As producer and consumer prices climb higher, retailers report their customers are researching — and buying — more online. Those with well-established e-commerce operations are coping with the shift, but stores don’t feel the pinch.
These were among the findings in the latest NKBA/John Burns Kitchen & Bath Market Index (KBMI) report on the 4th quarter of 2021. According to more than 850 NKBA members who responded to the quarterly survey, business remains strong, with an overall KBMI rating of 82.1, reflecting vigorous expansion in the closing months of 2021. Their future vision earned a hearty 76.6 rating, up six points from the prior quarter. But anecdotal responses indicate that inflationary pressures are affecting business.
For months, inflation has been a hot topic, with consumer prices up nearly 8% compared to a year ago. Vendors, plagued by supply-chain woes in getting materials to produce merchandise and labor shortages, keep raising prices to retailers, who pass those price hikes on to consumers. In the survey, 98% of retailers said vendors raised prices in Q4, and 40% said prices on wood goods were the most common increases.
Kitchen and bath retailers reported 11-16% price increases across all nine product categories tracked. Bathtub prices rose 16%, while tile, cabinets, and vanities were each up 13%. Refrigerators, stoves/ranges, toilets, and countertops spiked 12%, and faucets rose 11% in the three months. Retailers reported increasing discomfort from their customers about the price hikes. Consumers frequently respond by searching online for the best deals and availability — and with free shipping as an incentive to buy, they’ll look anywhere in the country.
“My customers have never been more informed than they are now,” said one retailer. “They come into the store having researched a few product options ahead of time.”
“I’ve noticed more consumers coming into my store and leaving without a purchase,” stated another. “When I inquire, they say they’re going to purchase something online. Some walk-in customers are taking the quotes we create for them and plugging them in online, where they’re finding they can get things faster than the lead-times we can give them.”
Retailers also report that availability remains consumers’ top priority, but product quality is a close second.
“Prices continue to rise with entry-level, so many people feel like they’re already spending the money, so they might as well pay a little more for high-end products. They want quality and are remodeling with the idea that they’re not moving anytime soon.”
As long as consumers have to wait for deliveries, often with weeks stretching into months, they don’t mind spending more for higher-quality materials and merchandise. Online research has led consumers to be open to lesser-known brands with availability.
“Customers are asking for brands I’ve never heard of. They are doing research online and then coming into the store to see if I sell it.”
Average foot traffic at brick-and-mortar stores was nearly flat, as retailers pointed to increased online shopping. Compared to Q3 2021, average foot traffic in Q4 inched up just 2%. Retailers attributed some of the expected slowdowns to the holiday season — appliances and countertops aren’t typical gift items — but the majority said in-store product shortages are the major factor driving more e-commerce sales.
So how are retailers coping? Some are stocking up on inventory, and others are building their e-commerce operations.
“Luckily, we have a robust online store,” said one dealer. “Our e-commerce sales have gone up significantly over the past few months. We’re offering brands not available in stores.”