MAR K E T I N G
A‘Black Swan event’ is a phrase
coined by Wall Street trader and
finance professor Nassim Taleb to
characterise an event so rare that
it is beyond reasonable expectation and has a
potentially catastrophic impact.
Experts are pointing to the coronavirus
pandemic as a potential once-in-a-lifetime Black
Swan event. While every government’s priority
has been the welfare of its people, the economic
impact of Covid-€ is likely to last for years, with
Lloyds Banking Group announcing on „… April
that the UK economy could shrink by as much as
ˆ.8% this year.
So, what is the outlook for the window,
door and conservatory industry and how can
companies respond given so many unknowns?
ECONOMIC COMPARISONS
We have never faced a pandemic of this nature,
however the industry has been through several
recessions including the early ‘€…s and the ‘great
recession’ of Œ……ˆ – Œ……€. While previous
recessions had a clear root cause in banking and
fiscal policies, there is no such contributor to the
current crisis which means we are in ‘unknown
territory’.
It’s important to note that recessions don’t
impact all industries in the same way. Aviation,
travel and hospitality have been severely affected
with British Airways, Boeing and Rolls Royce
already making large scale redundancies. However,
the outlook is more positive for the home
improvement sector. With families on lock-down
for weeks at a time, homeowners have had more
time to think about their home. And with holiday
and travel plans uncertain, adding more space
or improving their home may be the preferred
option in the months ahead. Garden related home
improvements, such as garden rooms and hot
tubs, are likely to see an upturn.
It’s not all plain sailing though. The spectre
of recession reduces consumer confidence
and homeowners will be more cautious about
spending money, and more selective on who they
spend it with.
As a result, the companies who remain visible
and have a strong brand and reputation will
fare better than others. According to BrandZ,
the world’s leading authority on tracking global
brands, companies with the strongest brands
perform better and recover much faster from
recession as customers gravitate towards brands
they trust.
Meanwhile, the Harvard Business Review
reports that companies which increase their
marketing activity during a downturn capture
market share from weaker rivals (and at a lower
cost), thereby boosting financial performance.
A NEW BUSINESS PLAN?
Many companies will want to review their business
strategy and forecasts. Taking a measured,
Œ-month view is essential. Knee-jerk reactions or
‘battening down the hatches’ could do more harm
than good.
Recession typically means a reduction in
competition as some firm’s scale-back or bury their
heads in the sand, while others sadly collapse.
According to Insight Data, over ,……… fabricators
and installers had ‘high-risk’ credit scores before
the pandemic struck, and without financial
resources, their situation can only worsen.
The evidence suggests that even with a
recession the home improvement market will be
less affected than many other sectors, and with
less competition, the companies who adopt a
pragmatic view, invest in their brand and take an
offensive position will gain market share.
Of course, that doesn’t mean companies
shouldn’t adapt. While the Œ……ˆ – Œ……€
recession was a liquidity and credit crisis, this
recession will be characterised by a shift in
behaviour and attitudes.
Some form of social distancing is likely to be
with us until a vaccine is found, and companies
must adapt their business model to meet changing
customer expectations.
Technology has a major role to play, but again
companies should avoid costly knee-jerk reactions
that could cause more damage in the long-run.
From a marketing perspective, moving all activity
online may be the right decision today, but as lockdown
eases a digital-only strategy is a dangerous
game. Few brands are built solely online, which is
why Amazon is one of the biggest advertisers on
terrestrial TV. And it’s no surprise that magazine.
co.uk has reported a ¡…„% rise in demand for
subscriptions to home and garden print magazines
during lockdown.
What does the future of the industry look like?
I am quietly optimistic. I expect to see significant
M&A activity, and sadly some companies will
vanish, but this makes room for others to capture
market share. How we operate as an industry
will change and the speed of diversification will
increase. The bottom line is that companies
will need to work harder and smarter for their
customers.
Surviving a Black Swan event
Can the glass and glazing industry bounce back from the Covid- crisis?
GGP Magazine catches up with industry expert, Andrew Scott, to discuss.
May www.ggpmag.com
“companies which increase
their marketing activity
during a downturn capture
market share from weaker
rivals (and at a lower cost),
thereby boosting financial
performance”
/co.uk
/www.ggpmag.com
