Neil Cooper-Smith, senior analyst, Business Pilot
The Business Pilot Barometer offers monthly analysis of the key trends defining window and door retail. It draws on real industry data collated by Business Pilot, the cloud-based business management tool developed by installers, for installers.
October was another month of political and economic change on an historic scale. Despite this (or perhaps because of it?) homeowners have continued to spend on home improvements.
Leads, and sales were up 19% in October on September, more than reversing the falls recorded in September on August, and more than offsetting a small drop in average order values (8%) to £4,848. The industry did good business in October, despite double-digit inflation, warnings of an impending downturn in the economy and a projected fall in property prices. So, what’s driving sales? And more importantly, will it continue?
The most important factor is house prices. We know that if people have equity and are confident in the housing market, they are more likely to spend on improving their properties.
At present, and despite the warnings of a drop, year-on-year growth stands at 8.1%. It should be noted however that this figure has been inflated by high demand at the start of this year.
13% fewer homes came onto the market in October compared to the five-year average, compounding the imbalance in supply and demand, and keeping house prices higher, even though levels of activity are lower. The longer-term outlook is that prices will fall. Lloyds Banking Group warned last month that it expects a drop of around 8% next year as the cost of living crisis hits.
The flip side of this is that one of the major driving force of inflation, the increased cost of energy, gives homeowners a tangible reason to invest. Former PM Liz Truss had pledged to guarantee that average energy bills would be capped at £2,500 a year for two years. One of the first things that her new chancellor Jeremy Hunt did was to distance the government from this commitment, trimming the deal to six months, ahead of an ominous-sounding review.
With average bills at £2,500, they remain at more than £1,200 than they were in March of this year. Energy market analysts warn that a withdrawal of government funding could push bills as high as £4,684 from April, and at best to £3,923, which is still £1,423 more than the current cap.
Tracking Google Trends evidences a very clear correlation between Ofgem announcements on energy costs and interest in new windows and home energy efficiency improvements more broadly. With house prices still historically high, homeowners will be more likely to have the confidence to invest in improving the energy efficiency of their properties in the run up to the end of the year at least. Spiralling energy costs give them an incentive.
Against this backdrop, mining your data for those projects that you didn’t close or win, and retargeting them, could deliver big results. How many leads went cold earlier in the year, last year? Why?
Business Pilot allows you to bring this information to your fingertips in an instant, helping you to target and retarget prospects while controlling operational costs and maximising profitability. The decisions you make today will determine where your business goes in the next 12 months. So if you’re still running your business on unlinked spreadsheets and gut feeling, it’s time to get in touch.
