‘Good things come to those who wait’
We have all heard the expectations of consumers going crazy with their spending once the Covid-19 virus is beaten or at least controlled. It’s something many people in a wide range of sectors are pinning their hopes on. Oxford Economics has added fuel to this notion with the release of a new paper ‘Why still-cautious consumers could spend big in 2021.’ The paper points to four key triggers for this spree – rising household savings, buoyant house prices, strong financial markets and high levels of fiscal support. Increases in disposal income has facilitated much of the continued spending on home improvement – a trend that is set to continue when you consider a further 18% of households are planing to commence home improvements after lockdowns and 81% stated they won’t be postponing home improvement work.
Oxford Economics balances this optimism with concerns over unemployment and low confidence amongst consumers – however it sees these as temporary and factors that will reduce with a successful vaccine rollout and easing of lockdowns. In many retail-facing sectors commentators are confident demand will come back and more than likely in a rush. These circumstances are likely to lead to inflation as many markets will be dominated by strong suppliers who have survived and will hold prices. It’s a common feature where lack of supply is feeding into areas of high demand. The other consequence is longer lead times on orders.
This is all too familiar for many in our own industry. As a sector we have been fortunate over the last six months that demand has stayed strong. When we overlap our own experiences onto the scenario laid down by Oxford Economics it clearly demonstrates we are not too dissimilar from other sectors. Importantly, it becomes possible to predict the medium and long-term. Many firms across the whole supply chain have been overrun – installers inundated with enquiries and installations – fabricators at full capacity – component suppliers running out of stock. What will be interesting is, come the Autumn and hopeful easing of restrictions and vaccinations for the wider population, will there be a permanent correction of the market? Specifically, will the ‘price be the price out of the factory into the home’ and will longer lead times be the accepted norm? This will be governed by future supply and demand. If supply has been normalised and demand surges as predicted, we can all expect a profitable future. Consumers will just have to wait a little bit longer for products they have paid the correct price for. ‘Good things come to those who wait’ could be the retail sales message moving forward…..
John Cowie – Editor
