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The Global Conservatory Roof Report
Conservatory Companies still forecasting strong growth
The Global Conservatory Roof Report now appears every three months in Conservatory Design & Build. As well as the quarterly trend survey, monthly trackers are also published four times a year in the Glass Age conservatory feature.
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Highlights this quarter:
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Sales
Despite anecdotal evidence of a weakening market, forty-nine percent of conservatory fabricators increased conservatory sales in April to June compared with the previous three months. Twelve percent saw a decrease and 39% stayed the same.The difference between the number of companies reporting an increase over those reporting a decrease is the net balance, expressed as a percentage. A positive net balance indicates growth, a net balance of zero implies little has changed.
On this basis, a net 37% of conservatory fabricators improved sales (chart 1). Companies of all sizes reported growth with large fabricators just ahead (net 47%). Interestingly, no large fabricators we spoke to reported a drop in sales. Fabricators across the country recorded growth with firms in the Midlands (net 43%) seeing the most widespread increases. Looking at fabricators by monthly conservatory sales, those selling more than £50k in June were ahead of others.
Compared with the same time last year a net 24% of fabricators sold more in April to June (chart 2). Large firms (net 35%) increased sales, ahead of medium and small companies (26% and 20%). All regions showed increases with fabricators in the North and South (net 28%) stronger. More fabricators who convert between 5% and 25% of windows and doors into conservatories showed growth (net 29%).
Prices
The average installed price of a conservatory in June increased by 10% from £6362 in March to £7020 (chart 3). Prices exclude VAT, dwarf walls and bases.
Conservatory Styles
Victorians accounted for 39% of the conservatories installed in this survey, Edwardians accounted for 38% and Lean tos for 23% (chart 5).
“Through product innovation, conservatories have become more thermally efficient, harder wearing and adaptable to customers' needs and wants.“We have been in business since 1985, and sell on quality and design, not on price. Due to the complete change of the installation design of conservatory roofs we are able to tell most of our customers, you draw it we can make it. “The conservatory industry moves with the times with increased knowledge, expertise and professionalism.”
Mr Stuart Donnelly, Canvass Manager
De Rosa Glass Ltd, Wolverhampton
Sales Forecasts
A net 45% of fabricators expect to sell more in July to September than in the previous three months. Medium-sized companies (net 56%), those in the South (49%) and fabricators selling between £10k and £20k conservatories per month have highest expectations. Expectations are also high compared with the same time last year with a net 42% of conservatory fabricators expecting to sell more (chart 6). Forecasts are strong across the board with fabricators of all sizes in all regions expecting increases. Fabricators with a total conservatory sales range of between £10k and £20k and companies who convert between 10-25% of windows and doors into conservatories (57% and 65% respectively) are particularly positive.
“The housing market is exploding at the moment and it is very expensive to move. So for many people it makes sense to build extensions and add conservatories instead.“By spending £10k on a conservatory instead of moving it is a cheaper investment, but one that adds value to the price of the house.”
Mr Paul Webster, Managing Director
MPN UPVC Windows and Doors, Port Talbot, South Wales
Outlook
Prospects are high again this quarter with a net 40% of companies more confident than three months ago (chart 7). Medium-sized firms (net 54%) have the most positive outlook. Small (38%) and large companies (29%) are also strongly positive. Regionally, fabricators in the South (net 45%) are most confident with those in the Midlands and North (net 40% and 35%) also optimistic. Firms that convert between 10-25% of windows and doors into conservatories are more confident than others.
The outlook for the conservatory market in 2004 compared with 2003 is still upbeat. A net 42% of those interviewed expect the market to grow. Medium-sized companies (net 59%) are ahead of small and large companies in their expectations (36%). Forecasts from fabricators in the South (net 46%) are just ahead of other regions. All the respondents expecting growth in 2004 compared with 2003, forecast increases of between 1% and 9%, a more modest increase than in previous quarters. Fabricators expect this increase because conservatories continue to grow as a popular addition to a house and have become a desired accessory.
Problem Areas
Price cutting in the market, margin squeeze and supplier price rises were the biggest problems in April to June. The single biggest problem was price cutting highlighted by 31% of respondents.
| Regional Review | South | Midlands | North |
| Sales last quarter compared with the previous quarter | 33% | 43% | 36% |
| Sales last quarter compared with the same period last year | 26% | 17% | 29% |
| Forecast sales next quarter compared with the previous quarter | 49% | 43% | 42% |
| Forecast sales next quarter compared with the same period last year | 44% | 33% | 48% |
| Average installed value in June 2004 | £7,849 | £6,397 | £6,620 |
| Sales and forecasts figures in the Regional Review show the net percentage, the balance of firms reporting an increase over those reporting a decrease in each region. | |||
| Company Size Review | Small | Medium | Large |
| Sales last quarter compared with the previous quarter | 38% | 30% | 47% |
| Sales last quarter compared to the same period last year | 20% | 26% | 35% |
| Forecast sales next quarter compared with the previous quarter | 46% | 56% | 24% |
| Forecast sales next quarter compared with the same period last year | 39% | 63% | 18% |
| Average installed value in March 2004 | £6,652 | £7,719 | £7,081 |
| Sales and forecasts figures in the summary show the net percentage, the balance of firms reporting an increase over those reporting a decrease for each size of firm. | |||
Overview
“Despite the shadow of Iraq, which is having a big impact on world oil prices, the latest economic news from the US is bullish,” says Mike Rigby, whose company produced this report, “US Federal Reserve officials believe that the recovery in the world's largest economy is likely to continue, despite oil prices surging to record levels. The Fed, which raised US interest rates in August, is also optimistic about the outlook with consumer spending picking up to support growth.“Closer to home, it seems that five interest rate rises in nine months are starting to bite. House prices in England and Wales fell 2% in the five weeks up to mid August - an average of nearly £4,000 - according to figures out from the property website Rightmove. They fell by an average of £12,000 in London. Over the same period the yearly house price inflation rate fell for the first time in seven months. But as a contrary signal, figures from the Council of Mortgage Lenders (CML) indicated that mortgage lending rose sharply in July. The UK housing market has fooled us all before - just when it seems about to die it flares up again. More tellingly perhaps there are widespread signs of an across the board softening of home improvement markets.”
Comment
“Reports of the death of the conservatory market in 2004 are clearly premature,” comments Nick Dutton, Sales & Marketing Director of Synseal Extrusions Ltd who sponsor this survey. ”Despite press comments and spin blaming the economy and the over 50s for turning their backs on conservatories the market is robust and its prospects still healthy. True a succession of interest rate rises and poor weather have taken the froth off the market and home improvements in general, but many conservatory companies have never had it so good.“There is an old saying: beware what you wish for because you just might get it. Trying to blame a depressed market for your own poor performance is a mugs game, and it's dangerous. You might deter potential buyers and thus bring about a real slowdown in demand, one that will affect everyone including you. And that wouldn't be very clever, would it?“
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The Global Conservatory Roof Report, a quarterly trends survey, is produced by
Michael Rigby Associates, and sponsored by Synseal Extrusions Ltd. It keeps a finger
on the market pulse, and monitors conservatory companies' views and expectations of
market movements. Michael Rigby Associates specialises in research based marketing and consultancy for the home improvement, building materials and window markets in the UK and Europe. The quarterly survey covers a representative sample of 100 conservatory fabricators who also install. Telephone interviews took place between the 22nd July and 2nd August 2004 across a balanced spread of size of firm, geographical area and type of fabricator. Number employed was used as an indication of company size. The categories are small (1-19 employees), medium (20-49) and large (over 50 employees). Visit: www.521621.com or contact Fiona Lund, Michael Rigby Associates (01453 521621) for a free copy of the full report. |
