Many KBB companies could be in danger if a slowdown in the market occurs, a supplier has warned.
JJO sales and marketing director John Pollitt (pictured) claimed companies with fragile finances may risk going out of business as uncertainty increases surrounding Brexit.
“There are many businesses – retailers, distributors and manufacturers – whose rainy-day fund is virtually non-existent and may well cease to trade due to this bump in the road,” he explained.
However, he went on to state that the “doomsday” scenario, speculated on by the media, has not happened and that the KBB industry shouldn’t panic over Brexit.
Many areas of the industry are seeing growth despite the uncertainty, he argued, while accepting that the full ramifications of a vote to leave were still unknown.
“There is a commonly held belief that the UK public bring on a self-fulfilling prophecy, when the media speculates on the prospect of entering recession,” he said. “Business in general has slowed since the referendum. Industry giants, such as Howdens and AO.com, have both referred to this within their annual statements. Retail has suffered, with bricks and mortar being hit harder than online.
“Visa has recently reported that consumer spending has fallen over a 12-month period, for the first time since September 2013. Again, further evidence of consumers tightening the purse strings.”
While new-build housing is currently seeing strong performance, Pollitt went on to argue that there could be future decline in this market.
According to the Nationwide House Price Index, there has been a third consecutive monthly decline, which is the first since 2009.
“The uncertainty caused by the result of the general election will only prolong the temporary paralysis,” Pollitt added. “When a degree of political certainty is restored, consumer confidence will increase and high-street footfall will improve.”
He concluded: “Trading over the ages has always ebbed and flowed and will continue to do so. The most crucial factor is that retailers and manufacturers choose their trading partners wisely, purchasing from financially strong suppliers, who can survive any temporary decline in demand.”