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  Kitchen & Bath Market Sentiment Dampened by Market Headwinds
[Jan 4, 2024]

"Kitchen and bath design and remodeling firms are guardedly optimistic about the prospects for a business uptick in 2024, although rising costs, labor constraints, consumer uncertainty, and other market headwinds continue to tamp down expectations,¡± reports Kitchen & Bath Design News.

¡°According to a nationwide survey conducted by Kitchen & Bath Design News, dealers and designers, although forecasting modest revenue gains in 2024, say that they harbor nagging concerns about economic conditions impacting sales revenue, business operations, and profit margins in the coming year.

¡°KBDN¡¯s online survey, which garnered 600+ responses, was conducted in November of 2023, amidst a third quarter marked by persistent inflation, 20+-year-high interest rates, a sluggish housing market, skilled-labor shortages, a decline in sales leads, and an increase in project postponements and cancellations.

¡°When asked about current economic conditions impacting their business in 2024, a whopping 93% of those surveyed told KBDN that they are either ¡®somewhat concerned,¡¯ ¡®very concerned,¡¯ or ¡®extremely concerned.¡¯ In contrast, only a scant 7% reported that they are either ¡®not very concerned¡¯ or ¡®not at all concerned.¡¯

¡°Those concerns are mirrored in 2024 revenue projections, which are decidedly less bullish than in previous annual forecasts. Indeed, some 69% of KBDN survey respondents reported that they expect 2024 annual revenue to either remain flat or decline compared to 2023. In contrast, less than half that number (31%) said they foresee a revenue increase this year.

¡°Moreover, when asked if anticipated revenue increases in 2024 would be at the same rate as in 2023, only about 35% of those surveyed answered affirmatively. By comparison, 65% of the survey respondents told KBDN that any revenue increase they might experience in 2024 would likely be at a slower pace than in 2023.

¡°Equally sobering are forecasts about 2024 profit margins, which are clearly being impacted by rising product and raw material costs, competitive pressures, and labor costs that have consistently been outpacing inflation.

¡°Specifically, among the kitchen and bath design professionals surveyed by KBDN, only about a quarter (25.7%) said they foresee their company¡¯s profit margins rising in 2024, while roughly three quarters believe their margins will either remain the same (51%) or decline (23.3%) compared to 2023.

¡°When it comes to kitchen and bath remodeling projects, roughly 58% of those surveyed also reported that pricing is generally more critical to clients than it was at the same time a year ago. By comparison, only about 4% said that pricing is less important than it was a year ago, while 38% said pricing is equally important than it was a year earlier.

¡°Also being impacted by lingering economic uncertainties are sales leads. Specifically, more than 42% of those surveyed report that their sales leads and project requests are either ¡®somewhat lower¡¯ (28.6%) or ¡®much lower¡¯ (13.8%) than at the same time a year ago. By comparison, about 26% say their sales leads are ¡®somewhat higher¡¯ than a year ago, while about 25% say they are about the same. Less than 7% report their current number of sales leads are ¡®much higher¡¯ than they were a year earlier.

¡°Price increases for products and raw materials, followed by a shortage of labor, head a list of challenges facing kitchen and bath design firms, survey respondents told KBDN. Other top challenges include long lead times for products, persistent production and shipping delays, and customers postponing or canceling projects due to increased costs.¡±

Source:  Kitchen & Bath Design News