2023 Cabinet Sales – Part I

Canary in a Coal Mine

For those youngsters that aren’t familiar with the “Canary in a Coal Mine” saying, it’s basically an early warning of bad times to come. Ya think?

I recently read a number of articles that I think have shed some light on what 2023 might look like for the Kitchen and Bath Industry. I decided to just focus on cabinets in this blog since they are typically the largest ticket item for a Dealer.

With that said, I also would like to remind both people that read my blog that these are solely my own predictions which means they are probably wrong. 😊

Okay, enough of that nonsense. Let’s move on to the show.

I think that cabinet sales for 2023 will drop 25-30% and maybe even more. Ouch! How dare me to say such a thing. Well, here is the information that I collected and threw into a Jimmy Buffet Margaritaville blender and hit high! Wow! It turned out to be some strong brew.

  1. Interest rates are not going to turn around any time soon. The Fed has made it clear that they will continue to raise them even after they see inflation coming down, or unemployment going up. Yesterday’s raise of .75 basis points on the interest rate is something that we will see in the foreseeable future.
  2. This is going to impact how many new homes will be sold next year big time! In fact, we have already seen a huge drop in 2022
    • January 2022-the annualized rate of new single-family homes being sold in the U.S. was pegged at 831K
    • July 2022-the annualized rate continued its downward path and dropped to 511K. That is the lowest since 1952 and a 38.5% decline from the first of the year.
      • Of course, that was not spread equally across the country. (year over year #’s)
        1. South -12.1%
        1. Midwest -20.6%
        1. West -13.3%
        1. Northeast +13.3%
      • The 30-year fixed mortgage rate was last seen at 6.43%. That’s over double what people are used to.
  3. Inflation – Talk about more good news! 😊 The goal for inflation should be around 2-3% which they have raised to 3-4%. We are currently running double those numbers. They have been spotted anywhere between 8-9% for the most part of this year. Those are also some numbers that should make your head get woozy.
  4. Remodeling – If there is somewhat of a bright side to this information, it’s that remodeling is not going to drop as much as new construction but drop it will. And not just a single digit either. I think that one will decline at least 20%. Remember that we have been on a hayride over the last 2 years. Why such a big drop moving forward?  Home prices are dropping as quick as heads in the sand that think this is only a blip on the radar screen. This will not be a “V” shaped recovery. More like a “U” shape with an unbeknownst length of time at the bottom. My guess is at least through 2023 and probably a bit longer.
  5. Worldwide economic conditions – Russia’s war on the Ukraine has certainly not helped things with supply chains that were already running amuck before it even started.
  6. Europe’s recession is only going to get worse and will probably hang around for the next couple of years. Cheers Mate….
  7. China’s economy has not been anything you want to write home about, and for good reason. Somehow, they overbuilt to the point where new construction can be described as sluggish at best. Think taking 10 Quaaludes and then trying to walk much less run. It ain’t going to happen.

Well, I believe we have covered most of the backdrop that we are facing right now and thru 2023.

Part II will cover what Kitchen and Bath Dealers will need to do to minimize the chance of shuttering their doors during this downturn. And trust me on this one, it will happen to a fair number of businesses in our industry. Think 35,000 Kitchen and Bath Dealers with more than 5,000 less after this recession. That’s about a 15% drop in the number of current dealers.

In the meantime, start with new ways of helping your business by adding the “Kitchen Planner” to your website to help generate new leads along with making your consumer’s digital experience that much better. The sale we have going on is bad to the bone.

P.S. If anybody thinks I wrote this blog only because I wanted to sell the Planner…then you should expect to see me at the upcoming KBIS wearing skinny jeans! 😊

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