The downturn in the housing market is also affecting the kitchen trade

Order a kitchen and have it installed at home within eight days? That is possible, says Ron van den Berg, commercial director of kitchen supplier DKG Group. Not long ago it was different. When the global economy started up again after the corona crisis, logistics supply lines jammed and shortages of materials and personnel affected almost every sector, it took at least four weeks for a customer to receive a kitchen. And that could be even worse: at competitor Roel Oostra, director of Keukenspectrum Groep, delivery of a kitchen sometimes took six months. Now that period is ten to twelve weeks.

It is one of the consequences of the ‘lesser market’ that Van den Berg sees for his sector.

Rising construction costs and shortages on the labor market play a role in this, as do the turnaround in the housing market. Prices are falling, the number of homes purchased has been declining since the summer of last year. In the fourth quarter, sales of existing homes – not new construction – were 8 percent down on one year previously the NVM calculated last month. 70 percent of all estate agents are members of this association. The number of new construction transactions even fell by about 46 percent.

Adjacent sectors, such as the kitchen and bathroom trade, are also noticing this decline. The residential sector got off to a “good start” last year, according to the newspaper retail organization INRetail, but during the course of the year the clientele fell. In the last quarter of last year, turnover in the home furnishing sector was about 7 percent lower than one year previously. Kitchen specialty stores noticed this the most in this sector: they saw their turnover fall by 12 percent.

Corona years

The latest figures contrast with the past corona years, when consumers were forced to stay at home. Money that they could not spend on the catering industry and on holiday was partly spent on interior design and improvement of their own home, it concluded. Central Bureau of Statistics earlier.

The current decline is noticeable in the stores, says Ron van den Berg of DKG Group. The number of private customers and appointments has decreased by about 15 percent this year. His group (about 900 employees, turnover of 270 million euros in 2022) includes the Bruynzeel Kitchens and Keller Kitchens brands. The company has approximately thirty stores and a factory in Bergen op Zoom.

DKG Groep installs kitchens in new homes and also focuses on the ‘replacement market’. This concerns, for example, private individuals who are tired of their own kitchen and want a new one, or housing associations who replace an old kitchen after about twenty years. The decline in sales of new-build and older homes has an impact on both areas, says Van den Berg. “People who replace a kitchen often do so when they move into a new home,” he says. “They don’t like the kitchen in the house, and they think: let me tackle it right away.”

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In new homes, a new kitchen must be installed anyway. Orders for this often arrive at DKG one and a half to two years before delivery of a home, says the commercial director. That is when the construction of a project actually starts: often when 70 percent of the homes to be delivered have been sold.

“From the third quarter of last year, we noticed a hesitation in new-build projects that had yet to start construction,” says Van den Berg. Interest rates rose, as did construction costs, while house prices fell. Project developers began to have doubts: will my homes still be profitable when they are finished? Van den Berg: “And then such a developer will take stock again. We have already experienced a number of times that projects were canceled or were delayed.”

Canceled orders

So far, the number of canceled orders has been limited, says Van den Berg: he estimates about 5 percent. “But I expect further delays this year. When I speak to other kitchen retailers, I hear the expectation that the number of orders will decrease by about 15 percent this year.”

The fact that there are fewer new homes will affect the order book for kitchen retailers in another way. “We count five relocation movements for new construction,” says director Roel Oostra of Keukenspectrum Groep. In other words, every new-build home sold results in four relocations of people moving on. And some of those movers also want a new kitchen in the house they just moved into. “It is a domino effect. People who change homes, that is actually the engine of our work.”

Oostra also saw its 32 stores become quieter and the number of sales fell, by about 15 percent in January. But, he says, compared to recent years, the Kitchen Spectrum Group is now running “normally”. His company (150 employees, turnover of 60 million euros in 2022) has two kitchen brands: ‘premium’ brand KeukenCoach and the cheaper I-KOOK. “From 2018, the industry overheated. First the very low interest rates, then the corona time. People were at home, wanting to fix up their houses.”

By ‘overheated’, Oostra refers to the shortage of professionals to design, make and assemble kitchens, and that equipment and parts – especially chips – were not available on the world market. “After two or three years of boiling, it is not so bad that sales are now falling.”

Prices up

The waiting times may be shorter, but customers are not better off financially. Both Oostra and Van den Berg say that their products are becoming increasingly expensive, mainly due to more expensive building materials and higher wages. Both say their kitchens have increased in price, on average, about 20 percent since last year. Oostra: “We also see that people want an increasingly luxurious kitchen. An ordinary tap no longer works, it must now be one that provides boiling or sparkling water. That drives prices up.”