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The Eurocell Conservatory Roof Report
Conservatory Fabricators forecast Stronger Market for 2006
The Eurocell Conservatory Roof Quarterly Trends Report appears in Conservatory Design & Build. As well as the quarterly trend survey, monthly trackers are published in intervening months in Glass Age.
Highlights this quarter:
- A balance of 14% of conservatory fabricators reported a fall in sales in October to December 2005 compared with the previous three months (chart 1).
- A net* 9% of fabricators also sold less in October to December 2005 compared with the same three months in 2004 (chart 2).
- Looking ahead, a net 56% of firms expect sales to rise in January to March 2006 compared with the fourth quarter of 2005.
- Fabricators are also positive in their year-on-year forecasts, with a net 37% anticipating sales growth over the next three months compared with the same period last year (chart 3).
*The difference between the percentage of companies reporting an increase over those reporting a decrease is the net balance.
| Regional Review | South | Midlands | North |
| Quarter-on-Quarter sales: October - December 05 compared with July - September 05 | -29%% | 7% | -17% |
| Year-on-Year sales: October - December 05 compared with October - December 04 | -21% | 3% | -8% |
| Forecast sales Quarter-on-Quarter: January - March compared with October - December 05 | 62% | 63% | 43% |
| Forecast sales Year-on-Year: January - March 06 compared with January - March 05 | 32% | 43% | 36% |
| Company Size Review | Small | Medium | Large |
| Quarter-on-Quarter sales: October - December 05 compared with July - September 05 | -2% | -10% | -63% |
| Year-on-Year sales: October - December 05 compared with October - December 04 | -8% | -13% | -6% |
| Forecast sales Quarter-on-Quarter: January - March compared with October - December 05 | 48% | 55% | 81% |
| Forecast sales Year-on-Year: January - March 06 compared with January - March 05 | 34% | 26% | 69% |
"In 2005, demand for conservatories dropped by approximately 20% as the economy slowed, credit limits exhausted and equity became diluted. However, we are an established company with a good reputation and high quality standards, and in order to secure our market share and a better year ahead we are pro-actively expanding our marketing and lead generation strategy. We will especially be focusing on the under 45's sector, although we have also seen a greater demand for larger, bespoke, more elaborate conservatories in the 45+ age group."I estimate that in 2006 there will be enough work for seven out of ten conservatory companies in our area."
Mr Paul Hines, Director
B Warm Windows & Conservatories Ltd, Hinckley
Prices
The average price of an installed conservatory in December was £6,805 (chart 4). This is a drop of 0.5% from £6,841 in Septemeber. The price excludes dwarf walls, bases and VAT.
Companies in the North (£7,380) reported higher average prices than those in the South (£6,821) or Midlands (£6,117).
By company size, average conservatory prices were higher for large firms (£7,988) than mid-sized (£7,124) or small fabricators (£6,284).
Conservatory Styles
Forty two per cent of conservatories installed in December were Edwardians/Georgians. Victorians accounted for 37%, while 17% were lean-to conservatories. Only 4% of those sold were 'Other' styles (chart 5).
"Due to a downturn in the economy last year, consumers across the country were wary of spending, which resulted in a drop in sales of conservatories in 2005 compared with 2004."So far this year we have seen a slowdown in enquiries by at least 10% and we have to work harder to get leads. We have increased our spending on lead generation by 4% this year, revamping our website and advertising in different directories beacause increasing brand awareness is very important."
Mr Tony Annear, Domestic Sales Manager
CAW (Cornwall) Ltd., Truro
Outlook
Thirty two per cent of fabricators are more confident now about the overall prospects for the conservatory market than three months ago (chart 7). Small firms (net 36%) and fabricators in the Midlands (43%) are most bullish.
On blance, 11% of fabricators expected the conservatory market to improve by the end of 2005 comared with 2004. Of those forecasting growth, 78% expected an increase of up to 20% (chart 8).
Problems
The main problems facing conservatory fabricators in the last three months were lack of confidence in the market (63%), price cutting (62%) and margin squeeze (58%). The single biggest problem facing fabricators though was a lack of sales leads, mentioned by 21% of respondents.
Overview
"While the conservatory market and indeed the UK economy are still underperforming" says Mike Rigby, whose company Michael Rigby Associates produced this report, "predictions of doom and gloom have not come true. We've escaped the worst with a soft landing, at least for now. In the long term it's a different story."During the last quarter of 2005 America has been steadily recovering and has watched its economy grow along with a rise in consumer confidence levels. India is still booming, and China looks on course to displace Britain as the world's fourth biggest economy. Eastern Europe has also continued its growth, but the old EU countries are still struggling to bounce back.
"The UK in particular has watched its manufacturing output fall sharply, and public spending, which has fuelled the economy and employment, has eased back. However it is not all bad news. The housing market has stabilised and interest rates are relatively low.
"The UK in particular has watched its manufacturing output fall sharply, and public spending, which has fuelled the economy and employment, has eased back. However it is not all bad news. The housing market has stabilised and interest rates are relatively low.
"Despite the confusing picture, there are clues that point towards an upturn in the Conservatory market. With consumers regaining their confidence, new government targets to up the amount of houses built per year, and the settling down of the economy, the home improvement sector will see a modest recovery. Home-owners still want more space - especially affordable space - and the opportunity to better their lifestyle, and now they seem to be regaining their confidence to pay, and borrow for it. If the industry responds equally confidently, the market will recover and grow in 2006."
Comment
"The past year has been difficult for conservatories" says David Leng, Managing Director of Eurocell, who sponsor this survey. "Not as difficult as replacement windows, but at least fabricators and installers selling replacement windows had notice that the market was getting harder and more competitive. There were warning signs from as early as 2000, whereas the conservatory market was storming away until the last quarter of 2004. It was a shock that a market with big potential could stumble so suddenly. But when consumer confidence wilts under rising interest rates and a weaker house market homeowners spend less and put a hold on their wish list."They haven't gone away, and gloomier scenarios have not materialised. Housing is recovering, and with it consumer confidence. Homeowners are being tempted back to work their way down their wish list, and conservatories remain high on their lists. What is different from the conservatory boom times of 2003-2004 is the number of companies competing for their business, and a more careful spending climate. It is a buyers market. In common with other retail markets consumers expect companies to compete for their business, in value for money and in interest. They do not expect to have to make all the running themselves. Proactive companies, who invest more in marketing, improve their selling, take the trouble to differentiate themselves and tell potential customers why they should buy from them rather than all the others who offer conservatories will do well in a big market with big potential. Those who wait for the telephone to ring could have lots of time on their hands in 2006."
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The Eurocell Conservatory Roof Report, a quarterly trends survey, is produced by Michael Rigby Associates, and sponsored by Eurocell Profiles Ltd. For survey details contact Lucia Di Stazio, Michael Rigby Associates (01453 521621). |
