This is a guest post by Mike Rigby of MRA Marketing:
This is a very peculiar recession.
It’s Government induced, and it was imposed abruptly so it felt like the economy was hitting a wall. Most shops and business were closed within two or three weeks of each other, and most working people sent home and told to stay there. Millions are being paid 80% of their salary. All this is having some massive unintended effects.
It’s the deepest recession for 300 years, according to the Governor of the Bank of England, but it doesn’t feel like it to many homeowners. With money coming in and nowhere to spend it, total forced savings are racking up fast. Yes, we are spending a lot more online, but there are limits to what you can or feel like spending.
The Bank of England says bank deposits rose £13.1 billion in March, a record increase. GoCompare estimates that UK drivers spent £267m less on fuel in the strictest phase of lockdown. Kantar, the retail research company, confirms we are spending a lot more on online groceries, but £1bn less on snacks and snack lunches for work. Nationwide says 40% of its customers have more disposable income than before the lockdown.
Peel Hunt, the stockbroker, calculates that UK households will save £120 billion in 2020 compared with £38.2 billion in 2019. That’s an additional £82 billion extra in savings and current accounts. That’s almost as much as the Government spends on schools and teachers. It’s a huge amount to try and spend on food and booze (20% up) and online purchases. Better off upper-middle class households are spending less than half their disposable income.
What will homeowners spend this huge amount of money on? Ordinarily, they’d be spending a lot of it on travel and holidays, concerts, and shows, and entertaining. But most people will not be able to spend on these things, or not be comfortable doing so. According to polls, two thirds of us will be wary of taking holidays abroad, or getting on a train or boat, or taking a flight any time soon.
A lot of this money is likely to be spent on improving the home. In their enforced lockdown, homeowners have been looking at the inside and outside of their homes. They’ve been thinking what needs fixing, what could be improved that would make it more comfortable and convenient and look better. What might make it more attractive to buy when they sell?
Paul Roughan, Trade Merchants Sales Director Dulux Trade, and BMBI’s Expert for Paint, says: “With the onset of the pandemic, in the latter part of March and all of April, the trade market was almost virtually shut down whilst the consumer market absolutely boomed. Everyone wanted to decorate and stock up to decorate. The few trade merchants open were only servicing heartland customers with click and collect/deliver orders to service essential projects. Other trades and some consumers, who may have gone to builders’ merchants, went instead to consumer stores that remained open throughout, such as B&M, The Range and Wilko; stores with food lines, hence classed as essential.”
The economy is not likely to bounce back instantly, but there’s a lot of money sloshing around and homeowners have been thinking of spending a chunk of it on improving their home. Now would be a good time to start marketing to reach out to them to get your fair share
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