NEWS | Q&A


EXCLUSIVE


Enclosure disclosure


Among the best-known figures in UK bathroom supply, Steve Lee (pictured), has taken a leap into one of the most competitive parts of the sector by gathering together two of the biggest names in shower enclosures under his own company banner. Andrew Davies caught up with him...


CEO at Methven, chairman at Aqualisa and former president of the Bathroom Manufacturers Association to name just a few highlights. It’s safe to say, therefore, that Lee understands the bathroom supply sector better than most so some might be surprised that, in forming his own company, he chose to dive straight into one of the most competitive arenas – shower enclosures. Late last year, under the AQ Group, Lee acquired Aqualux and, at the end of September this year, he added Aqata to the portfolio and, despite Covid lockdowns, it probably won’t be the end of his hunt for more brands….


S Q & A


Q: Tell us a little bit about the AQ Group as a company… A: It’s certainly not a brand or a group that we’re focusing our marketing attention on. The AQ Group was formed largely as a vehicle to acquire businesses through our supply and build strategy. So back in 2019, we acquired Aqualux from the Dutch bathroom giant Fetim, and more recently we acquired the luxury shower enclo- sure business Aqata. So the name obviously comes from the fact that those two brands start with AQ.


Q: You’re very experienced in the bathroom supply sector. What’s your view of the current market? A: Aqualux has its history seated firmly in the large-scale retailers and more recently also supplying to online businesses too. That is a part of the market that we found in particular


has retained its fluidity


during the lockdown and we’ve had real positive growth there. So we’ve seen a lot of our retail customers


8


teve Lee has a very impressive CV – CEO at Bristan for many years,


come through to us and extend product ranges and use our inventory and our delivery service to go direct to homes on their behalf. Aqata’s business comes through top-end, luxury bathroom retailers. What we saw with the first lockdown was a sort of pregnant pause for about three months, as most of the retailers were either closed or unable to trade and everything ground to a halt during the April, May and June period. That said, we then had a record September and October and the retailers are telling us that consumers are making appointments and spending a lot of time in their showrooms when they’re able to. Many of the retailers are now booked up well into the end of the first quarter of 2021, so that is a really positive story.


Q: That is very positive but how far into 2021 can you see that carrying on? A: I guess you have to caveat that with the fact that there’s bound to be a bubble.


And when you look at the position of the macro economy, there are a lot of people losing jobs sadly, and they will no doubt have one eye on next year and their family budgets. We’re seeing around 5% unem- ployment at the moment and, hopefully, we won’t see it grow much beyond that. There is still a lot of disposable income out there and people who can’t go on expensive holidays are hunkering down and doing the traditional British make- do-and-mend and improving their most valuable asset – their home.


Q: Obviously you’re a supplier, but you also have components coming to you. Are you seeing supply chain issues? A: Yes, very much so, but fortunately we’ve got significant inventory. I think one of the advantages of being two businesses together is that we


Many businesses stretch their brands into sectors that they just don’t suit. Having a dual brand strategy allows us to cross the different parts of the market quite nicely


have a global sourcing supply chain from Aqualux, which allows us to bring in product from all over our partnership network. With Aqata, we’re manufacturing everything in the UK, so we’re effectively flexing our facilities to suit the requirements of the market. But your point is not lost on me, we are seeing some real pressures on our supply chain.


Q: How do you define your two brands in terms of marketing? A: It’s the classic [structure] of good- better-best with Aqata very much sitting in the best category. It’s a brand that’s been associated with all the aspirational aspects of the bathroom industry for 25 to 30 years and we intend to retain that position right in the sweet spot of the top-end independent retail sector.


And with Aqualux, we also intend


to keep that exactly in the position that it is right now. Many businesses over the years try to stretch their brands into sectors that they just don’t suit. We recognise that and we think that having a dual brand strategy really does allow us to cross the different parts of the market quite nicely.


Q: The enclosure sector is very competitive. Was some sort of consolidation always inevitable? A: I think so, yes. We’ll see a little bit more of that too in the coming years. Shower enclosures have changed a lot in the past 15 years. Back then, there was a lot of engineering and moving parts, now the aspiration for most people is the walk-in with a focus on style, so there is a shift change that’s taken place that we can take part in and, hopefully, lead.


Q: How have you restructured the business to consolidate the manufacturing? A: That’s really important. As part of the uncoupling for Aqualux from Fetim, we’ve brought all the back office of the business from Amsterdam to the UK. Part of the strategic plan to acquire Aqata was to make best use of its site in Hinckley (Leicestershire), which was about five times bigger than it actually needed to be. So it was perfect to bring the Aqualux business into that site, which has just been completed. We’ve got a bit more organising to do, but we’re set up perfectly for the future.


Q: Are there further acquisitions in the


near future for the


AQ Group? A: We are always on the lookout. Given that the marketplace has been volatile over the past six months or so, maybe owners are looking to exit their business and we would be more than interested to take a look if something appropriate came along.


· December 2020


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