Geoff Cooper: retrofit existing housing stock.
TP assesses a bleak market
Published: 26 March, 2010
LONDON: Geoff Cooper, chief executive of national builders’ merchant Travis Perkins, said 2010 would turn out to be a much tougher year for the industry than 2009. Speaking at a private gathering at the Metropolitan Hotel in Old Park Lane last night, Mr Cooper addressed a section of the trade press to set out how TP viewed the merchant market going forward.
He said the retail sector would contract by between 4% to 5% this year. The housing market, however would bounce back, but only because it had reached such very low levels in 2009.
Public funding, said Mr Cooper, would continue until 2011, but the lag in the market was such that whatever government was in power, it was anticipated that spending would not return until the end of 2011.
Merchants, Mr Cooper said, had to be at the “top of their game in order to have a half decent time in 2010”. Long-term forecasts in this volatile market were “for idiots”, he stated.
Things would improve, based on long-term drivers. “Life events force turnover in the housing market,” he said.
The continuing lack of public confidence was holding back spending. “People simply don’t want to take on more debt,” he said. “This is especially true for public workers whose future whose future may be uncertain.”
What the UK needed was an energy-saving subsidy regime for retrofitting existing housing stock, he explained.
“A reduction in VAT to 5% will never happen,” he added. “In fact, there is a strong chance that VAT will be increased to 20% by June.”
TP’s business had not been immune to the recession. However, its Toolstation brand, acquired in 2008, has been thriving throughout the bleak times, thanks to consumers’ willingness to use the internet. Toolstation sells through stores, online and through catalogues.
“Toolstation was built from the ground up as a multi-channel operation,” Mr Cooper explained. “That means it has a much lower cost base and can therefore offer consumers better value.”
TP’s Wickes business was the company’s “best lever to make upgrading homes affordable.” He added that Wickes’ 200 outlets were “undersized for the UK market’s demand. We really ought to have 350 stores,” he commented. The Wickes television advertising campaign has to-date cost the company just under £20m.
John Carter, TP’s chief operating officer said “the recession has made cost reduction very important. Contractors want their tradesmen to be installing, not sourcing products.”
To add value to service, he said that TP’s programme of branch refurbishment or relocation had seen an upswing in both business and efficiency of operation.
TP would not be drawn about the City rumours that it might be interested in acquiring Wolseley’s offloaded businesses.