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What Will Drive Window & Door Sales In 2023?
What lies ahead for window and door sales and the economy generally is difficult to call writes Ryan Johnson, group managing director for Emplas, as he looks at the facets that will affect our fortunes.
Energy costs remain at record highs for business and consumers. On the one hand that’s placing a squeeze on household incomes. On the other, it gives them a reason to invest as savings become greater and payback times are cut.
Inflation
Inflation, which loomed large over the UK economy throughout 2022, peaked at 11% in Q4. Going into 2023, it will continue to put pressure on household budgets but is expected to fall back to 5% by the end of the year.
Inflation and higher interest rates mean real wages are falling. Consumer confidence will be fragile at the start of 2023 but with employment still high and inflation coming down, we can expect it to recover by the second half of the year – especially if fuel and energy costs stablilise.
Sales prospects
The people behind the Business Pilot CRM system for installers tell us that year-on-year leads and sales were both down 10% in November 2022 – but the previous year had seen huge demand and thus a fall back was always predicted. According to the ONS, the number of applications made for home improvement works in 2021 rose by more than a quarter compared to pre-pandemic levels. That was never going to be sustained in 2022 let alone into 2023.
Flush has entered the mainstream
We’ve seen massive growth in sales of Flush products from Profile 22 and AluK in the last two years. We expect that to continue to grow as flush products push beyond heritage replacement markets to a far wider range of installations.
Will the housing market crash?
At the time of writing, the housing market had cooled with a 1.4% fall in November, although remains in growth (4.4% year-on-year) for the year as a whole. Forecasts for the market in 2023 suggest a softening but a far more modest 5% and not the crash forecast in October. That’s important because it means people will retain equity in their properties, with the potential to release it for home improvements.
The energy crisis creates opportunity
At an upper limit of £3,000 on ‘average household bills’, the Energy Price Guarantee may have pulled homeowners back from a cliff edge but still represent roughly double what they were paying before April 2022. As it stands, it’s also only a two-year offer so if energy prices remain high, end-users will still face increased costs by April 2024. With new energy efficient windows offering savings of up to £1,400 a year and a significantly shorter payback time, it makes investing in home improvements if you can afford to, make sense.
Being targeted will pay
Baby-boomers born between 1946 and 1965 and to a lesser degree, Generation X (born 1966-81) have accumulated large amounts of housing equity, through rampant house-price inflation. This has supported a wave of spending that has gradually lifted spending levels within older age groups. With housing prices likely to hold-firm, older people will have greater equity and will be more willing to spend in the year ahead.
The people who spend on home improvements still have cash
According to the ONS almost half of the spending on home improvement in the ten years from 2011 to 2020 came from the upper fifth of households by income, with almost 80% of the spend from the top half by income. These are people with money who in the current energy crisis have an opportunity to control their future costs through a moderate spend now.
Glass is going to be a crunch point
Energy costs create opportunity but they also create pressure on business. The Energy Bill Relief Scheme which fixed energy prices for business for six-months from October is helping but it runs out on 31 March. Many businesses, including glass suppliers which use energy in high volumes, remain vulnerable. Consolidation in glass supply should be expected and that will make the supply chain fragile.
Sustainability
We’re working to lower our carbon footprint, streamline our manufacturing processes, use less energy and create less waste throughout our business. We work in the commercial sector and being able to evidence your environmental credentials is a pre-requisite to doing business. We’re seeing that cross over into home improvement. In 2023, it’s not going to define sales but it is going to contribute to them.
Picture: Ryan Johnson of Emplas.
Article written by Cathryn Ellis
15th December 2022