At WhatShed.co.uk wanted to understand what the effects of Brexit have and are going to have for the UK consumer garden buildings market. We recently surveyed two of the UKs largest garden building manufacturers, Mercia Garden Products and Shire Garden Buildings. Both manufacturers supply a significant percentage of the total volume of garden buildings sold in the UK both online and via ‘Blue Chip’ high street retailers.
- Currency swings following decision to leave EU (21% drop in value) have seen large increases in imported raw materials. Imported timber/materials typically make up 66% of the final costs the consumer pays.
- Currency fluctuations have caused a typical 14% cost increase to manufactures.
- To date the manufacturers have absorbed the costs, due to many ‘Blue Chip’ retailers who had fixed price agreements in place. To date this has insulated consumers from any price rises.
- Price increases will be now being passed on to consumers starting in April 2017. “As the dust has settled, and reality set in, this has now led to ‘Blue Chip’ customers accepting cost price increases, albeit very reluctantly.” Quote, Terry Waldron, MD for Mercia Garden Products.
- Price rises consumers are likely to see in 2017 will range from an 8% to 10% increase.
- Manufacturers are actively working hard to reduce capital projects intended to reduce costs to combat the remaining effects of the increases. This means potential job freezes or cuts are likely.
- Brexit has impacted the consumer in two ways for 2017.
- The garden building consumers buy is smaller and/or of a lower specification.
- The garden building consumers need, costs them more.
- The trend for smaller and cheaper sheds will mean a tightening of the market for some producers.
- Consumers are going to increasingly turn to sites like WhatShed.co.uk to help find the lowest priced products. “The consumer will undoubtedly turn to the internet to search for the best prices and competition will intensify.” Quote, Terry Waldron, MD for Mercia Garden Products
On a positive note, overall, sales of buildings have risen over the last 2 year period & it appears that this is continuing for 2017. The focus is once again on staying at home and improving all aspects of it. More people are expected to have ‘staycations’ this year due to the weak pound, so they are more likely to make the most of their gardens and garden buildings. The continues a growing trend for bespoke buildings and this again still appears to be strong in 2017. This aids the UK manufacturers due to higher margins.
So we feel that with all the creativity and business know how that is in our industry, it will be just fine…every Brexit cloud has a silver lining!