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The Rigby Research Conservatory Roof Report

Conservatory sales continue recovery

The Rigby Research Conservatory Roof Quarterly Trends Report appears in The Conservatories Active Supplement of Windows Active.

Highlights this quarter:

* The difference between the percentage of companies reporting an increase over those reporting a decrease is the net balance.



Regional ReviewSouthMidlandsNorthOverall
Quarter-on-Quarter sales:
April to June 07 compared with January to March 07
23%13%48%27%
Year-on-Year sales:
April to June 07 compared with April to June 06
23%0%37%20%
Forecast sales Quarter-on-Quarter:
July to September 07 compared with April to June 07
37%23%41%34%
Forecast sales Year-on-Year:
July to September 07 compared with July to September 06
40%13%41%32%
Sales and forecasts figures in the summary show the net percentage, the balance of firms reporting an increase over those reporting a decrease for each region.


Company Size ReviewSmallMediumLargeOverall
Quarter-on-Quarter sales:
April to June 07 compared with January to March 07
27%27%29%27%
Year-on-Year sales:
April to June 07 compared with April to June 06
13%27%36%20%
Forecast sales Quarter-on-Quarter:
July to September 07 compared with April to June 07
28%42%43%34%
Forecast sales Year-on-Year:
July to September 07 compared with July to September 06
18%50%57%32%
Sales and forecasts figures in the summary show the net percentage, the balance of firms reporting an increase over those reporting a decrease for each size of firm.




“Market expectations appear positive due to Government’s plans to build more homes and also because building a conservatory is an easy and affordable way to extend living space. However consumers are facing increased pressures due to continuing rises in interest rates, and their focus will be more on meeting mortgage payments and less on home improvements like conservatories.

However we believe that even in more testing times, the old fashioned concept of good customer service remains key, especially for small businesses. We will certainly be putting our focus on customer satisfaction to ensure positive word of mouth and continuing growth.”

Mr Simon Wade, Manager
Rugby Double Glazing, Rugby





Prices

The average price of an installed conservatory in June was £7,751 (chart 4), an increase of 9% from £7,105 in March. The price excludes dwarf walls, bases and VAT.

Companies in the South (£8,280) and Midlands (£7,900) reported higher average prices than those in the North (£6,717).

Average prices for conservatories were greater among mid-sized (£8,337) and large firms (£7,879) than small companies (£7,484).

Conservatory Styles

Forty-seven per cent of conservatories installed in June were Edwardians/ Georgians. Twenty six percent were Victorians, and 22% were Lean-to’s. 'Other' conservatory styles accounted for 5%.





Outlook

Confidence eased this quarter with a balance of only 14% of fabricators more confident now about the overall prospects for the conservatory market than three months ago (chart 7). Large (net 29%) and small firms (17%) are more positive. More fabricators in the North (net 41%) are optimistic than in the South (12%). The Midlands are less confident.



“Rising interest rates will undoubtedly have an affect on consumer spending. People seem to still have the money but are tightening their belts until interest rates settle. However, in such times, it’s even more important for businesses to be proactive in generating leads and sales. We are certainly making more of an effort in contacting prospects directly via mail shots and leaflets as well as continuing with our local advertising.

We have been experiencing growth of about 10% year-on-year and although it may seem a little ambitious for this year, we still hope to maintain that level of growth or to be close to it by the end of 2007.”

Mr Colin Blackburn, Sales Manager
Discount Window Centre, Southampton



A balance of 23% of fabricators expect the conservatory market to grow in 2007 compared with 2006. Of those forecasting growth, 41% anticipate a 10-19% rise and a further 31% expect an increase of 20% or more over the year.



Profitability

A net 27% of fabricators forecast better profits over the next 12 months compared with the previous 12 months. Large firms (net 43%) and fabricators in the North (48%) are most positive.

Problems

The main problems facing conservatory fabricators in the last three months were margin squeeze (74%), price cutting in the market (71%) and supplier price rises (68%). However, the single biggest problem was lack of sales leads, mentioned by 18% of fabricators.

Overview

“The Global economy is still in good health as we enter the second half of 2007,” says Mike Rigby, whose company Rigby Research produced this report. “Although the US housing market is showing no sign of recovery and estimates suggest mortgage losses could top $100 billion, the US economy is bouncing back and shrugging off the threat from the collapse of the sub prime mortgage market. Russia is growing fast and China grew even faster than expected in the second quarter and took over from the USA as the world’s largest CO2 emitter.”

“In the UK, the economy is growing faster than expected increasing the chances of another rate rise to curb inflation. The UK has now seen 60 quarters of growth – the last time the economy stumbled was 15 years ago, a remarkable performance.”

“Interest rate rises will affect groups of people differently. Younger people mortgaged up to the hilt, many with fixed rate deals coming up for renewal, will be hardest hit. Older homeowners, many with no mortgages and savings that are starting to earn a better rate of return will breathe easier. Every conservatory company will look to their customer mix to see how they are affected.”

Comment

“Conservatory fabricators have reported stronger sales in the second quarter of 2007,” comments Mike Rigby, whose company Rigby Research produced this report. “Their expectations are also rising but wet weather and floods could cause a serious hiccup. Sales were hit in Hull and Sheffield, and then floods at the end of July postponed thoughts of buying or installing conservatories in much of the Midlands, Oxfordshire and Gloucestershire.”

“More homeowners are now choosing to improve their homes rather than move. Still rising property prices and the prohibitive cost of relocating are deterring many people from climbing the housing ladder, so more are opting to upgrade or extend their homes. Adding a conservatory is a great way of gaining extra space and it could soon be easier to achieve. Under changes proposed by the government, smaller planning applications in England - such as home extensions and conservatories, should no longer need planning permission where there is little impact on neighbours.”

“However, consumers face the pinch with existing interest rate rises yet to impact, and the forecast of a further rise to come. At these times it is important to market your company effectively making the best use of the budget available. It should go without saying that quality and service drive customer satisfaction, which in turn drives word of mouth. But boosting natural word of mouth by consistent marketing makes the difference between the winners and the also-rans. Are you a marketing 'man' or a marketing 'mouse'?”

The Conservatory Roof Report, a quarterly trends survey, is produced by Rigby Research, a division of Michael Rigby Associates, and published in the Conservatories Active supplement of the trade journal Windows Active. For survey details contact Stephanie Bradfield, Rigby Research on (01453) 521621.

© Rigby Research, 2007

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