Covid: Still wreaking havoc on our industry five years on
By Danny Williams, managing director, Pioneer Trading.
Whilst few of us wear masks now and contracting Covid has become as inconsequential as a bout of ‘normal’ flu, we continue to feel its economic effects five years after it hit the world and locked the UK down on 23 March 2020.
The pandemic sent shockwaves through the planet and here, at home, whilst I argued at the time that many – most – businesses owners overreacted by simply closing their doors when the rules did not require them to do so, UK PLC pulled down the shutters and shut up shop for three months.
What followed of course was a huge surge in home improvement sales as homeowners embraced the relative ‘freedom’ of ordering improvements, including windows but especially garden doors, prompted by the fine weather that characterised the first lockdown and no doubt, by staring too long at the four walls (and old windows) of their home for weeks on end.
There was a bottleneck of what was called ‘involuntary’ savings of an estimated £200-£300 million accrued through being unable to take holidays and get out and about.
The flood in sales was short lived whilst unfortunately the effects of the pandemic live on. Lockdown was followed by the cost-of-living crisis, with the upswelling in interest rates hurting a nation that had become used to the cheapest money in living memory. Mortgage payers were hard pressed to keep the roofs over their heads, let alone take out extra finance to fund new windows and doors.
Experts now believe that the effect of these shocks on the population is worse than was at first acknowledged and, even five years on, homeowners are spending less and saving more than expected. The savings that consumers made during shutdown have been spent on surviving the cost-of-living crisis or have been tucked away ‘just in case’ often by the older homeowners that could usually be relied upon to upgrade one last time, with the low confidence in successive governments hardly inspiring the confidence to splash out.
More recently of course, inflation and interest rates have fallen but mortgagees continue to feel the squeeze, in turn stifling the desire to take on more debt. And a key economic ingredient, the ‘household saving ratio’, has yet to show signs of consumers once again being willing to spend more to stimulate the economy and of course, our industry.
The pre-pandemic saving ratio of between 4 and 6% of disposable income remains significantly higher at 10%, as we all remain cautious, especially in the face of a government that is hardly inspiring confidence.
Covid changed all of our lives forever and, whilst the masks are off, so many aspects of our lives remain affected, including our working practices and attitudes to money, both of which continue to have a negative effect on our industry (though not everyone agrees with my views about the WFH culture).
Neither can we expect an improvement in our lot any time soon. Although we are taught that we should save money and only buy what we can afford, beyond a certain point it does our national economy no good whatsoever as consumers need to spend to stimulate the economy. And whilst interest and inflation rates are going the right way at last, the Bank of England expects the saving ratio to fall only by a couple of percentage points over the next three years, whilst consumer spending will only rise in that time by 1.5%. Nothing in fact, that we may get excited about.
Sadly, neither is this government doing anything to help, with the significantly increased cost of employing people coupled with flat consumer spending, the figures quoted by the Bank of England might even prove to be optimistic.
And finally…
I was disappointed to learn about the demise of Dutemänn, a company that had produced high quality aluminium bi-folds and sliders for around 14 years or so. The owner, Martin James, expressed his sadness at closing the doors of the company for the last time early in March, saying that the company’s main product, bi-folding doors, has been ‘commoditised’.
I cannot help but wonder if the firm’s decision to step away from Schuco was instrumental in their change in fortunes. Schuco is an exclusive product and one that was separated by quality, reputation and of course price, from the ‘commoditised’ rest of the market. Never underestimate the power of brand.