Encon Insulation comment: Q4 2018

Mike Beard, Merchant Development Director Encon Insulation is BMBI’s Expert for Insulation Products – Distribution.

There seems to be no doubt that uncertainty and anxiety surrounding Brexit is increasingly weakening consumer and business confidence, which is affecting all areas of the market from new housing and RMI to commercial projects. The sooner we get Brexit clarity, the sooner we should see new market growth stimulated by private and social new build with a resulting positive knock-on to RMI. This though is dependent on avoiding a “no deal” scenario.

With this uncertainty in the market, actual sales volumes of insulation sales are holding up well, despite the pressures of rising prices in all sectors and continuing shortages of key products. Good winter building weather has helped here!

There is also no doubt that the specification and technical merit of all products is under great scrutiny, with fewer requests to ‘value engineer’ or compromise on original specifications. Overall, this is having a beneficial effect on the balance between commodity and value-added products.

For housebuilders on site, who already struggle with recruiting skilled labour, there is the looming problem of serious skill shortages, and inflation in construction material prices.

For merchants and retail outlets, there is an interesting dynamic in fragmenting product routes to market with the rise of online suppliers. Retail does appear to be losing share to these online suppliers, whether they are part of a merchant group or online-only traders who sell product without investing in stock. This change is also reflected in the reduction in DIY specialist retailers and the rise in trades both supplying and fitting the products.

Against this background of change, Encon is endeavouring to understand the individual merchant’s strategy in its local market, helping it to add value to insulation and related product opportunities and investing in senior sales support for key Independent Builders Merchants.

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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.