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.
Despite massive political and economic upheaval, September was, on balance, an OK month for UK window and door sales. There was a small drop of 7% on sales compared to August, but average order values were up 8% at £4,848, and the conversion rate held firm. This was despite inflation running at just under 10% and an interest rate rise of 0.5 percentage points on 22 September.
Year-on-year, sales were down 27% on September 2021. But order values were up 40%. This paints a picture of a slower but still solid market, the home improvement sector making the inevitable readjustment post-boom and post-lockdown.
Higher average order values suggest that many homeowners have chosen to invest in whole-house window and door replacements. This is something we believe can be directly linked to consumer spend on improved home energy efficiency in the run up to the increase in average energy bills under the Energy Price Guarantee of £2,500.
The guarantee remains, in our view, a continuing area of opportunity for the window and door industry. At £2,500 it still represents an increase of more than £1,200 on where average household bills were before April. The point to emphasise here is the word ‘average’. For many homeowners, particularly those with larger properties, the bills will be far higher. This is the demographic which, despite current instability in the UK economy, is most likely to continue to have money to spend on home improvements.
Where we go from here is frankly impossible to call. Leads were down month-on-month in September by 14%. This would imply that the market was going to continue to cool going into October anyway.
It is our view that the response of markets to the ‘mini-budget’ on 23 September make it likely that this slowdown will accelerate. Although we would take care not to imply cause and effect, there appears to be a correlation between the government’s policy announcements at the end of the month and panic in the UK pensions sector, prompting the intervention seen from the Bank of England on 28 September.
The Bank has also made it clear that further increases in the base rate are likely, which prompted the scramble by homeowners to secure fixed rates, and a withdrawal of more than 300 mortgage products temporarily from the market. This has contributed to a lower availability of credit, which analysts argue eats up any potential gains for buyers from the changes to the stamp duty threshold announced by the Chancellor. This, they warn, could lead to stagnation in the housing market and a fall in house prices of 10% next year.
If stagnation and falling property value happens, it will reduce activity in the housing market but also lower the equity that people have in their homes. This may impact people’s willingness to invest.
Business Pilot can’t help you unpick government policy but it can help you maximise opportunities and your profitability, through business-critical management information, lead generation and automation of process, saving you time and money in the office and on site. How you negotiate the next few months may mean the difference between the success or failure of your business. Business Pilot helps you make an informed choice and to run your business better.
