NEWS | Round-up VIEWPOINT
Why retailers need to plan for the future
Richard Hibbert, national chair of the KBSA, on why it’s important to make the time for business planning in a challenging market
Independents grab lion’s share of £5bn UK kitchen market
THE UK independent kitchen market was worth £1.76 billion and holds a 35.5% share of the £5bn new kitchen spend in 2021, says researcher JKMR.
THE UNCERTAINTY and unprecedented events of the past few years may have relegated business planning to the bottom of many retailers’ to-do lists. More recent issues with supply chains, and rising costs across the board have also made it difficult for retailers to make any long-term plans, but now may be a good time to reintroduce the idea of short-, medium- and long-term planning. One thing that retailers have learnt since the pandemic is the need to be flexible and this can be incorporated in the business planning process. Plans should always be made to be adapted, as sticking to a plan, come what may, is as bad as not doing any planning at all.
A good plan will look at different options and scenarios, outlining the development of a business based on a number of ‘what-if’ situations. This builds in agility and avoids knee-jerk reactions to situations when they arise.
A couple of sessions can be enough to develop the basics of a business plan for the entire year
Looking ahead may feel like gazing into a crystal ball, but a risk-and-chance analysis can put things into perspective and help focus the mind on what needs addressing within a business.
Business planning doesn’t have to be a time-consuming ordeal. Taking time out for a couple of two- to three-hour sessions, can be enough to develop the basics of a development plan that will invigorate a business for an entire year. Relocating to
another place outside of the showroom can work well, providing space to think away from the normal day-to- day distractions of running a business.
When it comes to financial planning, it pays to make friends with your accountant. Analysing spreadsheets, understanding paybacks, and the tax system is a lot easier with expert advice from an accountant. Introducing a mentor or a business coach is also often worth the investment. A business coach can help clarify goals. They can help get all the stuff that most business owners carry around in their head out into some kind of plan. They also provide an impartial view and can offer much-needed support. It’s essential to find the right person to work with, so it may pay to take recommendations from others. An end-of-the-year review will also help establish what was a success and what could be improved. Involving the staff makes them feel part of the business. Once staff are committed to where the business is going, it is possible to incentivise them with rewards and targets related to their contributions. And membership of a trade association such as the KBSA provides access to other businesses that face the same challenges, enabling experiences to be shared.
10 · October 2022
JKMR has valued the fitted kitchen products market at £4.97 billion. Independents account for 35.5% of the total market share, with trade retailers (Howdens and the merchants) in second place with 28.5%. Consumer multiples like Wren, B&Q and Homebase make up 19% of the market, with direct contracts at only 9%. Online retail is only 8% of the total market share. The total market value had steady growth since it dipped in 2009. However, there was a drop in 2020 because of the full lockdowns. As a result, the total market value has jumped after the 2020 slump and is projected to show growth in 2022.
There were 1.25 million new kitchens purchased in 2021. The number of installations also increased in 2021 after a slight drop in 2020. However, the number of installations is predicted to drop in 2022. JKMR said in the summary of Market Trends: UK Kitchen Market Size: “The loss of much Q2 2020 retail business allied to building sites mothballed for part of the year meant market volume and value decline for 2020, but a markedly strong ‘bounce back’ for most retail operations in Q3/4, plus increases in project budgets mitigated the value decline. “Despite the Q1 2021 lockdown, consumer desire for home refurbishment, plus a degree
of ‘catch-up’ of new-build activity, enabled notable market growth in 2021, allowing installations to just exceed 2018 levels and market value to rise 15%.
“At this stage, it is projected that wider economic stress will see 2022 installations down on 2021, but price rises, if nothing else, will ensure further value growth.” JKMR’s research into the key market factor indicators – which includes average house price, new-build activity, fitted kitchen products RSP, total major appliances RSP, and DIY and decorating products RSP – found that all areas were up in 2021 compared with 2020 and subsequent years. In addition, projected growth for all areas for 2022 is steadily rising, although not to the extent of the considerable jump from 2020 to 2021.
JKMR said about the key market indicators: “The 2021 market value continued upward due to more market activity and price rises. Unlike the broader DIY market, the fitted kitchen products market is biased toward higher- earning owner-occupiers with more home equity, and thus its growth rates tend to show a nearer correlation to house price movements. “Both it and the total MDA market saw a small dip in 2020 market value, with much of Q2 trading wiped out for physical store retailers; but price increases and the still buoyant property market drove notable growth for both sectors in 2021, which are expected to continue in 2022.”
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