Despite significant supply chain issues, the market is full of highly positive indicators which demand some long-term thinking from the tools and fixings sector, argues Will Jones, Chief Operating Officer of the British Home Enhancement Trade Association (BHETA)…
Back in the first Covid lockdown when sales of all things DIY and garden related started to take off exponentially, the biggest issue for the suppliers who had not foreseen such levels of end user demand was shortage of stock. We also began to see speculation in some quarters about how long this ‘boom’ would last. Surely, there would come a time when all the home and garden improvement tasks were done and / or that everyone would be sick of doing them!
With that as a backdrop, we are now re‐emerging from the third Covid lockdown, dealing with the trading complications of Brexit and wrestling with the costs of freight. It is an opportune time to review what short and long‐term plans the industry needs to be making.
Despite the current challenges – especially in terms of supply chain and logistics – there are many extremely positive economic indicators. Moreover, taken together those indicators support the view that far from being a boom which will end, what we are witnessing is a fundamental shift in mindset which runs through consumer behaviour to property prices to construction output. The tools and fixings industry needs to plan accordingly. It would after all be tragic – not to mention ironic – if, after all we have been through, we were unable to keep turning that shift in mindset to economic advantage because we failed to gear up to do so.
Let us look at where we are now. At risk of stating the obvious we have the happy coincidence of retail re‐opening just as the traditional spring weather‐fuelled ‘season’ for home and garden improvement kicks in again, along with the season for house moves. More than 40 million Covid vaccination jabs have
been administered to date, boosting business and consumer confidence; and with the Bank of England estimating around £125bn of extra savings in bank accounts, there is a good chance that at least some of that will drive a continuation in consumer‐led demand.
The economic indicators reflect this positivity. Job creation rose at the fastest pace since December 2018. The IHS Markit/CIPS UK Construction PMI jumped to 61.7 in March 2021, from 53.3 in the previous month and well above market expectations of 54.6. Any reading above 50 indicates growth.
This signalled the strongest rate of construction output growth since September 2014, with housebuilding rising the most since July 2020 and both commercial construction and civil engineering expanding the most since the second half of 2014. According to Duncan Brock, a director at the Chartered Institute of Procurement and Supply, which jointly compiles the survey, these figures are “spectacular”.
New order growth accelerated to its fastest since September 2014 and the rate of job creation was the strongest for over two years. In addition, the latest upturn in input buying was the steepest since November 2020. On the price front, purchasing price inflation was the highest since August 2008. Meanwhile, after a record fall in exports in January, February saw a rebound with export growing 46.6%. Business expectations are at their highest level since June 2015, reflecting confidence in the UK economic outlook, the improving pandemic situation and pent‐up demand.
The tools and fixings perspective
From the tools and fixings perspective, the strength of the housing market must be good news with a boom in moves driven by the stamp duty holiday which has been extended until September, and demand outstripping supply. As we all know, the housing market drives home improvement whatever other factors apply, as householders start work on new abodes or improve old ones for selling or attracting new tenants. Besides which, with housebuilding the best performing part of the construction sector, combined with signs of recovery in civil engineering and commercial – as outlets prepare for reopening and new projects suddenly look more viable and emerge from ‘on hold’ – demand for tools and fixings can only remain high.
This combination of factors leads me to believe in long‐term opportunities for the sector. The only negative – and I appreciate its gravity – is the impact of such huge demand combined with current logistical problems and supply issues, driving up raw materials prices, with the inevitable knock on throughout the supply chain.
While I am not saying that any individual supplier, retailer, professional end user or DIY consumer can individually solve the current logistical problems, it is essential that the industry collectively appreciates the opportunity and does its utmost now to plan accordingly – despite the supply chain issues. This
demand is not a freak moment. It is an indication of the future if we all respond to it and raise the game accordingly.
To find out more about BHETA lobbying, retailer networking and business support, contact Nicola Adams in BHETA Member Services on firstname.lastname@example.org or on 07946 078566.
This article originally appeared in the April 2021 issue of Torque Magazine, which you can read in our archive. If you are in the fastener, tool, fixing or related industries, you can subscribe to Torque Magazine or sign up to our weekly newsletter.