As we begin 2020, we are looking to build on a fantastic year in 2019. The market grew by only 0.7% in value but we outperformed this for an incredible result. In 2020, the market is forecast to grow by 1.3%, offering more potential for growth, though we will need to protect the gains we made last year.
We will talk about our strategy for 2020 in more detail in the January 31 edition of The Bubble, which follows the annual sales conference on January 28 and 29. In this edition, we are looking at some of the main factors which could impact our commercial performance this year.
1. Brexit
December’s General Election result gave Boris Johnson’s Conservative party a clear House of Commons majority to get Brexit over the line. Feedback from across various industries was that the lack of clarity over Brexit led to uncertainty in business. Now we know Brexit will happen, its effects will start to become clear and we can react accordingly.
Tom Burdon, Channel Director – Residential, said: “Tough market conditions are still present but demand for quality housing remains. Should consumer confidence return to normal levels then Ideal Standard are well placed to benefit due to the great work by the whole residential team building a strong pipeline and converting opportunities that are still to be built."
2. Improving our performance in RMI
RMI (repair, maintenance, improvement) is a huge market where our share is low, and therefore there is a lot of potential to increase this. We expect to see an increase in share as a result of our work over the past year to improve our online presence, including the launches with Amazon and VictoriaPlum.com, and our relationships with the rapidly growing and disruptive fixed price merchants, like ScrewFix and Toolstation.
Business Development Director Neil Bills said: “Statistics show that 90% of consumers start their journey online, gaining inspiration for their bathroom, but the final purchase is still 50/50 online versus traditional showroom. Therefore, it’s crucial they get a good experience when they’re viewing our product solutions online but the benefits are wider than just growing our revenue through an online channel as it will support our showroom channel too.
“The growing position of Screwfix and Toolstation is equally important. They have a combined estate of around 1,000 stores in the UK and this looks like to continue to grow through 2020 by 15% to 20%. Their breadth of offer and service proposition is something we cannot ignore.”
3. Growth in new build residential
This is predicted to hit 1.9% in 2020, compared to 0.6% in 2019, and remains a core area for us. New build residential is an area where we are already strong and will be looking for more opportunities to take share from competitors.
Tom said: “We’ll have a continued focus on high rise and the regional housebuilders we don’t already work with. We have been building a considerable order book in these markets so we should start to realise the specification work we have been doing over the past two years. We will be pushing the new products that are coming through, including the Atelier Collections, but it will be some time before developments being specified this year will actually be under construction.”
4. Modern methods of construction
The UK is a long way from achieving the government’s 300,000 new homes per year target. Traditional builders will not deliver this target, so modern methods of construction (MMC), such as off-site, are viewed as the most likely source for closing that gap. The sector is very much in its infancy but a number of big companies have invested large sums of money in developing off-site construction facilities, often aided by government support through Homes England, so this is clearly a trend that has huge market potential.
Business Development Director Neil Bills said: “Through 2019 we increased our network and our understanding of the MMC market through industry bodies and new relationships. We understand the hierarchy of needs of the market, and have been working on new bathroom solutions with developers to support this specific area of the market.
“The timing is critical. In 2019 over £200m was directly invested in MMC developers by large scale investors such as Goldman Sachs. Everything in construction takes time so we are positioning ourselves to be ready and at the forefront when the volume from such investment starts pulling through.”
5. The end of austerity
There is talk of an end to austerity, which should mean more government spending on major projects. Plans for 40 hospitals were announced by Boris Johnson last year, although only six are confirmed and some of these are renovations.
Tim Chappell, Channel Director – Non-Residential, said: “You could say that the announcement about the new hospitals was a sign that more money was being spent. Of course, hospitals take years to build so it will take time for any increase in government spending to have a transactional impact on us, but the work begins now to secure them for the future.”