Growth

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.

Jobber’s Latest report reveals full quarter of positive year-over-year revenue growth for Cleaning, Contracting, and Green segments

Jobber, the leading provider of home service management software, today released the Home Service Economic Report: Summer Edition, which showcases market trends and insights pertaining to Home Service businesses in the first three quarters of 2020. Year-to-date, the Home Service category has shown overall positive year-over-year revenue growth, demonstrating resilience to the ongoing pandemic.

Type of Work Performed – Contracting (YoY)

Findings within the report cover all Home Service industries with additional details divided into three segments: Cleaning, Green, and Contracting. According to the report, all segments have now experienced four consecutive months of positive year-over-year revenue growth and equal or positive gains in new work scheduled.

“The Home Service category has continued its path of recovery throughout Q3, in most cases, rebounding to pre-pandemic growth levels,” said Sam Pillar, CEO & Co-founder at Jobber. “While June saw record-high growth, Q3 was a successful quarter as it showed consistent improvements across segments and less volatility overall. It’s possible that this last quarter could signal a return to a new normal.”

Category Comparison YoY (Q3 2020)

Jobber’s Home Service Economic Reports are compiled using proprietary performance data aggregated from the 100,000+ home service professionals the platform serves. Category performance is also compared to other major categories for context. New to this quarter’s report is data revealing trends in type of work completed, digital payment adoption, and consumer communication. Key findings from the summer report include:

• New Work Finds Pre-Pandemic Success—New-work-scheduled started to show signs of recovery from May onwards, hitting a record high for the year in June with 17% growth year-over-year. The growth continues to look healthy year-over-year in Q3, exceeding pre-COVID levels.
• Employment Growth Sees Upward Trajectory—Compared to Total Nonfarm employment growth, which saw an average decline of around -7% year-over-year in Q3, Home Service fared much better with a decline of around -4%. The category has seen rapid recovery, starting with a decline of -12.9% in April to -4.9% year-over-year in June 2020, followed by continued improvement in Q3.
• Home Service Outperforming Most Categories—With the exception of Grocery Stores and General Merchandise Stores, Home Service was the most stable category through the peak of the pandemic. It has also recovered very well through June and Q3 compared to others such as Clothing Stores and Restaurants.
• Electronic Payments On the Rise—From January to May, there has been a 5% increase in e-payment collection when compared to other methods such as cash or cheque, which can be largely attributed to social distancing measures that came into effect earlier this year.

Consumer Spending Comparison YoY

“Analyzing measures such as consumer demand, employment, and revenues, we see encouraging results for the Home Service category,” said Abheek Dhawan, VP, Business Operations at Jobber. “Home Service businesses have rebounded better than most other categories, and it’s fair to say that businesses and consumers remain optimistic, but cautious, as we enter the final quarter of 2020.”

To download the full Home Service Economic Report: Summer 2020 Edition, visit Jobber Homes Services Report.