As the year draws to a close, KBB retailers will be reviewing their business success over the past year and planning for 2024.

With rising mortgage rates and the cost-of-living crisis still having a major impact on consumer spending power this year, it is likely that this will continue into the first quarter of next year. Mortgage uncertainty is a major factor impacting consumer confidence, as homeowners with mortgage deals ending are contemplating how much more they will have to pay. The retail intelligence expert MRI Software (formerly MRI Springboard) has predicted that around half-a-million households are facing the end of their fixed-rate mortgages in early 2024, which means a significant rise in their monthly outgoings.

This uncertainty is likely to be more of an issue in the middle market, rather than the upper end, where those that have disposable income are more able to invest in their home. Many KBSA members have seen an increase in project values during 2023, with luxury finishes and high-end appliances driving up sales. This upper end of the market is changing rapidly, providing substantial opportunities for growth. Those retailers that invest in displays to tap into this market can inspire consumers to spend more and will undoubtedly benefit as we move into 2024.

This trend is reflected in the recent report from JKMR. Predictions from Jayne Barber note that rising budgets will be sufficient to ensure value growth for the studio sector, with the higher end of the market better insulated from wider economic stress.

The report says that studio value growth is expected to be better than that seen in the market in its entirety over the next few years.

Finding opportunities

The report also states that sluggish new-build activity, rising mortgage costs, and house price deflation (or, at best, inflation at much lower rates than seen up until late 2022) will result in kitchen installations dropping in 2023 and further in 2024, before they start to pick up again in 2025.

The lower end of the market is more likely to see this drop in business, with the middle market feeling the squeeze. Household incomes are under pressure in these market sectors, making them most likely to delay major purchases. A survey by the Office for National Statistics found that 40% of people currently paying rent or a mortgage are finding it difficult to afford these payments, compared with 30% at the same time last year.

We are likely to see the ‘not move but improve’ sector of the market drive forward sales in 2024, but there is no doubt that it will remain a challenge to win new business.

An election in 2024 could provide a boost, as cautious pre-election consumers become more positive once the new government is in place, usually with promises of brighter times ahead. Retailers that have a strong pipeline of new business to see them into 2024 will be best prepared to ride the lull and be well placed to pick up the increase afterwards.

KBB retailers have proved how flexible they can be over the past few years, being able to adapt to changes in trading conditions by focusing on what they do best and continuing to target those customers that still have the spending power.

Investing in a business is vital to capture those high-end customers that have the spending power.

Cutting back on marketing in a less buoyant market is a false economy. With fewer customers available, it pays to continue to promote the business to ensure a consistent pipeline of enquiries.

Independent retailers must make the most of opportunities to highlight the benefits of dealing with smaller, customer-focused businesses that care, and that deliver on their promises. Always striving to be the best.

Working with other independent businesses that share these values to host events and promotions is a great way to boost the customer base and capture new customers. Also broadening your horizons to maybe look at adding new products, particularly appliances, into the showroom, can entice customers to buy. Inspiration is going to be key in 2024 – there is no room for mediocre.

Aside from the possibility of another global crisis that KBB retailers may have to dodge, I do believe that there’s still a massive opportunity for independents in this current market and through the year ahead.

The biggest opportunity for growth in 2024 is...

High-end luxury

Tap into the aspirational luxury market where bricks really are resilient. These customers are well-equipped to deal with the economic landscape and will be happy to invest if they can see the quality and the service.