Why Wayne Dance, the MD of InHouse, is urging the industry to be cautious about the months ahead, despite the recent unprecedented surge in demand for kitchen and bathroom renovations brought on by the pandemic
With lockdowns lifted and regulations over, it’s easy to think that we need to make the most of the current situation to make up for everything we’ve lost during the past 18 months – in terms of business and opportunities. Fortunately, we are one of the lucky industries that have seen phenomenal growth.
Those who know me will recognise that I’m not a pessimist. I firmly believe we should grab every opportunity as it presents itself, yet this year has made me pause for thought. American author William A Ward once said: “The pessimist complains about the wind. The optimist expects it to change. The realist adjusts the sails.” And that’s what I am. A realist.
While the country has been stuck at home, unable to travel, and some unable to work, the home has taken precedence. For those who were planning a new kitchen or bathroom, time-scales have been brought forward. The demands for additional space and the pressures on working from home have meant that people have prioritised home improvements – and rightly so.
But, as the world opens back up, other things will take priority. We’ll all be rushing back to restaurants. Having saved money on holidays, we’ll be looking to take a proper trip away – a trip of a lifetime – to make up for the lost experiences and to build new memories, should we find ourselves locked down again.
The question I ask you is whether we might be robbing Peter to pay Paul. That by making the most of this year, we’ll be making future years more barren.
That’s why I urge caution.
Globally, we’ve faced a huge ordeal and for us in the KBB industry, we’ve come through relatively unscathed. We just need to be cautious that we’re not creating a vacuum in business that we’ll feel next year, or even the year after.
Supply and demand
Coronavirus has affected world trade. There have been delays in manufacturing, delays in exporting goods and delays in the supply chain. Add Brexit to this, and then the blockage in the Suez Canal earlier this year, which had a $40 billion (£29bn) impact on the global supply chain.
Demand is currently outstripping supply, and this is causing issues. One customer I heard of had been waiting eight weeks for a bathroom installer to come and fit their new bathroom. The installer never showed, presumably having received better-paid work elsewhere.
When this customer went back out to the market to obtain a new quote, the price for installation had doubled – in just two months.
When trades are busy, their prices go up. Customer service can get shoddy. While customers might have their backs against the wall, they will likely pay. However, this creates ill will and you can be sure they won’t leave good reviews or recommendations. Brands can easily be damaged by this type of short-term opportunism. It’s not good business and it’s not good for your reputation.
We’re in danger of this in the KBB industry. When certain components for your appliances are stuck in China, manufacturers pay over the odds for goods in short supply. Prices for their appliances go up and, by the way, they rarely, if ever, go back down.
Retailers need to pass these price increases on to customers to protect their margins. And that makes goods more expensive, reducing the number of people who can afford them. It’s a compound effect of supply-chain economics and it’s the customer who ends up feeling the brunt of the impact.
Wise manufacturers are those who take a long-term view. They work with their retailers to protect their margins, so customers are protected from price hikes. When planning for Brexit, Schüller decided not to pass on any increases to their retailers. There were no increased delivery costs – they are still free of charge. And there is confirmation that there will only be a standard inflation-based price increase next year.
That’s just one of the benefits of working with a family firm. They take the long-term view and are not at the beck and call of the quarterly demands of the City or Stock Exchange.
So, before we all rush out and put our prices up because there’s greater demand for our kitchens, bedrooms and bathrooms, I urge you to stop and think. What’s more important to us? Short-term gains or long-term survival? I would encourage you to adjust your sales accordingly, even if the wind is behind you.