Where next for the bathroom market?

June 2009

The bathroom market, like every sector, has hit hard times and ‘survival of the fittest’ appears to be the obvious mantra.  One company bucking the trend is Lakes Bathrooms and sales director Robin Craddock shares his insight for how to be one of the winners.

We are all painfully aware of the catastrophic state of the construction industry and its impact on the bathroom market has been severe.  Most recently (March 2009) Bovis Homes announced that they had put new housebuilding on hold as their finance director Neil Cooper made clear, "We've gone into this year building effectively nothing," he said.

Meanwhile the Government has stepped in to shore up house building and the public purse now funds about half of all home construction.  According to Savills, the property consultancy, about half of the 60,000 housing starts forecast for 2009 were likely to be affordable housing and a significant proportion of the other half is likely to have some public sector involvement.

This gives us a clue that controlled pricing and best value are going to be key for any plumbing or bathroom firm concerned in the housing market in the coming years.  So to achieve that leaness a very firm hand on financial control and savvy operation will be critical. 

Smart companies are now watching cashflow like a lifesupport monitor and utilising all advantages available.  A good example of this is a retailer or installer that either takes stock on extended credit terms or with a buy-back agreement.  Brighter still is the company that avoids the capital burden of stock altogether.  This is only possible if the manufacturer can offer swift and efficient delivery, so that the seller can win positive cashflow by receiving the consumer’s money long before they have to pay the supplier.

With finance so hard to come by this is the very time to capitalise on the value in supplier relationships and shop around if necessary.  We have certainly won business as retailers and installers look around for better support and ready stock.

Ray of hope

One surprising ray of hope for the industry is hidden in the grim news that the rate of house sales has fallen to its lowest in at least 30 years, according to figures from the Royal Institute of Chartered Surveyors.

This isn’t all doom, however, as homeowners who are put off moving do appear to be improving instead.  Our local planning department reported that there is always a flow of householder planning applications and that these represent almost half of the total they receive. 

Digging deeper to establish whether this local view was representative of a national picture, there’s reassurance from the Development Control Statistics for England from the Department of Communities and Local Government.  Perhaps surprisingly, it is reported that total planning decisions for the period April 2007 to March 2008 were up slightly on the previous year. 

Encouraging findings

Planning permission evidence does seem to show some encouragement for those serving the consumer and it is set to improve further.  New government regulations relaxed some aspects of planning permission in October last year and most extensions can now avoid the process of formal permission, providing they meet certain size criteria.  This move to cut red tape and make the planning process easier and faster should also encourage homeowners to enhance their existing property.

Bathrooms are well proven to exceed initial investment figures in house resale values.   According to Nationwide Building Society’s research, adding an en suite or second bathroom can add five per cent to a home’s value.  Renewing a bathroom suite is also recognised to make a house more saleable so if a homeowner does need to cash in then one of the factors that could help them sell more quickly is a good looking bathroom – something to point out to any prospective customer.

Looking backwards to see forwards

Historically in recession consumers will move away from higher priced products and pay closer scrutiny to the value proposition.  That doesn’t mean cheapest is best or will sell most strongly, but it does mean we all need to pay careful attention to the value in what we sell, with a realistic and competitive approach to our pricing.

Consumers are canny and have time to weigh up options carefully.  To win their favour we have to present them with practical quality but wrapped with aspirational benefits.  Those companies that add value – such as adding a stay-clean coating to a shower enclosure without hiking the price - are bound to win out.