Near the end of March, we saw a double-dose of bad financial news. First, inflation rose to 6.2%, which exceeded forecasts of 6%. Rising inflation has prompted the Bank of England to start to raise interest rates from record lows to 0.75%. The BoE is expected to keep raising rates until inflation comes under control, but there is a long way to go until that happens.
Second, the hit to the economy from the cost of living crisis was laid bare by both the Chancellor in his Spring Statement and the OBR. Growth in the UK has been revised down from 6% to 3.8% this year. Perhaps more starkly, the independent OBR has said that even with the measures announced by the Chancellor in his Spring Statement, the UK is set to see the biggest hit to living standards since the 1950s.
Marketing now matters
All of this matters to UK fenestration, and we can already see the effects of the changing economy on our industry, with warnings and articles now being published warning on the changing landscape.
Our industry has certainly not been immune from the spiral of price increases that many other sectors have been hammered with. The price of our goods has skyrocketed in the past two years, along with the cost of labour and transport. Those increases have been passed down to the consumer over those past two years, but you can feel a sense of unease growing about how much more we can pass on, else risking hitting a ceiling and some portions of the public simply not being able to afford our products.
The fact is, the outlook this year and likely next is going to be a lot harder than the last two. Most believe that from the second quarter onwards even more will feel the effects of inflation and slam the brakes on spending on big-ticket items. New windows and doors are in that bracket. It is going to take some time for economic conditions to settle down, and the war in Ukraine has lengthened that further.
The steps our industry takes next will be vitally important if we are to navigate this next period as smoothly as possible. We can either stick our heads in the sand, deny what is happening and pretend everything is fine. Or, educate ourselves about what is happening, adapt once again and hit this new challenge head-on.
That means marketing very much matters. Not just the industry marketing to itself, but to the public. Despite the rising cost of gas and electricity, there is a very major role our industry can play. The good news is that the products we sell can contribute massively to improving the energy efficiency of homes. Let’s leave the trickle vents aside for the moment. There is a very clear marketing opportunity for our sector to take and we need to be making the most of it.
Installation companies need to start being a lot more vocal on social media and whatever other advertising platforms they use to promote the energy efficiency side of things. Fabricators and other suppliers that have a route to consumers should also be promoting the same message. Yes, we have suffered wild price increases on our products, but our products are also part of the solution. It would have been nice to see the Chancellor recognise new windows and doors alongside solar panels and heat pumps when it came to lowering VAT.
Inflation changing our market
These past two years of surging demand and wild price increases have changed our market. Maybe forever. Pre-pandemic we were talking about trying to prevent another race to the bottom on price. We knew that with a raft of growing product niches, like aluminium bi-folding doors and sliders, solid roofs and flush windows, we had a chance to reset how we go about selling our wares to the general public. We knew that we had to avoid ripping the margins out of premium products and starting a price race where no one wins. I was worried that we weren’t learning our lessons as some of the marketing activities from certain installers and fabricators appeared to be following the same path as previous generations.
Then the pandemic came and turned everything on its head. Lockdown upended everything and upon our return, we were all met with demand we simply could not handle. Supply chains crumbled and the spiral of higher inflation soon began.
Suddenly, the regular emails about aluminium bi-folds at 37p per leaf glazed dried up. The industry was quickly realising that in an environment where raw material prices were out of control, sales based on the lowest possible prices would be the worst road to go down.
I have seen a lot more focus on customer service, product quality, and choice as a means of selling in both the B2B and B2C sides of the industry. It is a much more professional approach and although I believe it has been forced upon some, rather than it being done by choice, I hope it stays that way when inflation becomes more stable. This is a more sustainable, higher-quality approach to sales and it will do the sector the world of good in many ways if we can stick to these principles for as long as we can.
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