Remember how at the end of 2014 the various market reports were predicting strong growth for the window and door industry over the next few years? Well, according to the latest market report from Palmer Market Research, the strength of that recovery might be starting to fall away. Here’s what you need to know.
“Significantly less optimistic”
This is how PMR described their feelings about the window and door industry over the in comparison to a year before:
However, 12 months on, the story is rather different. According to Robert Palmer, PMR’s director, “We are significantly less optimistic than we were last year. Overall for the sector, very sluggish performance is forecast over the period to 2019.” In the recently-published 2015 report, Palmer predicts that from an installed value of £4.12 billion in 2014 the market will have grown by less than 5% by 2019.
That rate of growth is definitely not anything to be boasting about. Although the growth in the market was 4.5%, which isn’t bad. But it does go to show how sharp PMR believes the slow down will be when the growth over the next four years will be 5%.
The PMR report summary in full:
As the report reveals, in 2014 the market actually did grow, by (a not insubstantial) 4.5% in volume terms. Yet focus in a little closer, and we see three very different stories emerge.
The glazing market in the new housing sector rocketed by 23%, as housing starts moved to their highest level since 2007, and the move to detached houses continued, with window installations growing to 1.37m units, the highest for seven years.
Over the next few years, a continued demand for new housing, offset by uncertainty around rising interest rates, planning delays and labour availability, lead Palmer to continuing but slowing growth in this sector.
But it’s in home improvements where things seem to have stalled, and this is critical, since the sector represents nearly 80% of the total market. Says Palmer, “In spite of a benign, improving economy, with strong GDP growth, glazing home improvements seem to have faltered”.
Why is this? Palmer believes the slowdown in property transactions through 2014 and into the first part of 2015 – crucial since a significant percentage of home improvements are carried out soon after purchase, the current necessity of homeowners to continue paying back debt rather than extracting equity, and the issue of saturation in the critical window replacement market – which just gets worse, with over 91% of windows now replaced at least once, all contribute. The outcome is dramatic, with a GfK poll cited in the PMR report revealing ever-decreasing interest among homeowners in spending large sums on home improvements.
The social housing sector actually did rather better than expected, with the first volume and value growth in window sales for nine years. That said, government cost-saving initiatives, from the end of the Decent Homes programme to the likely reintroduction of Right to Buy, means the outlook is far from rosy, with the market forecast to contract every year to 2019.
One trend may offer some relief to those in the industry: apparently driven by the fashion for “family room” type extensions, bifold doors and long-term underperformers conservatories (particularly “orangeries”), showed growth, both in the home improvement sector, and overall. Palmer predicts bifold doors to become the strongest performer among patio door types by 2019.
And surprisingly, for a product thought to be in long term decline, the market for conservatories will continue to increase. Incidence increased in both new build and home improvements in 2014, and the forecast is for 96,200 in 2019, way below peak years, but 15% up on the 2014 figure.
However, the window market is forecast to contract over the years to 2019, and growth in entrance doors will be marginal at best.
PVCU’s overall market share continues to decrease, and is expected to reduce further, from 62% (by installed value) in 2014 to 58% in 2019, as composites, wood and aluminium, which is particularly suitable for bifold doors, products grow their share.
See the report
Not much good news to read there, unless you sell and install windows and doors in new-builds, and even then Palmer aren’t that hot on that.
The bad news lies in the residential sector, where that makes up 80% of the wider window and door market. As the report indicates, the focus for home owners to reduce debts, and a slowdown in the property market, are contributing to slower growth. I think the most worrying thing is the poll carried out for PMR which came out with results saying home owners are less and less wanting to spend large amounts on home improvements. Not good news for those positioned at the higher and of the market.
There is some good news though in the conservatory sector, with PMR predicting a 15% rise in that part of the market by 2019.
There’s more good news for those producing and installing bi-folding doors, with PMR forecasting the product to be king of the patio door world by 2019.
How worried should we be?
Although the report makes for bad headlines, it’s not yet time to start panicking about the future of the window and door economy.
Many things can change in the space of a few years. Just look at how different this year’s report is to last year. As quickly as things can change in a negative way, they can change in a positive way too.
There are areas of positivity within the general gloom of the report. Bi-folding doors and glazed extensions are areas of good growth and installers should focus on those areas to stave off the effects of a general drop in window and door activity.
My own personal views is that the industry has been steady this year in comparison to 2014. Last year had a frenzied sense to it, with business much busier than most thought it would be. This year though that frantic energy has been replaced with something a bit more sedate. Business in general has been has been good, perhaps not earth shattering like some had wanted and predicted. But the report summary above really explains why.
Moving forward over the next few years to 2019, syscos, fabricators and installers are all going to have to work very hard if they want to increase market share, grow their sales and of course maintain good margins. We’re all going to have to continue to diversify to keep revenue lines fresh. It’s not going to be easy, but I’m confident that our industry is innovative and hard working enough to prove this report wrong.
Doesn’t this just prove that these ‘Research Reports’ are not to be taken too seriously? If last year’s positive forecast is now being contradicted then why should we believe this year’s pessimistic one? There’s lots of business out there to be had & successful companies will buck any trend & generate their own increased sales year on year despite the overall market trends.
Totally agree with you Russell. When I first read the report I was surprised at how negative it was. 2014 was so good, yes 2015 probably isn’t as explosive as we thought it might be, but it has still been a good year for many, with the quality companies finding growth through new products and diversification.
Thanks for your comment!