Whether you want to hear it or not, the next 12-18 months are going to be a very rough ride. The boom is firmly behind us, and the only question now is how long and how deep the coming recession will be.
It’s time to party like it’s 2008.
A situation like no other
Unlike previous downturns and recessions, there has generally been a singular issue at play. For example, the Great Financial Crisis was caused as a result of Lehman Brothers going bust which caused the entire global financial system to almost implode. The resulting actions to save the banking system around the world sent most of it into a recession which took the best part of a decade to fully recover from.
At that time, however, there was no inflation crisis, no cost of living crisis, no energy crisis and no major wars in eastern Europe. There was just the financial crisis, and let’s be honest, that was a big enough problem in itself.
I am struggling to remember a time when the world and our country have ever been so unstable. There are so many massive distractions and problems to concern ourselves with. Inflation alone is a massive singular issue. But we also have the cost of living crisis which is crippling consumer confidence and the ability to freely spend. War in Europe was certainly not at the forefront of people’s minds at the start of the year, yet here we are. That in itself has further exacerbated the energy crisis which affects every single home and business. Now we have newer problems such as an impending mortgage crisis which could ruin millions of households, caused by gargantuan ineptitude from a brand new Government that seem completely unqualified to handle the problems we all face.
At the best of times, it’s difficult enough to remain focused when there is a single world-altering event ongoing which affects everything we do. Right now we have about half a dozen and every single one affects what we do in the world of fenestration either directly or indirectly.
Although the waters we are in are firmly uncharted, there are things we can do, by drawing on past experience, to help navigate our way through what is going to be a very tough period.
How to navigate this recession
As per all previous recessions, people will rein in spending. Caution is the order of the day. But the answer to that caution, if you are trying to sell windows and doors to the general public, is to make sure that the reasons you give for people to buy are as strong as possible. Just because people are more cautious doesn’t mean they’ll never buy new windows, we just have to enhance our argument so strongly that the homeowner feels confident in their purchase.
Thankfully UK fenestration has two very strong USPs right now. One of them is energy efficiency and one is design.
We have never been so blessed with products that look sexy. Yes, we have to stop thinking of ourselves as a dowdy old plastic sector and consider ourselves as very much a desirable and sexy industry that transforms homes with the work that we do. There is little else more persuasive or powerful than the lure of good design. Just look at how popular Lamborghini and Ferrari are! We have to harness the power of imagery to excite the end user and feel inspired into investing in their homes even in these harsh times.
The second and perhaps most important USP we have right now is the ability for new windows and doors to save people money on their energy bills. Given one of the most pressing crises is the cost of energy, this seems perhaps the single biggest and most influential USP the fenestration sector has.
We know our products have one of the biggest and most immediate impacts in reducing energy loss in homes. We have to refine and amplify that message as quickly and efficiently as possible. Although the initial outlay for many homeowners will be in the thousands of pounds, it is the long-term investment and reduction in energy loss that we have to press home. If we can do this effectively I believe we can keep our sector’s products at the forefront of people’s minds.
There are a number of things installers need to do as well as fabricators. Installers could look at expanding their product portfolios to attract new revenue streams. We are currently undergoing this process at our place and finding some early success with it. This is not a quick thing to do however and does require planning and likely investment in showrooms and marketing.
Fabricators also need to be active in supporting their installers. I really would urge any major fabricator that doesn’t offer an aluminium product to do so. It’s the only growth area in the sector and installers are quickly turning to aluminium as a way to bring in new business. It would be wise not to miss out on this significant opportunity.
Marketing tools also need to be given to installers by their fabricators. It could be social media graphics for general distribution, an additional point of sale marketing to brighten up showroom spaces, help with website updates, a wider choice of product options, branded brochures and other literature. I hope that in the coming months fabricators will be in touch with their clients to gauge what requirements installers need to help generate new business.
My other bit of advice is on the financial side. Many businesses up and down the fenestration supply chain will have invested to grow over the past couple of years to manage the boom that followed the end of the first lockdown. It’s likely a lot of that investment will be in loans and borrowing. Debt that carries interest. With the Bank of England set to hike interest rates even further in November and well beyond that, the cost of that debt is going to get very expensive very quickly. Suddenly that loan that looked risk-free with ultra-low interest rates now looks rather troublesome. If you can, work on reducing loans and other debt with interest as soon as you can. Even the company credit card. In the same way that mortgages are suddenly becoming much more expensive, other loans and debt will be hit in the same way. I fear that those companies who took out loans over the last two years could be badly exposed.
Finally, everyone needs to increase marketing to whoever their client base is. The worst thing you can do in a recession, where business activity slows, is to make things worse by voluntarily withdrawing marketing to save some pounds. You only compound the problems and make them worse. Now is very much the time to become more visible. To elevate your message to more companies and people. To drive home your core message and USPs and to galvanise your argument to spend. It doesn’t have to cost a lot of money, it just has to be done right, and in 2022 there are a plethora of tools and services out there to make that happen.
Make no mistake, the period that we’re now entering is going to be rough as hell. There will be casualties along the way. There may even be another General Election before too long. The recession will be pretty long and pretty deep. But where there is a crisis there is always opportunity and our industry is uniquely placed to be able to take advantage of the energy situation as our products are firmly part of the solution.
Be proactive, step up marketing, cut company debts and find ways to become more efficient. There is a lot of opportunity to be had once we come out of the other side of this.
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