31 August 2010

Lean and mean selling machine

Forgive me, but I'm getting just a tad fed up with those in KBB Land banging on about how bad business is because property prices are not racing ahead out of control.


I've been through at least four property roller coaster rides since the 1960's (no, the 60's weren’t all peace and love and sadly not all sex and drugs and rock'n'roll either), and they all followed the same pattern.

House prices go up and everyone thinks the rise will last for ever. People get very excited and over-extend themselves. House prices plummet and everyone looks surprised.

Wounds are licked, house prices come down slightly, wages go up slightly, and the pain of negative equity fades, and off we go again. That's basically all there is to it

Oh yes, one other small but interesting point. Since 1968, every housing bust has lasted the same time as the boom that preceded it.

If that's repeated this time (and don't be misled by the temporary 'spike' in property prices that - happened in the last crash too), we have another seven or eight years to wait before we see property prices shoot up again.

Now you can spend the next eight years looking over your shoulder at the "good old days" if you wish, but you are going to miss a lot of the opportunities that lay ahead if you do.

We've lost the 'froth' of year-on-year property price hikes, but when did anybody doing up an investment property for a quick sale buy quality kitchens and bathrooms?

Why do builders (mostly) only focus on how low they can drive the prices of the kitchens and bathrooms they buy too?

It's because neither had to live with the consequence of their purchase decisions.

The private buyer who is going to live in their 'home' - and the key word here is 'home not 'property investment' - is the bedrock of the UK's kitchen and bathroom business.

Oh sure, the private buyer can drive a hard bargain because it's a buyer's market. But you've trimmed your costs and you are now leaner and meaner, thanks to your froth-free diet.

The independent kitchen or bathroom supplier is best placed to do serious business with serious customers, but you won't see them coming if you are always looking behind you.

1 comment:

  1. I agree fully with the comments above. At the moment our sales are growing but only because we are working on small margins and adverting heavily.
    We have only been trading for 2 years in this industry and it is hard work but we have managed to push net margin from 10% to 14% and turnover will approach £5m this year.
    I spend much of my days reading the industry magazines and being told by various sales reps that business is gloomy but this is not the case. Many businesses in this sector are either to large or to old to change or react to market conditions.

    There are opportunities out there its just that some companies have grown fat and stale hence that amount of large manufacturers, distributors and showrooms which have gone out of business in the past 2-3 years.