Has the cost of living affected the home improvement market?

With the cost of living rising, the KBB industry and financial experts are undecided about whether this crisis will affect the home improvement boom.

Experts in the KBB and retail sectors say that retailers should be cautious and expect the current boom to slow down as the cost of living impacts consumer spending. However, some expect the boom to continue to the end of the year as the mid to top-end market will most likely be unaffected by the crisis.

Much of the recent home improvement boom has come from people staying at home and people not being able to travel. However, with foreign travel opening back up again fully, the home improvement industry is battling against the travel industry for consumer spending.

KPMG found in a recent survey that those planning to spend savings intend to buy the following big-ticket items, 38% said on a holiday while 32% said home improvements. While 21% said, they wanted to spend on home appliances or home electronics.

The British Institute of Kitchen, Bedroom & Bathroom Installation (BiKBBI) has recommended ‘caution’ to the KBB industry as BiKBBI CEO Damian Walters said big-ticket items – like home improvements – are likely to fall.

Walters said: “The home improvement sector has flourished over the last two years, but we must not assume that the nation’s current rate of investment in their homes will continue into 2023. The data we are seeing clearly demonstrates a decline in consumer confidence, with predictions that the cost of living will continue to rise throughout 2022. Its highly probably that, as disposable income reduces, the decline we are already seeing in big-ticket spending will continue to fall.”

Managing director of Kitchen Bathroom Buying Group (KBBG), Bill Miller, is optimistic about the home improvement boom continuing, as he has been for many months. KBBG members are still experiencing a high level of enquiries, and therefore the buying group predicts good sales to continue well into 2022.

Miller said: “The rising cost of living will certainly hold many consumers back from undertaking a large renovation project and will compete with their finances. There will be a sense of caution on spending large amounts of money while consumers get to grips with their monthly expenditure while energy, fuel and food prices continue to rise. However, this could spur consumers on to consider making their home future-proof for the long-term, by investing in new and sustainable technology in an effort to reduce on going costs.”

There is some hope for the mid to high-end retailer who will be less likely to be affected by short-term changes, believes Jayne Barber, the founder of analyst JKMR. Barber said: Over the next 12 months, disposable incomes will be affected by rising utility costs and taxes, and consumer confidence in committing to ‘big-ticket’ purchases may start to waver.

“Rising interest rates will also potentially reduce budgets for major refurbishment. These impacts, however, are likely to disproportionately affect mass volume retailers, rather than kitchen studios that are more focused on higher-end budgets.”

For those taking a broader view of the market and not just focusing on the KBB industry, British Retail Consortium’s chief executive, Helen Dickinson OBE, has seen the rise in the cost of living hurt consumer confidence, big-ticket items being hit the hardest.

Dickinson explained: “The rising cost of living has crushed consumer confidence and put the brakes on consumer spending. Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation. Big-ticket items have been hit hardest, as consumers reigned in spending on furniture, electricals and other homeware; compounded by delays on goods coming from China.”

Hear more on the changing retail and housing markets in the latest episode of The kbbreview Podcast. Click on the player below to listen now or simply search ‘kbbreview’ in your podcast app of choice.

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