Despite warnings and press released warning the industry about resisting entering a new race to the bottom and competing solely on price to win new business, the reality is that we are already in one and have been for some time.
History repeats itself as the saying goes, and it seems as though the sector is fully willing to plough on ahead and do the exact same thing it has done in the past. And no doubt in a year or so, when there is another burst of companies going to the wall, we’ll all throw our hands up in disbelief and wonder what went wrong.
Repeating the same mistake
Another saying that I like is: “the definition of insanity is doing the same thing over and over again but expecting different results”. That one is attributed to Albert Einstein, and I think we can all agree, he probably knew what he was talking about.
Right now, our industry is doing the same exact thing it has always done, and will somehow expect a different result.
For months now, I, as I am sure many others of you out there have as well, been getting communications, usually via email, advertising all sorts of fenestration products at maddeningly low prices and often unbelievable turnaround times. So whilst some of the sector has been trying to warn not to engage in a new race to the bottom as market conditions become tougher, we seem unable to stop the momentum behind this new price-driven panic for new business.
We have done this before. We know what happens. Margins that are barely there disappear. We’re already in a downturn which means even a modest further drop in demand, say 5-10% will be more than enough to pull the rug from some companies.
Despite the fact we all know what happens in a typical race to the bottom cycle, we’re doing it all over again. It is like a panic sets in and we seem to just revert to the default setting of selling on the cheapest possible price in the hopes that it will turn things around. Do we have any other setting or is this the only true platform the mass fenestration market has been built on?
Quality, service, choice
The really frustrating thing about all of this is that we know there are better and more sustainable ways to sell. We have been banging on about it for years. Certainly for as long as I have run this site. And that is to sell on quality and good service. I would add to that product choice as well. These are all very strong USPs that when executed properly by any business in the fenestration supply chain should be able to find success with.
I appreciate that we have gone through a very long period of high price inflation, and that has left the cost of our products significantly higher than they were in 2020. But you get what you pay for and as simple as that point is, it is true. Higher prices can always be justified so long as the quality of the product and service by the seller reflects that.
For example, we sell Spitfire doors at our family installations business as you likely know. You’ll also likely know that their doors certainly are not the cheapest in the industry. Perhaps some of the most expensive in fact. Yet, in the last week or so we have sold an S200, stunning S500 with side lights and an S600 pivot door. We’re also awaiting a stunning Black gloss S500 with side lights going into a large renovation project we have now started.
These doors, especially the S500 range, retail comfortably over £10,000. Off the bat, yes that it a lot of money, and yes we market these to a certain client. But the art in selling such a high end door is showing the customer why they cost as much as they do. You cannot sell a product like this on price. You also cannot just stick an £11k price tag on a door and hope to sell one with minimal effort. We have a very detailed and personal approach to clients looking at this range of doors and it works. We sell them and we are hoping to sell even more of them in 2024.
The Spitfire doors example is an extreme one. But I am using it to illustrate the point that be it a window, composite door, bi-folding door, lantern roof or sky light, our wares can be sold on quality, customer service and choice and therefore command a more profitable and sustainable price for the business. All whilst the client knows they are getting good value for that product.
The outlook for the start of 2024 looks about as tough as 2023 did. January could be a very rough month as the hangover from Christmas spending and seasonally quiet periods combine. It may be a month where we see more industry casualties.
Inflation still remains well above the 2% target and the cost of living crisis has not gone away. With the UK becoming a stagnant economy with no obvious catalyst in sight to change that, the next 12 months could look very much like the last 12 months.
That being said, there remains avenues of opportunity. They lie in the higher end of the market such as aluminium and timber, and they lie in front of any company that is willing to put in the effort to sell properly. New business certainly isn’t going to walk through the door. This isn’t 2020 or 2021 when most of us simply had to just turn up to work and wait for the clients to flood in. It’s going to take a lot of hard work and creativity to tap into the niches and products where there is still a lot of growth to be found.
Selling on price alone is not the thing that is going to work. In a high cost environment against flatlining demand and external economic problems, undercutting and a race to the bottom is only going to accelerate the downfall of some of our companies. Avoid that route if you can. Sell on product quality, customer service and choice and trust the process.
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