There are a couple of things I think it’s important to keep in mind in what is a very distressing period for industry – but more importantly, personally. I’m not going to pretend that it’s business as usual, it’s not, the figures in our latest barometer make that clear.
I am, however, for a moment going to focus on things that do perhaps at least provide a balance. The first of these is that the industry had entered a period of growth. This included the significant uplift in January, with leads jumping by 97%. This was sustained in February, although at a slightly reduced rate – particularly at the tail end of the month when the impact of the challenge we currently face, started to hit home.
It wasn’t just us who were tracking growth, consumer confidence was up – as were house prices with the average asking price topping £300,000 just £40 short of an all-time record. The IHS Markit/The Chartered Institute of Procurement & Supply’s Purchasing Managers’ Index (PMI) construction survey, also revealed the strongest expansion of house building activity since July 2018.
Our figures show homeowners were similarly prepared to invest. Conversion rates in March hit 37.7% – that was higher than at any time this year.
Lead times in March were also up to an average of 17.7 days, suggesting that installers order books were looking healthy.
Then came the ‘lockdown’ on March 23rd. Up until that point, sales had slowed but held-up. These were down by 32% in March compared to February, already as we had identified in our last report, slightly down on January.
The impact of the crisis is best illustrated, however, by figures for new leads, which dropped by 39% on February – again, already marginally down on January. Market collapse? Well, we’d say it’s come close. Every installer, every business, everyone, is feeling the impact.
This is, however, if an exceptionally sharp shock, is going to be short. House price inflation has slowed – but it is not forecast to crash. That means homeowners will retain equity. Government intervention, means that most people for now, are also retaining their jobs. Interest rates are at record lows and cash is cheap.
Does that mean that consumers will be prepared to spend ‘on the other side’? That depends on timeframes and scale of the impact.
What we know for sure is that the demand in retail was there before Coronavirus hit. I’m not quite ready to put my head on the block and say we will see a ‘bounce’ immediately afterwards, but we don’t see anything to suggest that it will simply evaporate.
My final point is perhaps the most important one. As a retail business you are not ‘a passenger’, you have an opportunity to shape your outcomes. This is a time to review, restructure and to ensure that your business is fit for what we can be certain, will be a new commercial landscape.
We’re working with our customers to help them to be ready.