Business is booming in the home improvements sector according to GS1 UK as consumers seek alternatives to moving home due to high costs.
In the year to 30 June 2017, 274 home improvement businesses joined GS1 UK, the supply chain standards organisation, compared to an average of 80 per year over the course of the previous 4 years.
In 2014, 57 home improvement businesses, companies specialising in DIY, furnishings and lighting, joined GS1 UK, with another 72 in 2015 and 108 in 2016.
Members of GS1 UK say that the increase is driven by a significant number of home improvements shows on TV and the increasing cost of moving, which is encouraging people to stay in their homes and improve them. GS1 UK’s analysis of HM Revenue & Customs data shows a substantial increase in the cost of moving compared to the average salary.
In the year 2008-09, the average stamp duty bill was £3,624 or 14% of the average salary at the time (£25,806). In the year 2015-2016, however, the average stamp duty bill was £6,175 or 22% of the average salary (£28,200).
Gary Lynch, CEO of GS1 UK, said: “The housing market is such an important part of the UK economy. But while this sector has slowed down, the home improvements sector has been able to take advantage and enjoy substantial growth while offering consumers wider choice to improve their homes.”
Online marketplaces are supporting the growth in home improvement sector
More businesses in the home improvements sector are trading via online marketplaces, such as Etsy, and by trade-facing sites, such as Screwfix, according to GS1 UK’s research.
GS1 UK’s membership data shows 81 British businesses joined the organisation to sell their products through Etsy in the 12 months to June 2017 compared to just 10 businesses which joined to sell products via Etsy in the previous 3 years.
By selling via these newer online marketplaces, along with more established sites such as Amazon and eBay, retailers in the home improvements sector have been able to sell to a larger market, with the potential to more easily export around the world.
The move away from bricks and mortar stores towards online retail has also reduced the costs associated with establishing a business in the home improvements sector. By having fewer physical or smaller physical premises, these companies benefit from lower start up and operating costs.
The upturn in business is reflected in the average turnover of GS1 UK’s members in the home improvements sector. GS1 UK data shows the average revenue for a business looking to sell their products online or via a major retailer has risen from £2.8m in 2016, to £3.5m in 2017.
Gary suggests that the growing popularity of ecommerce sites is enabling more home improvement businesses to flourish selling to a much wider audience. Increasingly, entrepreneurs in the sector are setting up digital businesses which allow their specialised products to reach more customers.
“These firms are taking advantage of the lower costs associated with trading online and rapidly growing turnover.While online marketplaces were initially seen as a threat to small businesses, they are increasingly becoming their distribution channel of choice. These sites are making it much easier to launch and expand businesses online – allowing simpler trading and expansion across borders.”
He added: “But selling online and using digital marketplaces present small businesses with a different set challenges and barriers, compared to traditional retail. These include standing out from the increased competition, protecting brand identity, managing all the information and data needed to sell via marketplaces, and ensuring supply chains and distribution channels are as efficient as possible.”