Retail sector ‘flatlines’ in September

By Neil Cooper-Smith, senior analyst, Business Pilot.

There is a feeling we flatlined in September, with all our metrics showing no real movement up or down.

Average leads stayed exactly the same at 107, while average sales dipped slightly to 48.9 in September from 52.1 in August. Given that September was a shorter month, I don’t see this as foreboding sign.

What I do find interesting is that at £3,593, the average order value still reflects what I believe to be an active volume sector of the market. (Higher average order values mean increased sales of higher margin products.)

Yet, the conversion rate is the second highest we’ve recorded this year: 41.7% (up slightly from 41.3% in August).

When we see activity increase in the volume sector, we tend to see overall activity increase. This typically includes people who are (forgive me) window shopping – or not committed to buying. As a result, conversion rates drop because many more enquires do not result in sales.

Instead, we are seeing conversion rates hold up, which suggests a change in buying behaviour.

Instead of visiting multiple window companies, homeowners are conducting more research before they approach the market. They decide what they want, who they want it from, and then seek fewer quotes.

(As an illustration, if every homeowner gets three quotes and then commits to buying, then the conversion rate would be 33.3%.)

The logical conclusion is that buying habits are changing right across the different buying demographics. Understanding this is key to positioning yourself to make the most of the opportunities as they arise.

For example, is your website optimised to manage enquiries from well-informed homeowners? Do you have the latest sales tools to tap into this new trend? Is your brand consistent across multiple platforms, including third party sites like TrustPilot?

And if we look at the overall market conditions, we can see that homeowners are under multiple pressures when it comes to refurbishment.

As I write this, it has been announced that house prices have risen at the fastest pace in two years, almost half of homeowners plan to limit energy use as the energy price cap is raised, and consumer confidence has dipped in the lead up to the October Budget.

By understanding your business metrics on a daily basis, and having the tools to act on that information, means you are in a much better position to react to changes – especially if those changes aren’t what you expected.