The canary in the mine

A heavy weight has been lifted from the window industry. We’re all breathing easier as recovery gains momentum. Growth is so strong we’ve got growing pains. They hurt most where sectors were already growing – foiled colour for example. Rapidly increasing demand is testing some Systems companies’ service to destruction.

Recession is over, but in the last five years Britain has been changing the way it buys. And the effects are ripping retailers’ business models to pieces. The Banks may be too big to fail, but there’s no safety net for retail. First, the effects. While high-end niche player Waitrose (market share just under 5%) continues to shine, the big four – Tesco, Sainsbury’s, ASDA and Wm Morrison – are battling each other and discounters Aldi and Lidl, Poundland and B&M. Collectively the big four who control around three quarters of the market are losing share to the discounters who are hammering their business model. Morrison announced it would invest £1bn in cutting prices. Tesco plans £200m in price cuts, investing more online, and opening 150 convenience stores a year. More ominously, it aims to ramp up its large-store revamp programme because it has too much expensive out-of-town selling space. Even Sainsbury’s reported its first fall in underlying sales. Industry watchers see it as the start of structural change, the next stage in ‘unravelling the big four’.

What’s driving these changes?

Recession has made us careful with our money, and the time and cost of travel. And the internet has made it easier, quicker, more convenient and cheaper to research and buy what we want, when we want, from anywhere. It has broadened our horizons and choice. Over half of adults (51%) now own smartphones, according to Ofcom, almost double the proportion two years ago (27%). Tablet ownership more than doubled in 2013, to 24% of homes. People use them both constantly for communicating, searching, comparing prices and ordering. Smartphones are also transforming the way installers work. Many use them to show off their work on social media, share information on suppliers and products, search and compare prices. They buy and sell from home, office, pub, on-site or in traffic – day or night, weekdays and weekends. Amazon and other online retailers are teaching us how to buy with a convenience that is hard to better for choice, speed, ease of buying and delivery.

Where are we heading?

The trends are clear, but the future is cloudy. However, with the clear exception of Door-Stop, most businesses and business models in the industry are falling behind these accelerating trends. Their customers are moving faster than they are. For years industry change has followed a top down path, from Systems companies down to installers. Now it is reversing. Homeowners are changing how they buy, and installers are changing how they do business. A number of fabricators do speak B2C – having started as installers – and understand the need for rapid change. But, how many systems companies have been on a pitch, in a home, and understand what installers need to sell? How many ‘speak’ retail, feel B2C in their bones and ‘get’ this revolution? Big retail is the canary in the mine. When it splutters and starts to choke, it’s time to change your business model or leave the mine. Agree? Disagree? Want help with change and your business model?