Other than “when do you think things will get back to normal”, the other question I am always asked in my regular industry conversations is “how long do you think this will last?”
“This” being the insane level of demand from the general public for new fenestration-related home improvement products. As we are all acutely aware, we have barely held our heads above water to cope with record amounts of sales, driven by a renewed passion from homeowners to show their properties some love during the pandemic.
We don’t need to explore the reasons why we have this boom, we know the reasons. But when it comes to trying to figure out when this boom period will last, that answer is a bit more difficult to explain.
September, or forever?
Until now, I would say that the majority, although not exclusive, consensus is that the extreme levels of demand we have seen since May should level off and then drop once support schemes come to an end. In September of this year, a number of Government support schemes set up to help the country through the pandemic are due to end. The key one being the furlough scheme.
The thinking has been that once this ends, and the mask is taken away, only then will we see the damage done to the economy and then perhaps we will see a sharp slowdown. The logic of it makes sense. Millions of jobs continue to be supported by it, and not every single one can be saved. And if you’re still on furlough in an industry that is fully open, then it may not be a good outlook for that job. But, we have said this since May. When this ends, when that ends. It will go quiet in July. It will go quiet after Christmas. Furlough is masking everything. Those have been the claims. As time has ticked on, and the number on furlough gradually decreases, the reality is that demand in our sector has held up incredibly well.
We continue to be very well positioned as a sector. We have been one of a handful of sectors where people have been truly free to spend their money. With many receiving refunds for holidays, and money gradually building up in accounts because the normal routes to spend disposable income are closed, people have funnelled their spending power on their homes and gardens. These economic conditions have been very fortunate for us, and with foreign travel still not 100% certain, even after the press conference from the PM today, millions will still see home improvement projects as a necessity for this year.
Could the end of furlough spoil this come September? I’m not convinced it will. So long as there is no cliff-edge cut off to support, and the public is weaned off the various support packages gradually and carefully, I don’t think there is going to be a big slowdown as we enter the last quarter of the year. There have been a number of reports stating that the public is sat on more spare cash than ever before, which if this is indeed the case, gives the spending public quite a buffer to feel comfortable on.
So my second theory, one that I have been coming around to more and more these past few weeks, is that the pandemic and subsequent lockdown measures, has forced a permanent rethink in Britain about our homes and gardens. As a country, we have always had a certain level of appreciation for our homes and properties. You only need to look at the number of home improvements-related programmes on TV and online. But I would say that over the last year that connection between a person and home has become even stronger as we have been forced to make our personal spaces work for us in so many other ways. Home offices, bars, entertaining spaces etc. With more time being spent at home, the public has been forced to look at the imperfections in their properties and areas that need improvement.
Rather than things tailing off in September, I am starting to believe that there has been a more permanent shift in the minds of British homeowners. One that will put home improvement work further up the list of priorities. If this is indeed the case, then we could be looking at levels of demand that we’re currently experiencing for many more months. Perhaps even years.
That is assuming of course that there are no more major shocks in the story of the pandemic, and the economy doesn’t implode under the weight of debt, mass unemployment or something even worse.
Plan for the very busy medium term
If you were to ask me which of the two scenarios I think are more likely, I would have to say the latter of what I have just described. I was a believer at one point that once support packages were closed then perhaps a large economic hit would take place that would dampen enthusiasm for spending. But the longer this level of demand goes on, the more I believe that we have gone through a permanent shift in thinking.
So, let’s work with that scenario for now. Let’s assume for a moment that the public will continue to push home improvements further up their list of priorities for at least the medium term, maybe even longer. We could be looking at 3-5 years of this level of demand. Maybe things start to flatten out after, once international air travel resumes without restrictions in a meaningful way.
Three, perhaps five years of this level of sustained demand is going to put incredible pressure on the supply chain. We have had it for less than a year and in some places, the supply chain is already crumbling. Price increases, many in the double-digits, are becoming a weekly occurrence. There are now some quite severe product shortages, some hitting the composite sector hard. Manufacturing lead times are going beyond three months, and some installers are reporting work booked into the end of Q3 or even after. There is also an intense amount of stress in the sector right now, from top to bottom. That is not something that can or should be sustained for any long period of time. It is not healthy and any bravado or glorification of working too much and sleeping too little should be shut down.
Our sector has to find a way to scale up its operations now. Ideas may not be able to be implemented immediately, but they can be planned and initiated now, with the end goal to be to ease pressures in the months to come. If our industry is going to find itself at the centre of a year-long spending spree then we need to figure out how to make the most of it better than we are doing now. Because right now the residential part of our sector is selling more than it can make, causing constantly rising lead times, supply chain pressures and what I am almost certain about is endless mental health problems.
This year I believe we will continue to see records broken on a monthly basis. Installers, fabricators and systems companies are all reporting huge sales activity and does appear set solid for the rest of 2021. The question now remains, how are we going to manage demand this year? We will get better? Will we scale up? Will we adapt to be able to make the most of this unique set of circumstances?
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