As we near the end of 2023 I have had time to reflect upon where my predictions and hopes were at this time last year.

The confidence levels in December 2022 were very low for various reasons, but primarily because of uncertainty in fuel, raw materials, staffing and strong government leadership. The first half of 2023 did nothing to change this.

Having been in this industry for over 30 years, I have experienced many economic highs and lows, but in the main there have been seasonal predictors that one could rely on such as January/February/September/October and November highs, and lows in April/July/August and December. These months were normally in tune with predicted annual advertising campaigns, however confidence levels this year continued to run hot and cold like water from a faulty tap.

There have been fits and starts and the makings of decent runs on retail business, but as quickly as good enquiries came in, they have dried up again.

This year has seen a far more considered approach from our ‘normal’ clientele. Ordinarily we measure, present and sell a consistent percentage of projects from that process. This process normally takes no more than two to three weeks.

Delayed decisions

This year however, we have seen the majority of presentations end on a positive note, a polite thank you from the prospect with no sale and no commitment to meet again. As the year progressed and we moved beyond August, we have seen a large number of these early prospects reappear, some as long as six months from the initial presentation with the larger sales being closed first.

Household expenditure continues to be squeezed with fuel and food costs still sitting at extremely high levels. Insurance rises across the board are now starting to bite with spare parts, materials and staffing costs now being passed straight to the consumer. On the bright side, average pay increases are outstripping the rate of inflation.

While it looks likely we will avoid another recession, this can’t be discounted when there are two wars currently raging.

My overall experience in 2023 has been a slow start, as expected, but a far longer return to some level of confidence. There has been a substantial decrease in lower end sales with very obvious discounting. The higher end of the market would not normally be this sluggish during difficult economic periods, but this year we have even been seeing caution in this sector.

My prediction for 2024 is that the higher end of the market will continue to grow in confidence and those at this end will see the first signs of recovery as higher material and labour costs are accepted. This end of the marketplace is looking for value and reassurance that they are making a solid purchase. Those placed at the higher end offering supply only or supply and install should therefore see a reasonably consistent and profitable order book.

Businesses positioned at the lower to middle end of the market could very well be the hardest hit. This sector may have to drive down prices to meet the expectations of hard-pressed homeowners coming out of fixed-rate mortgages against the already higher cost of living. Clientele in this sector may even end up shelving larger purchases and focusing on leisure spending.

The impact of this could see more of the larger multiples diversifying into different areas in an effort to keep business alive.

There could also be a move towards mergers between like-minded bathroom or kitchen retail and manufacturer businesses in an effort to streamline resources.

Whichever end of the market any KBB business is in the most important element is to make the most out of the resources you have. Carry out a proper analysis of what your business is capable of achieving and what you need to change to make this happen.

AI is highly effective in delivering a highly personalised shopping experience in a way that can be enhanced by experienced retail staff. This algorithm is being pushed in a very subtle way that we have all become used to in everyday life and there is no reason why its principles cannot be delivered by bricks-and-mortar retailers in the same way that online dealers already do.

Whichever direction a company is taken, the fundamentals remain the same – look after your staff and they will look after your company. You could write a dozen books on what makes good service, but if your staff don’t have the desire to give it, then it is meaningless.

THE BIGGEST OPPORTUNITY FOR RETAILERS IN 2024 IS...

DIVERSIFICATION

Retailers who look at new and different revenue streams will be the ones growing in 2024. We have been steadily moving into "whole of house" installations and this is where we've been getting our biggest orders