Kbb News
The shape of things to come
We ask a cross-section of suppliers to the KBB markets what tips they had to help companies survive in 2009.
Truth be told, nobody know for sure how tough 2009 is going to be. We are told that property prices are dropping at record levels. But these commentators often overlook that the house prices are falling from an all-time high, so it's hardly surprising that records are being set by the decline.'It is also vital to bear in mind that any downturn is always part of a cycle and the market will pick up again - we must prepare for that.' David Osborne, md, Roman Showers.
What we can say with a degree of certainty that the days of a plentiful supply of cheap credit are over and any business that relied on this is going to have more than a few problems in the year ahead.
What we do not know yet is how hard the home improvement market is going to suffer, but most of our commentators see this part of the market doing quite well.However, we are talking about good quality projects to homes the owners plan to live in and enjoy the improvements they make, not a cheap kitchen or bathroom bought to 'do the place up' for a quick sale.
Excellent opportunities
Omar Beggs, product manager of Whale Pumps (www.whalepumps.com), says he believes 2009 will bring some excellent opportunities for new business in a variety of areas.'Spending may be going down, but there is still money flowing and the key is to identify small niche markets that added together can really help profitability,' he says.
'The economic downturn in the construction industry has not had the same severe effect in the refurbishment market,' he adds.'There is no doubt that 2009 will be challenging,' says Paul Tanner, head of sales and marketing at Waterfront (www.waterfrontbathrooms.com).
'It is at times like these that we all have to pull out all the stops. We need a clear focus with a development and growth strategy to continue to meet both our short-term and long-term goals.
'For everyone it is necessary to look for efficiency gains but when the tough times come it is important to lay solid foundations for future growth.'
Six-point plan
But what form should these "solid foundations" take? Philip Tutt a partner at 360 Integrated Marketing Solutions (www.360integrated.com) offers the following six-point plan for survival. Aimed primarily at manufacturers, it can also be adopted by most specialist retailers too.
'We know businesses that market themselves through a recession come out stronger and faster,' says Tutt, 'but only if that marketing is embraced by the audience and builds brand appeal. So, in 2009 above all:
- Be honest with yourself. Decide what makes your product or service stand out from the crowd.
- If you can't think of anything, create something – fast!
- Get a proper creative team to work this into a campaign. Spend smart not just big.
- Follow through with focused PR to create a persuasive narrative around your brand.
- Involve your retailers; they are your brand ambassadors. Ensure they understand and advocate not just how to specify your product, but the vision you are trying to communicate.
- Know your customers - they are probably more web savvy than you think, so make sure social networks are part of your promotional strategy.
It is clear that there is not a one-size-fits-all strategy for 2009. For some, product knowledge and training are crucial. For others, brand positioning is essential.
'When money is moving freely, retailers often don't have to be all that creative to get their share of it,' says Jane Rylands (Pic 1), marketing manager at Belling (www.belling.co.uk). 'But when market conditions tighten, the retailers who survive economic setbacks will be the ones who've received effective training and know their products well.
'For many small independents, training programs for unskilled employees are often not practical or possible, and for those who do offer training the budget is often one of the first things to be cut during a recession. We believe that effective sales training is an essential part of surviving a recession.'
'The top end of the market is not as affected by the economic downturn, so retailers should ensure they are servicing this sector of the market with their product offering,' suggests David Osborne (Pic 2), managing director of Roman Showers (www.roman-showers.com).
'The top end of the market means higher value sales and therefore the opportunity for increased margins. For this less affected sector of the market, you can maximise every sale with add-on sales, such as accessories, to further increase margins.
'Lower priced and non-branded products are finding the market much more difficult, so it is important to work with well known established brands that are more likely to survive.
'Manufacturers who are on track to survive the downturn will be bringing new products to market - it is therefore a good opportunity to update showrooms by adding new products to your displays, ready for when the market picks back up.
'Showrooms should work alongside suppliers to re-vamp their showrooms with the most up to date products.
'It is also vital to bear in mind that any downturn is always part of a cycle and the market will pick up again - we must prepare for that'.
Efficient and effective
'It is a good time to truly make your business efficient and effective,' adds Graham Gleave (Pic 3), national sales manager at ATAG UK (www.atag.co.uk). 'We will all be forced to work harder and question all aspects of our business. This doesn't mean cutting heads or not investing in stock but ensuring that your processes and procedures are as efficient as possible.
'With the rising fuel costs and the housing market decidedly cold, the consumer will retrench and stay at home, with the possibility of investing in it, rather than moving house - this will result in adding new appliances and changing out old ones.
'The rise in the cost of energy will mean that appliances will have to deliver a saving on their investment and it may mean consumers ditching their 10-year old appliances for new ones to get energy saving advantages, for example.
'With such poor returns on savings the consumer may well be looking to invest their hard earned cash in revamping their kitchen and will be looking to spend it wisely and carefully especially when it comes to appliance purchases.
'The "have it now" and "throw it away when a new colour or programme comes along" are things of the past. Everyone will be looking to brands that deliver long-term durability and reliability supported by long lasting and meaningful guarantees that will produce a return on their investment.'
Property market
The jury seems to be out on when the property market will kick in again. And by "kick in", we do not mean a return to the madness that was the property price boom of 2005-6, but more realistically when the present fall in house prices will stop.
Henneke Duistermaat (Pic 4), director of marketing at, Britannia Living Ltd (www.britannialiving.co.uk) predicts that confidence will return in Spring 2009. 'The Obama factor in the USA will give us all a boost and this will be supported by bargain hunters calling the bottom of the property market and by more bank lending becoming available.
'However, business will remain tough and no market growth should be expected. I would suggest companies focus on the needs of their customers, making sure they have the right offers for their target groups. The right offer may include a special deal or a value added promotion but could also mean new or improved products or even new technology.
'Make sure there is quality in everything you do, especially if it is customer-focused activity. Ensure you get the most out of your marketing spend and be careful about cutting costs as the brands that continue to invest will prosper once the market picks up.'
'The development of the high street into two distinct sectors will continue in 2009,' suggests Graham Ball (Pic 5), CEO of the KBSA (www.kbsa.org.uk).
'We will see some retailers going further down the discount price route as a means of hanging on to their sales and those who will offer the very different shopping experience of quality products with high levels of customer service' adds Ball.
'Retailers who can manage their costs but also maintain service levels will be well placed to retain their share of those customers who are willing to spend. There is likely to be little improvement in the housing market for some time and this will create opportunities from homeowners who will want to improve the home they are in, rather than even considering moving in the short term.'
Buying British?
We are frequently reminded that what we are all experiencing is a worldwide downturn in business rather than a situation that just applies to Dear Old Blighty. And with the pound shrinking in value against most other currencies - especially our good friend the Euro - is this not a good time to be buying British?
'The UK ceramic tile market has been dominated to the tune of 80 percent by imported products from Europe and beyond,' explains Nigel Croll, marketing manager for British Ceramic Tile (www.britishceramictile.com). 'In 2009 British manufacturers will regain some lost ground as imports become more expensive, and as the environmental debate favours those whose products are made locally and efficiently.
'Retailers will seek to lessen stock risk, tie less money up on products coming from abroad, so favouring British sources able to offer quality designs, service and value.
'Consumers will still seek style but will be polarised between those who can afford it and those who have to work to a budget and will perhaps begin migrating back to DIY.
'British manufacturers continue to concentrate on the UK market whilst overseas manufacturers, hit hard by the decline in their domestic markets and the demise of the US market, will be trying to sell their wares wherever possible. Their designs may well become less relevant to the UK market than ever before.'
In summary the advice from our industry friends is to concentrate on the quality, owner refurbishment market with well made, high value, products, sold by knowledgeable, well-trained staff and not to cut back on training and promotion no matter how tempting it may be to shave a few pounds off the marketing budget.
Chinese method
'Having tried the more traditional methods of predicting the future, palmistry, crystal balls, astrology and tasseography to no avail, for 2009 I have decided to use the Chinese method of fortune telling,' admits Iain McKinlay, managing director at Hansgrohe UK (www.hansgrohe.co.uk).
'2009 is the year of the ox, and it is predicted that it will be a good year for those who seek wealth, career advancement and wish to have general good luck. To achieve these goals you need to work hard and be resolute. In the world of predictions this sounds as good as any I have heard.
'This time next year, how many of today's readers of kbb News will still be in business? Whether you are a retailer, distributor, importer or manufacturer, it will not make any difference if you have not established your marketing plans for 2009 at least six months ago.
'There is nothing mystical or magical about January 1st. No matter how hard you work or how resolute you are, any good marketing plan will take six months to kick in.
'There will be casualties. Those retailers who did not choose their suppliers wisely. Those suppliers to the trade who have not invested in R&D, who have not looked to improve their services, who have battened down the hatches hoping it will all go away, will not be looking forward to the year of the Tiger in 2010.
'The next twelve months will sort the wheat from the chaff. The survivors will be all the stronger for having ridden the storm and more able to take advantage of the upturn in the market.
'So those who have your marketing plan in place, work hard, be resolute and wealth, advancement and good luck will surely follow.
'Kung Hei Fat Choy!'
Absolutely.
If you would like to share your thoughts on what the year has in store for us in KBB-land, please use the feedback form below.