Granite Countertops

In the last number of years, we've seen a democratization of granite countertops in homes. Years ago, granite was considered a premium luxury product that was exclusively available to upper-income households. However, in the last number of years the material has become extremely accessible at lower and lower price points. What is driving this trend and is the housing recession going to result in this material being available at the same affordable price points?

ITEM #	LENGTH	DEPTH	PRICE
SH-77A-25X22.25	25"	22-1/4"	$412.74
SH-77A-31X22.25	31"	22-1/4"	$424.12
SH-77A-37X22.25	37"	22-1/4"	$509.57
SH-77A-49X22.25	49"	22-1/4"	$596.64
SH-77A-61X22.25	61"	22-1/4"	$688.60
SH-77A-61X22.25DB	61"	22-1/4" (Double Bowl)	$817.10

The large macro trend that has caused a dramatic price drop in granite countertops is globalization. Granite has always been mined from various quarries around the world. The development of containers and the ease of global trade have increased supply to developed nations such as the United States and Canada. Today, most of the granite available in the North American markets originates from China or Brazil. This glut of imports has forced the traditional western European manufacturers of granite to reduce their pricing in order to compete. All of these forces combined have dramatically reduced pricing and increased the availability of the material.

Additionally, the number of granite fabricators capable of working with the raw slabs has increased. As entrepreneurs saw an opportunity to fabricate and distribute the materials to consumers and local home builders, they began to buy more equipment and open new fabrication facilities. This surge in competition further reduced profit margins for the industry participants, but that reduction further made the material available to the mass market.

Once the major home improvement suppliers embraced granite counter tops for the masses, we saw a tipping point of prices. These major retailers went directly to China and imported standard sizes for kitchen and bathroom cabinetry. Now, consumers and trade professionals were no longer subjected to waiting for a fabricator to rework their granite. Instead, they could simply walk in a store and walk out with the materials they needed. As the rest of the industry wholesalers and retailers saw this trend, they were also forced to purchase the material to accommodate the requests their consumers now had. Incremental sales resulted in websites geared to selling building materials now also selling the product. These e-commerce sites drove down profit margins and even began to supply materials to home builders and the trade.

This vicious cycle pushed prices lower and lower until the housing market finally collapsed. At this point, there are simply too many granite countertop fabricators, retailers, and wholesalers in the supply chain. Many have already closed and gone out of business due to the sharp drop-off in demand. In spite of the reduction of demand, prices have held at the lower end of the price spectrum. As long as globalization allows imports of Chinese and Brazilian materials in to the domestic market, these prices will continue to be suppressed. This is a positive deflationary force that hurts retailers, but strongly benefits consumers. Once the supply wears down in the market place and the marginal companies operating with losses go out of business, it is possible for the major retailers to gain some pricing power. Until then, consumers can enjoy exotic granite countertops at incredible prices. Materials once only available to upper income households are now available to the masses.

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