Dulux Trade Comment: Q3 2019

Paul Roughan, Trade Merchants Sales Director Dulux Trade is BMBI’s Expert for Paint.

Last quarter, the BMBI macroeconomics commentary was filled with uncertainty and low confidence. Brexit didn’t happen, again, and an election has been called for December 12th, adding to the uncertainty.

The consumer confidence index continued to decline in Q3, with all five of the measures that the index tracks declining in October. Housing transactions are at their weakest for two years, however GDP grew by 0.3% in Q3 with services leading the way. Inflation is roughly at the government’s target with house prices, mortgage demand and construction output all positive.

The trade paints market grew by 2.7% in volume and 6.3% in value in the 12 months to September 2019. Within this performance, there are three key growth sectors: durable emulsions, premium aesthetics, and water based trim paints. Firstly, based on current trends in value terms, durable emulsions will be larger than contract emulsions by 2021. Premium aesthetics, or ‘luxury paints’, are growing at 28% year-on-year in volume, while water-based trim paints, although currently less than 25% of total interior trim sales, are forecast to reach 34% in three years.

Interestingly, all these three growth sectors command a price premium. This is great news as it seems as if decorators, generalist painters and consumers are all willing to pay a premium for products that deliver performance benefits.

The number of painting operatives in the UK has remained stable over the last three years. However, the proportion working in painting and decorating businesses has increased and there are signs of growth in painting works among other trades. This is an opportunity for merchants because customer feedback suggests these other trades are predominantly shopping in specialist merchants for their decorating needs rather than in general builders’ merchants.
Finally, according to the ONS, net migration of Europeans into the UK is declining. More central and eastern Europeans are leaving the UK than arriving for the first time since 2004. There will soon be, if not already, a significant squeeze on labour supply.

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Launched in 2015, the award winning monthly Builders Merchant Building Index (BMBI) report is the only reliable measure of repair, maintenance & improvement (RMI) activity in the UK. Filling an important gap, it can be widely used in construction, and by economists, Government, national media, commentators and influencers outside the industry.

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