UK tiles floored by consumers opting for travel over home improvements

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A sharp downturn has hit Britain’s tiles industry as the cost of living crisis has cooled the pandemic-era enthusiasm for home improvement.

While some areas of spending including travel are holding up, consumers are putting off bathroom and kitchen renovations, pushing the UK tiles market down 13 per cent in 2023 from the previous year. UK tiles producers and retailers are slashing sales forecasts, with some going out of business.

“Consumers are much more focused on finances,” said Robert Parker, chief executive of Topps Tiles, Britain’s largest retailer in the sector, which last month warned investors of lower profits. He added that even though he believed the market had reached bottom, the current environment was “the toughest since the financial crisis”.

The company, with more than 300 shops across the UK, said its sales dropped almost 10 per cent on a like-for-like basis in the third quarter compared to one year earlier.

“People probably have spent quite a lot of money on their homes over the last two, three years which means that they’re in a position where they don’t need to do it this year,” said Parker.

Retailer CTD Tiles, with 56 shops across the country, last week went into administration before it was bought by Topps. Late last year, Tile Giant, which had 82 stores, closed down, pointing to how the cost of living crisis had squeezed cash flow.

In the aftermath of the pandemic, consumers flush with excess savings continued to spend relatively freely, even as economic conditions tightened and energy prices jumped. This ground to a halt last year as interest rates rose to a 16-year high.

Growth in spending on home improvements has been declining over the past few years; it fell 7.5 per cent in July compared to the same period last year. In contrast, customers continue to splurge on other discretionary areas such as travel, data from Barclays shows.

While spending on DIY renovations are still robust, “do-it-for-me” projects, where people hire tradespeople to tackle bathroom or kitchen upgrades, have petered out, said Richard Wesley, director of surfaces and decor at B&Q. Some are turning to cheaper alternatives, like using vinyl flooring, which is easier to do yourself. 

“Pretty much anyone can pick up a paintbrush and paint a wall but if you’re tiling you’ll probably need a tradesperson to do the job,” he said. 

House moves are a key sales catalyst for home improvement products, meaning that a stagnant housing market has done nothing but add to the industry’s troubles, analysts said.

While getting better, the pace at which people are buying and selling properties is still below its pre-pandemic levels. There were about 91,290 housing transactions in May, against 96,120 over the same period in 2019, according to HM Revenue & Customs.

“Given where we are in the economic cycle, tiles is just one of the things people are squeezing out of their budgets,” said John Stevenson, an analyst with Peel Hunt. “But I am sure we’re now at the bottom of the cycle.”

Planning applications in the UK for bigger home projects have plummeted 44 per cent since their peak in March 2021, from 49,073 to 27,447 in the same period this year, according to Barbour ABI, a data firm.

Other specialist retailers have also been hit by weak demand. DFS, the UK’s largest retailer of living room furniture, in June cut its profit expectations by nearly 50 per cent, saying consumer demand in the upholstery sector was at a “record low”. Carpetright, a flooring specialist, last month filed a notice of intent to appoint administrators as it fell victim to “the challenges of many retailers, especially those selling big-ticket items”.

Big home improvements are also being delayed in the US, where many projects are financed by borrowings, according to Home Depot. Similarly, US group Pool Corporation said demand for new swimming pools was weak.

Back in the UK, small producers are also facing problems. In April, Johnson Tiles, which had been designing and producing ceramic and porcelain tiles since 1901, closed down all its UK manufacturing sites, saying it was “increasingly unsustainable” to produce tiles in the country. 

The luxury end of the market is struggling, too. Sarah Watson, founder of Balineum, a producer and retailer of handmade tiles based in Stoke-on-Trent, has been questioning whether the company could continue manufacturing its wares in the UK amid weak demand and high costs.

While the company reported strong revenue increases in the rest of the world for the year to March compared to the previous year, it saw a 16 per cent drop in the UK, its biggest market.

“It feels like we are hit from every direction at the same time,” she said. “It is the general economic conditions, but also a combination of Covid and Brexit, inflation . . . the industry has a really tough road ahead.”