Addressing Rising Costs

Robert Isler

The NKBA/John Burns Kitchen & Bath Market Index (KBMI) is a quarterly gauge of current and future market conditions within the kitchen & bath industry. A total of 719 industry professionals participated in the study from these four primary sectors – Design, Building & Construction, Manufacturing and Retail. Results of critical measures are compared with the previous four quarters to identify industry growth/decline patterns. The report also explores the latest market shifts and provides valuable insights into each segment’s ever-changing challenges and opportunities.

Rising costs are a significant concern among cabinet manufacturers, but a mixture of flexibility and ingenuity is helping to make the situation more tolerable. Cost of materials and cost inflation, identified as the #1 and #2 challenges facing the K+B industry according to the recently released second quarter NKBA/John Burns Kitchen & Bath Index (KBMI) study, have supplanted supply chain disruptions as top concerns. Customers relentlessly continue to postpone projects or scale them back as they face inflation and rising interest rates.

K+B industry professionals report that costs in Q2 2022 were 11% higher than the previous year. To compensate, they expect to raise their prices an average of 13% full year based on their increased vendor and labour costs. Not all within the industry are opting to take this route, concerned they will be pricing themselves out of jobs. While 41% are passing along costs to clients to maintain margins, 29% are reevaluating pricing or accepting lower profitability to gain a competitive edge. Another 27% are changing product purchasing decisions to lower their cost basis. This can be accomplished in any number of ways. For instance, one respondent suggested stock cabinets for clients to save on costs and lead time. Another sources local suppliers and has been changing protocols to maintain affordability. Cutting back on finishes and fixtures to keep the project’s overall scale has also proven effective.  

Flexibility is key. Offering prospects a high, medium and low-priced option and carefully explaining the pros and cons of each has been the winning formula for one. Another uses fewer accessories and cuts back on floor plans to keep costs in line. Clients are more likely to buy into a plan and accept compromises if honestly explained. One bathroom designer regularly substitutes lower-cost tiles to balance the spike in faucets, toilets and other items to maintain a project’s price. A builder found a unique solution to keep costs down: “We just sold a large house with four different kitchen cabinet brands to stay within budget.” When all else fails and pricing compromises aren’t viable, a potential solution is to aim for a different target audience. “I’m shifting my business towards high-income households that are willing to pay a premium for products,” offered one respondent.

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