination.

But it was another of Herb’s bold moves that garnered infinitely more international acclaim for the company and opened the floodgates to a new and prosperous expansion of Kohler Co.’s impact – golf.

A Golfer’s Dream

The Chicago Tribune once wrote about Sheboygan County, “The likelihood of turning this vast rural farmland into a golf mecca is about the same as making a toilet a work of art. Herbert Kohler can now say he has done both.”

During The American Club’s early years, guests asked Herb why the resort offered transportation to local golf courses, but no golf course itself. The question ultimately inspired first a partnership and then deep friendship with hall-of-fame golf course designer Pete Dye, and a vision that brought forth what some have called the most spectacular 72 holes of championship golf in America.

Blackwolf Run, the first piece of Destination Kohler’s golf portfolio, opened in 1988. Whistling Straits came 10 years later, transforming a polluted, abandoned airfield site into a world-class golf experience evoking the seaside links courses of the British Isles – right down to the flock of Scottish Blackface sheep Herb acquired that still roam the grounds today.

Herb’s next golf adventure took him to the game’s birthplace in St Andrews, Scotland, where he bought a hotel alongside the legendary Old Course and turned it into the Old Course Hotel Golf Resort and Spa and added The Duke’s – a heathland golf course outside of town. His most recent projects are closer to home, including the Straits Chapel, serving as the co-designer of the enjoyable 10-hole, par-3 Baths of Blackwolf Run golf course that debuted in June 2021, as well as plans to build an 18-hole public golf course on company property along more than a mile of Lake Michigan shoreline in southern Sheboygan County.

Whistling Straits and Blackwolf Run have been recognized among the best golf courses in the country – in 2000, Golf Digest named Sheboygan County 7th among the top 50 golf destinations in the world – and continue to challenge professional and amateur athletes from across the globe. The Kohler courses have hosted six Major golf championships to date, including one of the most exciting PGA Championships on record at Whistling Straits in 2015. In 2021, in perhaps the culmination of his legacy and passion for golf was hosting the 43rd Ryder Cup – which many golf experts called the best-ever in the 94-year history of the storied competition.

In 2016, Herb earned the Old Tom Morris Award from the Golf Course Superintendents Association of America; the award recognized his “indelible mark on golf and focus on the importance of environmental stewardship.” Then in 2019, the Wisconsin Athletic Hall of Fame enshrined Herb as part of its 69th class for transforming Wisconsin into a worldwide golfing destination and bringing six golf Major Championships to Wisconsin and the 43rd Ryder Cup in 2021.

The business of golf sparked a passion within Herb for the sport itself, and he became a serious student of the game in his 50s. He spoke fondly of the values associated with golf and the friendships he made – particularly with his beloved “Gnarly Balls” gang of friends, who played courses all over the world, usually in harsh weather, and always with a friendly wager. Herb recorded his only hole-in-one on the 11th hole of the Old Course at St Andrews in 2007. It was a “postcard moment” he laughingly remembered not only for the achievement, but also for the fact that his golfing companions celebrated by downing expensive shots of scotch – and presenting him with the bill.

A Greater Purpose

Herb Kohler found strong inspiration in the life of his uncle, Walter J. Kohler Sr., who led Kohler Co. from 1905 until his death in 1940. The elder Kohler often quoted a business principle coined by 19th century English critic John Ruskin: “Life without labor is guilt, labor without art is brutality.” The quotation resonated with Herb, who saw business as a process that thrived on creativity, provided constant challenges, and offered a means by which to help others. He worked diligently to be a positive influence in his community and was an ardent supporter of the arts, the environment and historic preservation

Working closely with his sister Ruth and the John Michael Kohler Arts Center, Herb helped establish an innovative Arts/Industry residency program that invites artists into the Kohler factories to work alongside production associates turning out stunning works of handcrafted sculptures of art made from plumbing product materials, such as vitreous china, cast iron and brass. To date, more than 500 artists have participated in this unique residency that intersects art and manufacturing.

Walter’s influence was also evident in Herb’s community services. In the early 1900s, Walter hired the pre-eminent landscape architecture firm of the Olmsted Brothers – whose portfolio included New York’s Central Park and the U.S. Capitol – to create a 50-year plan for the Village’s green spaces. In 1977, Herb worked with the Frank Lloyd Wright Foundation to put together a second 50-year plan for the Village, paving the way for additional development of residential and company properties including the Sports Core, Shops at Woodlake, and the Woodlake Market.

Herb established and chaired the Kohler Trust for the Arts and Education, the Kohler Trust for Preservation, passing the chair role to his daughter Laura in 2015. Herb also established the Kohler Trust for Clean Water in 2019, of which Laura is also chair. Among the beneficiaries of the Trusts are the Wisconsin Chapter of The Nature Conservancy, and recently a major conservation project in the Sheboygan River Watershed.

He served as President of the Kohler Foundation that provides hundreds of thousands of dollars in scholarships annually, sponsors a Distinguished Guest Series that brings internationally recognized performers to Sheboygan County and manages the Waelderhaus – a replica of the Austrian home of John Michael Kohler that is open to the public.

The Foundation and Trusts have funded the preservation of significant art environments and collections, as well as the re-creation of a working sawmill and millpond at Wade House State Park in Greenbush, Wisconsin, a state historical site initially preserved by the Kohler Foundation under the leadership of Herb’s mother. Herb also served as co-chairman of the successful fund raising effort in support of the creation of Old World Wisconsin, a living ethnic museum built by the Wisconsin State Historical Society in Eagle, Wisconsin.

Herb’s interest in the outdoors and environmental preservation led to the creation of River Wildlife, a 500-acre nature preserve along the banks of the Sheboygan River; and the preservation of Eagle Valley, a 1,440-acre eagle preserve along the bluffs of the Mississippi River, which earned a Wisconsin Wildlife Habitat Development Award. Additionally, Herb developed Kohler Co.’s 12 Environmental Principles, allowing the company to meld environmental stewardship with industrial manufacturing. And in September 2022, the KOHLER Center for Marsh Education was opened at the Sheboygan Marsh Wildlife Area to promote the environment, conservation, and stewardship through education, hands-on activities, and advocacy.

In 2012, Herb helped finance and led the design and construction of the Kohler Environmental Center at Choate Rosemary Hall, his alma mater. This LEED-Platinum environmental research and education center is outfitted with three working laboratories, two classrooms, and a greenhouse. It is home to the Environmental Immersion Program, a year-long residential and interdisciplinary program.

Herb was an advocate of youth development and education. He volunteered his time as a board member of Outward Bound USA, a leading provider of experiential and outdoor education programs. He was personally impacted by Outward Bound in 1986 through an Invitational Expedition on North Carolina’s Chattooga River. Immediately captured by the adventure and experience, Herb joined the Board of Directors in 1997 on which he served until 2010 and introduced each of his children – and subsequently grandchildren – to the organization, who attended expeditions as youth. A life of service, impact, and commitment to this non-profit earned Herb and daughter Laura the highly coveted Kurt Hahn Award in 2020.

He also served as a trustee at Lawrence University in Appleton, Wisconsin; Choate Rosemary Hall; the National Housing Endowment; and Friendship House, a home-based facility for at-risk youth in Sheboygan. He was an active supporter of The First Tee, an initiative to create new golf facilities around the country and make the game more affordable and accessible, especially to youth.

As part of his commitment to education, Herb established the Kohler Scholarship Endowment in Drama at Duke University. He also endowed the Kohler Center for Entrepreneurship in the College of Business Administration at Marquette University, creating a program putting Marquette students in regular contact with established business leaders to study entrepreneurial success. In 2018, the UW-Madison College of Engineering was a benefactor when the Kohler Innovation Visualization Studio was opened, and in 2014 Lakeshore Technical College in Cleveland, Wisconsin, was a benefactor when the KOHLER Center for Manufacturing Excellence was unveiled.

In 1997, Herb earned the Ellis Island Medal of Honor for “exemplifying American ideals and preserving an Austrian heritage.”  In 2018, the University of St Andrews presented Herb with an Honorary degree, Doctor of Laws for demonstrating a lasting commitment to the town and people of St Andrews.

Foundation in Family

Herb Kohler never pushed his three children into the family business, instead encouraging them to follow their own paths. The fact that all three paths eventually led Laura, Rachel, and David to Kohler Co. is testament to their father’s steady influence and example. David oversees Kohler Co. in the role of President and CEO, Laura is Senior Vice President of Human Resources, Stewardship and Sustainability, and Rachel formerly served as Group President of Kohler Interiors and now an entrepreneur in her own right, is a member of the company Board of Directors.

Herb married the former Natalie Black in 1988 and together they built a life focused on growing the business on a global scale. Natalie Black Kohler is now retired, having recently served as Senior Vice President and Chief Legal Officer for Kohler Co. She is also a member of the company’s Board of Directors and President of the Kohler Foundation.

Herb was devoted to his family, often sharing adventurous vacations with them. Close friends say his forceful personality could be tamed within seconds by the smiles of his 10 grandchildren and three great grandchildren.

His marriage to Linda Kohler Anderson ended in divorce in the early 1980s. Linda, the mother of Laura, Rachel, and David, died in 2005. Herb was also preceded in death by his parents, Herbert V., Sr., and Ruth DeYoung; his younger brother, Frederic Kohler; and younger sister, Ruth DeYoung Kohler II.

Herb is survived by his wife, Natalie; two daughters, Laura Kohler (Steve Proudman), and Rachel Kohler (Mark Hoplamazian); and one son, David Kohler (Nina). He is further survived by 10 grandchildren, and three great grandchildren, Ophelia, Herbert, and Uma Cartwright.

He will be greatly missed by his family, a large circle of friends, tens of thousands of Kohler Co. associates and retirees worldwide, as well as many others who came to know him.

Celebrating Herb’s Legacy

The family plans to host a private service. At a date to be determined, Kohler Co. will host a tribute to Herb Kohler for associates, past and present.

Coming soon is a tribute website to learn more about Herb Kohler’s countless contributions, his dynamic life, business impact and well-deserved accolades. Information regarding ways to honor his memory will be detailed on the website.

 

 

Kitchen and Bath business projected to contract but still projected to be 16 percent higher than 2021 The National Kitchen & Bath Association (NKBA)– the world’s leading association for the kitchen and bath industry has released its midyear 2022 Kitchen & Bath Market Outlook. While both inflation and mortgage rate increases have impacted the segment, the overall Read more

Kitchen and Bath business projected to contract but still projected to be 16 percent higher than 2021

The National Kitchen & Bath Association (NKBA)– the world’s leading association for the kitchen and bath industry has released its midyear 2022 Kitchen & Bath Market Outlook. While both inflation and mortgage rate increases have impacted the segment, the overall annual forecast still represents a double-digit increase over 2021.

“This new Market Outlook report provides revised market size estimates and 2022 forecasts in the Kitchen and Bath Industry, as well as gauges the economic and housing market shifts that continue to impact our market,” said Bill Darcy, CEO of the National Kitchen & Bath Association (NKBA). “Despite some economic headwinds, kitchen and bath remodeling demand remains strong. Residential kitchen and bath spending is anticipated to grow by 16% to $189 billion in 2022.”

NKBA’s 2022 Kitchen and Bath Market Outlook Midyear Report Top Takeaway

  • Resilient Revenues. Full-year kitchen and bath spending is expected to reach $189 billion, 16 percent higher than 2021, yet $10 billion lower than the initial 2022 forecast.
  • New Construction Strength. New construction is projected to represent over 60 percent of industry revenues, driven by a record number of new home builds.  The report forecasts 21 percent YOY new construction growth, unchanged from the initial report in January.
  • Larger Projects Gaining Momentum. Higher-end activity has been revised upward due to rapid home appreciation and client movement on deferred projects.  With upwards of 20 percent gains, mid-range projects are expected to register the biggest YOY increases based on growth in new construction.  Lower-end work projection has been sharply scaled back due to higher inflation causing many to put their projects on hold.
  • Numerous Remodel Drivers. Nearly three in four homeowners are locked into mortgage rates below 4 percent, making it more cost-effective to remodel than to move. This, along with record-high homeowner equity per household and a high number of homes in prime remodeling years, bodes well for the second half of 2022.
  • Normalization of Housing Starts/Completions. While builders are working through the substantial backlog of homes in various stages of completion, the number of new housing starts are falling due to high mortgage rates and home prices. This combination has led to a shrinking gap between home starts and completions.
  • Recession Concerns. The Fed has tried to control inflation with three interest rate hikes this year, the latest in June. Of note: The last three times the Fed initiated a cycle of rate hikes, a recession ensued within a year.

“We anticipate moderate declines in kitchen and bath spending in the event of a recession next year,” said Darcy. “Our view is informed by improved housing and consumer fundamentals and a likely less severe recession, relative to recent history if one were to occur.”

To learn more about the key findings and to access the full 2022 Kitchen & Bath Market Outlook: July Update, contact Brittany Loeffler at bloeffler@whitegood.com.

Projects Shift Upward in Price Sales growth expectations rise to 13.4% The National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) today reported that their Q1 2021 Kitchen & Bath Market Index (KBMI) has soared to a rating 79.8, its highest score since the inception of the index. KBMI measures the Read more

Projects Shift Upward in Price Sales growth expectations rise to 13.4%

The National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) today reported that their Q1 2021 Kitchen & Bath Market Index (KBMI) has soared to a rating 79.8, its highest score since the inception of the index.

KBMI measures the current strength of the industry, expectations and challenges facing four major sectors — design, manufacturing, retail and building — with scores above 50 indicating expansion and scores below 50, contraction. The current rating marks an increase of 14.8 points from last quarter alone and a 38.8 point improvement from this time last year.

Significantly, one in three designers noted that clients are now requesting higher-priced products and finishes. Retailers are experiencing that same customer shift. The trend is likely owing to quick-fix, pandemic-driven DIY projects running their course and being replaced by serious makeovers to accommodate new lifestyles.

“There is continued optimism in the industry with COVID-19 becoming less of an obstacle due to the rapid vaccine rollout,” said NKBA CEO Bill Darcy. “We are encouraged to see the index reach a historic high, and look forward to the continued industry growth as homeowners opt for larger, more upscale remodels.”

“As consumers experience more flexibility in their working arrangements, there’s an increased need for total reconfigurations for their spaces,” notes Todd Tomalak, Principal of JBREC. “And from an economic perspective, we’ve seen Americans utilizing their stimulus checks and savings from canceled vacations or other activations — which have been largely paused for the last year —  for these home-improvement projects.” 

Overall, demand is at an all-time high as vaccination rates increase and for some, permanent and hybrid work-from-home lifestyles are encouraging consumers to reconfigure their home layouts. As the pandemic’s impact on the market starts to lessen and previously postponed projects resume, backlogs for projects are reaching upwards of three to six months. Continued supply chain disruptions from COVID-fueled demand and factory shutdowns at the onset of the pandemic are further affected by the Suez Canal incident and overall port congestion, but NKBA members remain confident in the industry outlook with expected sales to be markedly higher in Q2 2021.

As members see less of a negative impact from COVID-19 on their business, they reported a near-double-digit sales growth of 9.7% on average in Q1 2021, compared to the same period in 2020.

As for future sales and overall industry health, bullish demand and consumer confidence continue to fuel a positive outlook. Design companies have the lowest rating of the overall industry, at 76.1, while Building & Construction, Retail Sales and Manufacturing segments soar at 83.8, 82.2, and 86.7, respectively.

And overall, the industry increased full-year sales growth expectations to 13.4% in 2021, up from their rating of 10.7% in Q4 2020.

The following trends are expected to impact homeowners and the industry through 2021:

  • Members are seeing larger project scopes as homeowners invest in whole-home reconfigurations and luxury finishes.
    • Designers also cite permanent work-from-home lifestyles as a catalyst for the consumer shift to high-end, higher-priced materials and finishes with designer firms reporting a 61% increase in the average size of projects.
  • The main obstacle for members is sourcing affordable materials as delays and price hikes make it difficult to maintain profit margins. More US-based sourcing could be likely as import delays and pricing become more severe and firms are sourcing outside their approved vendor list to accommodate.
    • Appliances have been the most difficult products to source, with 51% of designers reporting difficulty sourcing refrigerators, ranges/stoves and dishwashers.
  • The majority of firms are increasing labor rates to maintain current staffing levels and bolster recruitment efforts, but these increased costs aren’t expected to deter demand, as consumers are eager to remodel their primary bath and kitchen spaces.

Notable challenges and opportunities for the kitchen and bath market include:

  • Over half of designers (55%) report no project cancellations or postponements in Q1, but 45% note material shortage and product pricing are starting to affect project timelines.
  • As vaccination rates climb, consumers are more comfortable shopping in-person for items with over 50% of retailers reporting growth in foot traffic in Q1 2021 (compared to 35% in Q4 2020).
  •  45% of retailers continue to report a shift in price-point with 70% shifting to higher prices, and despite price surges for some products, consumers are still opting to pay for high-end products and finishes. Refrigerators and ranges/stoves are seeing the highest price climb at 12% and 11%, respectively.
  •  60% of manufacturing firms report average lead times of 6+ weeks in Q1 2021, a drastic increase from Q4 2020 (36% reporting 6+ week lead times). 78% of manufacturers report severe capacity constraints at this time, a rise from the prior quarter (23%) due to extended lead times on raw materials and significant freight delays.
  • With the surge in remodeling demand, 67% of building and construction firms report a backlog of 3+ months and of that, 21% have a backlog extending through 2021.
  • With the pandemic affecting many industry professionals, the already strained labor market continued to dwindle. In response, over 60% of companies report increasing labor rates to retain current staff and of the companies reporting labor rate increases, almost half report increasing labor rates 10-19%.

Nearly Half of Industry Professionals Saying Demand Has Returned to Pre-Pandemic Levels Today, the National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) released their Q4 2020 Kitchen & Bath Market Index (KBMI), which shows industry sales grew 2% from Q3 2020 and 4% year-over-year from Q4 2019. Retail sales are experiencing especially impressive Read more

Nearly Half of Industry Professionals Saying Demand Has Returned to Pre-Pandemic Levels

Today, the National Kitchen & Bath Association (NKBA) and John Burns Real Estate Consulting (JBREC) released their Q4 2020 Kitchen & Bath Market Index (KBMI), which shows industry sales grew 2% from Q3 2020 and 4% year-over-year from Q4 2019. Retail sales are experiencing especially impressive growth, with average sales up 7.9% from last year, followed by manufacturing (5.5%), building/construction (3.8%) and design (2.4%).

The KBMI reached a rating of 65, representing a third consecutive quarter-over-quarter increase. The index stood at 61.9 in Q3 2020 and was below 50 in both the first and second quarters of last year. Scores above 50 indicate expansion and scores below, contraction. All indicators of this report have improved over the last several quarters — with kitchen and bath market respondents ranking current conditions at 59.8; future conditions at 72.7; and the health of the industry (measured on a scale of one to 10) at 7.1, just below the pre-pandemic 7.2 registered in Q4 2019.

Supply-chain disruption, cost of materials, concerns around keeping COVID-19 under control and availability of skilled labor are the top concerns of industry professionals. More than half (56%) say COVID-19 has worsened the pre-existing labor shortage by fueling demand, with 58% reporting their pipelines are larger now than at the same time in 2019.

The industry expects 10.7% sales growth in 2021

The NKBA has identified the following consumer trends via the latest KBMI report:

  • The shift to smaller project sizes seen earlier in the year reverses, as homeowners are undertaking larger projects, including expanding and rearranging floorplans or creating dedicated offices, to increase home functionality. This recalibration of priorities is contributing to anticipated business growth across sectors, as more complex jobs require a level of professional help not seen in 2020’s DIY boom.
  • In fact, pandemic circumstances are actually driving demand to 60% of kitchen and bath companies, with members reporting that consumers are beginning the remodeling projects they planned while sheltering in place in 2020.
  • Still, there remains higher demand for lower-priced products and finishes. Homeowners also seek out wellness design, perhaps unsurprisingly given the focus on physical and mental health spurred by the pandemic.

“We’re seeing an incomparable surge in homeowners looking to rearrange floor plans, tear out complete kitchens, baths and other rooms to make space for increased activity within the home, and generally create a space that better suits their evolving needs,” said NKBA CEO Bill Darcy. “Our industry’s greatest challenge will be operational, as our members aim to meet growing demand from homeowners with an unmatched appetite for remodeling.”

Each sector of the kitchen and bath market is impacted by current demand in different ways, though all report supply-chain disruptions as a significant, negative impact of COVID-19 on their business. Other key takeaways include: 

  • Retail sales see strong growth across all price points, though wood items like cabinets are under inflationary pressure due to the lumber market. Regardless, retailers have the most positive outlook on the industry, ranking the KBMI highest of any group at 71.7.
  • Demand continues to exceed supply for manufacturers, most notably in cabinetry and appliances, but fewer than one in five (19%) say supply-chain disruptions are significantly impacting their business.
  • Building and construction firms report cancellations and postponements are declining, with more than half (58%) reporting zero in Q4, compared to 49% in Q3. Builders are more likely to report supply-chain disruptions as significantly impacting their business (23%) compared to other sectors.
  • Half of designers say demand for future projects is higher than it was pre-COVID, while consumers’ finances have less of a negative impact as economic confidence has continued to improve over the last several quarters.

Overall Kitchen and Bath Spending Projected to Total $158.6 Billion in 2021 The National Kitchen & Bath Association (NKBA) today released its 2021 Market Outlook report, revealing the industry is poised for continued growth with overall spending for both kitchen and bath projects to increase in the coming year. The industry anticipates a pronounced rebound Read more

Overall Kitchen and Bath Spending Projected to Total $158.6 Billion in 2021

The National Kitchen & Bath Association (NKBA) today released its 2021 Market Outlook report, revealing the industry is poised for continued growth with overall spending for both kitchen and bath projects to increase in the coming year. The industry anticipates a pronounced rebound in overall industry growth-from -5.9% in 2020 to 16.6% in 2021, compared to 9% in 2018 and 1% in 2019.

Homeowners cite the kitchen and bath areas as two times more important than other spaces within the home, and the kitchen particularly gained status throughout the COVID-19 pandemic, with 70% of homeowners considering it extremely important compared to 64% prior to the crisis. With a renewed focus on these rooms, the industry projects a tailwind of big interior projects, including indoor kitchen remodels. This year may see a shift from the DIY boom of 2020 toward jobs that require a kitchen and bath professional, many of which may have been postponed by homeowners during the pandemic, due to health-risks associated with having someone inside the home.

“After such a strong year for home remodeling in 2020, some wondered if we were approaching a home improvement spending ‘cliff.’ We’re pleased to say that’s not what the kitchen and bath market is expecting in 2021,” said Bill Darcy, NKBA CEO. “Last year, homeowners started the work of improving their living spaces with DIY projects. And this year, with early distribution of the vaccine and other measures to reduce the public health impact of the virus, we expect to see continued renovations and more projects requiring our members.”

The study saw a number of project motivators and inspirations that continue to drive renovations:

  • While larger, more professional-intensive projects are slated to increase this year, homeowners cited a desire to save money (25%), additional time to pursue projects (23%) and health and safety concerns (22%) as the primary reasons for recent DIY work.
  • Households indicate that improving the home’s aesthetics are the main motivators for remodels in the bathroom (16%) and kitchen (15%), followed by maximizing quality and durability, and increasing the value of the home.
  • Homeowners completing budget-friendly bathroom remodels focused on updating cabinets (52% of projects) and plumbing (43% of projects). Smart home products (57%) and water filtration systems (54%) were the focus of premium feature upgrades in the kitchen.
  • Both household income and life stage jointly influence kitchen remodel cost considerations. “Mature households,” those age 45+ with no children, have the highest share of premium upgrades in their kitchens.
  • Google searches and social media are the primary inspiration for kitchen and bath remodels. Households frequently indicate that they rely on more than one source to inspire a remodel. Young single homeowners or couples tend to more heavily rely on Google and Instagram, while mature adults (45+) put greater weight on other homes seen in person for inspiration.

Economic indicators that may impact remodeling activity include:

  • A 10% growth in single family residential construction starts in 2020 will lead to new construction dollarizing in 2021, driving a +17% growth in new residential building materials.
  • Spending on new construction represents 57% of the total residential kitchen and bath spending at $90.0 billion. Residential remodeling makes up 43% at $68.6 billion in spending.
  • Approximately 1% lower mortgage rates than a year ago will continue to drive demand for homes across buyer segments.
  • With a record low for-sale inventory, housing stock is set for price appreciation, which will serve to increase homeowners’ decisions to pursue large-scale remodels. The study forecasts an approximate 31% total house price appreciation between 2020-2023 driven by both the supply shortages and underlying demand.

Methodology 

NKBA commissioned the highly regarded consulting firm John Burns Real Estate Consulting (JBREC) to field the study. The data presented in this report is compiled from a variety of sources: The U.S. Census American Housing Survey home-improvement projects microdata, National Apartment Association (NAA) spending (rental), and JBREC’s home improvement estimates and forecasts of single-family rental renovation spending. In addition, a survey was conducted among 4,732 among homeowners who had initiated a home improvement project since the start of the COVID-19 pandemic.

About the National Kitchen & Bath Association and the Kitchen & Bath Industry Show

The National Kitchen & Bath Association (NKBA) is the not-for-profit trade association that owns the Kitchen & Bath Industry Show® (KBIS), as part of Design & Construction Week® (DCW). With nearly 50,000 members in all segments of the kitchen and bath industry, the NKBA has educated and led the industry since the association’s founding in 1963. The NKBA envisions a world where everyone enjoys safe, beautiful and functional kitchen and bath spaces. The mission of the NKBA is to inspire, lead and empower the kitchen and bath industry through the creation of marketplaces, networks and certifications. For more information, visit NKBA.org or call 1-800-THE-NKBA (843-6522).

KBIS® and NKBA® are registered trademarks of the National Kitchen & Bath Association.