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Letter to the editor

We must not talk markets down because of an inherent fear of change. With change comes opportunity and the key is spotting the right opportunities: this means finding the right products, for the right people, at the right time. Follow The Money.
2018: A Game of Two Halves?
As we get back into the new business year, it’s time to get out our crystal balls. Economists have already made their predictions which have come with a handful of health warnings. Perhaps most worryingly, Britain is set to have the worst wage growth of any wealthy nation next year, ranking behind Italy, Greece and Hungary at the bottom of 32 OECD countries as real earnings lag behind inflation. Representing the biggest squeeze on living standards in generations, it’s no surprise that many households are pessimistic about their finances. 
For many in our industry, this lack of consumer confidence reared its head in the second half of 2017 when core market growth stalled. I use the word ‘core’ for a reason because all the evidence points to the fact that white, square ‘bread and butter’ windows fell at the first hurdle, while higher value, differentiated product sales excelled. 
Trend spotters like Deceuninck predicted this trend over 12 months ago when we spoke to our customers about a market move from distress to discretionary purchases. In one section of the mass market, there are the cash poor whose life outside of normal subsistence expenses is challenging. Depressed, disposable incomes have restricted sales of commodity replacement home improvements for the sake of it. New doors and windows are the last thing on your list when you’re just about managing to cover the mortgage. 
Shielded Pockets of Potential
In contrast, shielded and secluded from the rest of the economy, is a group of cash and asset rich consumers who want premium, aspirational products that they’re more than happy to pay for against the rising value of their homes. They’ve had replacement windows at least twice now and didn’t fall for the industry’s campaign to embrace triple glazing. So what’s next for them? With product durability, security and energy efficiency now taken for granted, they’re looking for differentiation, added value, attention to detail and choice. 
This means as a supply chain – and many forward-thinking fabricators and installers have already made this move – we need to follow the money. We need to wholeheartedly embrace higher value products that spark the imagination of this group. For our customers, having the ability to offer colour, a range of heritage products and true aluminium alternatives is already paying off. While overall market sales of the white PVC squares the industry has relied on in the last 3 decades is down by up to 20% in some cases, sales of higher end products has increased by double and even treble digits over the last 18 months. Significantly, this increase is reflected in both sales volume and value. 
2018 will no doubt see this gap between the haves and have-nots broaden and like our target customers, there will be winners and losers in our industry. The losers will bury their heads in the sand and carry on doing what they’ve always done. The winners will be the ones who take a good look at their business and ask what they can do differently and better. They will understand who they are selling to; who has the money available and wants to spend. They will quickly differentiate between the haves and have-nots and change their businesses to deliver what they need. In 2017, Deceuninck’s customers were already seeing the benefits of working together to do just this. We look forward to partnering with more fabricators in 2018 who are ready to make a change and grow their sales and bottom lines. 
Rob McGlennon MD






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