Skills Shortage News

CAN KBB RETAILERS AFFORD NOT TO TAKE THIS SITUATION SERIOUSLY?

BiKBBI Chief Executive Damian Walters talks about the skills shortage and how that will affect retailers and their respective installation proposition in the not so distant future.

In October 2016, a new industry report was published which concluded that the construction sector must ‘modernise or die’.

‘The Farmer Review of the UK Construction Labour Model’ was commissioned in February 2016 by the Construction Leadership Council at the request of the government. Led by CEO of Cast Consultancy, Mark Farmer, the report investigated the current labour model and proposed actions to safeguard the industry’s future.

The report suggests that the UK’s construction and refurbishment industry faces ‘inexorable decline’ unless longstanding problems are addressed. In particular, the review highlights the sector’s dysfunctional training model, its lack of innovation and collaboration, and its non-existent research and development culture.

As more people leave the industry each year than join it, the construction and refurbishment workforce is shrinking, placing increasing constraints on its capacity to build housing and infrastructure, which of course has a direct connection with the home improvement sector and those installation specialists (& retailers) who operate within it.

Figures from a 2016 YouGov poll confirm suspicions that school leavers and graduates do not view trades as an attractive career choice (the poll found that two-thirds of Britons wouldn’t consider a career in construction). Brexit could make this situation even worse if it results in reduced migrant labour.

Free movement of people between the EU and UK will end in March 2019, UK government ministers have said. From that date EU workers moving to the UK will have to register, at least until a permanent post-Brexit immigration policy is put in place.

But Home Secretary Amber Rudd has sought to reassure business there will not be a “cliff edge” in terms of employing foreign workers after Brexit. She said policy would be evidence-based and take into account economic impact.

Whilst it appears certain workers and specialisms will be ring-fenced within Brexit considerations; the government may not have much control on how migrant workers actually feel. If opportunities exist within other EU States, perhaps individuals may consider those as a safer option for their futures and their families.

Damian Walters

The solutions, according to Farmer, lie in the need to better align the requirements of industry firms and the businesses who hire them.

So, where does this leave the KBB industry?

There is an evident shortage of available kitchen, bedroom and bathroom installers who are willing to support retail lead installations. BiKBBI partners are anecdotally reporting challenges to keep up with a growing sales demand.

The BiKBBI undertook research, canvassing some 3,000 installers in 2017, on the subject of retail lead installation opportunities:

• There was a rough 5050 split between kitchen and bathroom installers; • A third were BiKBBI members currently working with our retail partners; • A third were BiKBBI members not currently working with our retail partners; and • A third were not BiKBBI members.

Retail loyalty

Of the 1,000 working with our partners, 94% work, or have worked, with 2 or more retailers at the same time, with 47% working with more than 3 retailers. This does suggest that retailers are, for a number of reasons, working with an installer population who are not dedicated to any single brand.

Future plans

When asked whether they saw themselves working with the retailer in 5 years, 31% said they wouldn’t be (for whatever reason). This may correspond to the demographic of those surveyed, with 56% in the 45 years+ age bracket (indicating an aging workforce typically).

Reasons for not working with retailers

Those BiKBBI members not working with retailers said that price was the main reason for their choice, although 90% of those who gave this as a reason, had in fact, not received details of pricing within the last 2 years.

With a skills shortage driving supply and demand characteristics, it is evident that the retail sector has a challenge to meet the lucrative lure of the private B-2-C (installer – consumer direct) contracts. Perhaps it is a simple case that retailers should be seriously reviewing their pricing strategy in light of changing and extraordinary times?

Only 4% of members, not currently working with retailers, had ever had a retail relationship, stating that a poor reputation of working with retailers was a key factor to their choice.

Interestingly, only 9% said they would consider working with a retailer today, but an encouraging 84% of those said that they would consider it in the future if compelling reasons were presented.

What’s important to installers in a retail relationship?

Those surveyed were clear about what’s important to them:

1. Competitive pricing 2. Fair payment terms that offered protection to suppliers 3. Installer friendly product and materials quality 4. On time, in full delivery 5. Personal relationships with the retailer & onsite support

Cutting to the chase

There’s absolutely no doubt about it – money talks. As the skills gap bites, the existing workforce become more valuable. It’s the age old ‘supply and demand’ situation that’s been around for centuries. My view is that pricing policies must be reviewed to ensure the industry keeps up with a very changing market place and if retailers want to attract (& retain) great installers, they must be prepared to review pricing and indeed the overall proposition.

Installation should not be viewed as a bolt on to the product. Instead, a truly integrated installation service should maximise a good balance between a great customer experience, risk management and the commercials for the retailer.