Allan Jeffrey, CEO at Ultra Decking, believes sharp decrease in consumer spending combined with rising costs will continue to impact profits.
The home improvement industry experienced significant growth during the COVID-19 pandemic, with new customers taking advantage of the time available to work on their homes.
However, behind the scenes, things have not been so smooth sailing. The aftermath of the lockdowns and staffing issues caused by COVID meant that there was a huge backlog of containers in destination ports, and a break in the supply chain.
As a result of the disruption in trade, especially with Asia, there was an over 600% increase in container prices. This almost overnight price hike doubled month on month, hitting around $24,000 for a single container in 2021.
Following this, the industry was further hit by the rising costs of materials that followed supply issues and a failure to meet global demand for goods during and after the height of the pandemic.
In some cases goods and materials rose ten per cent, adding further to the pressure already growing with rising container prices. Following this, fuel increases hit Europe and the UK, alongside a driver shortage - worsening supply chain issues.
These kinds of issues have now become the norm, with long delays for goods coming into the warehouse, and longer lead times between deliveries, stock control has become harder to manage. This is leading many businesses to opt for smaller stock holding in order to try and effectively manage future projections.
Now, we face a situation where the cost of living is dampening consumer demand, as households put their spending power elsewhere. Demand is now not high enough to really combat our own rising business costs, shrinking our profit margins.
As a business, our choice is to support customers with new product lines such as cladding and fencing, allowing us to diversify into ever-growing markets, while also investing more in transport options to help manage costs.
Ultra Decking believe this year will continue to be a challenging one, with the sharp decrease in consumer spending combined with rising costs continuing to impact profits, while we continue to try and keep our prices as low as we can for consumers.