Seeing past the slowdown: Survey predicts growth despite first quarter downturn

The Global Roof Conservatory Quarterly Trends Report appears in Conservatory Design & Build. As well as the quarterly trend survey, monthly trackers are published in intervening months in Glass Age. The report is a quarterly trends survey, produced by Michael Rigby Associates, and sponsored by Synseal Extrusions Ltd. For survey details or a free copy of the full report visit www.521621.com or contact Lucia Di Stazio at MRA (tel. 01453 521621).

Highlights this quarter:

• A net five per cent of conservatory fabricators increased sales in January to March 2005 compared with the previous three months.
• A net 3% of fabricators sold less in January to March 2005 compared with same period in 2004.
• Just over seven in 10 respondents expect rising sales in the next quarter compared with the previous quarter.
• A balance of 24% forecast better sales over the next three months compared with the same period last year.

Sales, quarter-on-quarter

36% of conservatory fabricators increased sales in January to March 2005 compared with the previous three months. 31% saw a decrease and 33% 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 no change.

On this basis, a net 5% of conservatory fabricators sold more in the first quarter of 2005 compared with the previous quarter. Large (29%) and mid-sized (17%) firms saw sales rise but a net 9% of small fabricators sold less. Fabricators in the South saw the most widespread growth (a net 22% sold more) whereas firms in the Midlands (7%) and North (3%) fell back.

Sales, year-on-year

Year-on-year sales are down. A net 3% of conservatory fabricators sold less in January to March 2005 compared with the same period in 2004. Mid-sized firms (4%) saw an increase but large and small companies (6%) reported lower sales. Conservatory fabricators in the North (18%) sold fewer conservatories while both the South (3%) and Midlands (7%) were up.

Prices

The average installed price of a conservatory in March increased 4% from £7,549 in December to £7,865. Prices exclude VAT, dwarf walls and bases.

Conservatory Styles

Edwardians/Georgians accounted for 50% of the conservatories installed in March, Victorians for 25%, and Lean-to conservatories for 23%. A small proportion (2%) were ‘Other’ styles.

Sales Forecasts

A balance of just over seven in 10 conservatory fabricators forecast higher sales in the next three months compared with the previous three months. Few expect a drop. This is mirrored in companies of all sizes. Fabricators in the Midlands (93%) and North (82%) are most positive while firms in the South are more cautious (49%).

Fabricators are more tentative in their year-on-year forecasts with a net 24% expecting sales to increase over the next three months compared with the same three months in 2004. Mid-sized and small firms in all regions are positive about future sales of conservatories, but large fabricators expect no change.

Outlook

Prospects are upbeat this quarter with a net 44% of firms more confident now about the overall prospects for the conservatory market than they were three months ago. Small firms (48%) are more positive than large (41%) or mid-sized fabricators (38%). Confidence is high in all regions, especially in the North (52%).

The overall outlook for conservatories in 2005 compared with 2004 is positive. A net 20% of those interviewed predict growth this year. Small (30%) and mid-sized firms (21%) are positive but a net 12% of large firms forecast a drop. Firms in the Midlands and North are more bullish (28%) than those in the South (5%).

Of those expecting growth, 39% anticipate an increase of 10-19% in 2005 compared with last year. A further 37% predict a rise of 20-29%.

Problem Areas

Price cutting in the market, lack of sales leads and low sales volume were the main problems affecting conservatory sales in the last quarter. The single biggest problem was price cutting mentioned by 34% of respondents. However, 23% of fabricators reported no problems over the period.

Overview

‘There is nothing like an election for taking consumers’ thoughts off spending,’ says Mike Rigby, whose company produced this report. ‘But don’t expect a bounce back now the election is over. The consumer slowdown started last August as interest rates began to bite and the housing market came off the boil.

‘The Bank of England has kept interest rates at 4.75% for the ninth month, and may even drop interest rates to revive consumer confidence. The housing market isn’t dead, and with the election over and interest rates perhaps at a peak, consumer spending may stabilise. But the chance of a consumer led upturn is slim. Homeowners still need affordable extra space, and still yearn for the enhanced lifestyle a conservatory offers. But they will need to be tempted and persuaded that now is the time to buy, and yours is the product they want.’

‘The growth in the number of conservatory systems companies has had a positive impact on the market, like for example, more roofs available on 24 hour lead time instead of two weeks and simpler designs which in turn means quicker and easier installations.

‘I feel now is the time for systems companies to manufacture and complement each other with universal roof sections so that service calls will be easier to handle with ready solutions.’

Mr Shaun Sadler, Sales & Marketing Manager, Dolphin Security Windows Ltd, Chester-le-Street

‘We have seen significant increases in sales of conservatories over the last couple of years and expect further growth this year. Although the majority of our sales come through recommends, I think one future option to enhance sales is to design an interactive website to show our customers what we can provide in terms of coloured profile and conservatory design.’

Mr Ray Lavin, Proprietor, Ross Windows, Ross-on-Wye