APL Market Update. Quarter one 2015

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1 APL Market Update Quarter one 2015 Welcome to the first edition of APL Market Update. This quarterly report is specifically for our landscaper and designer members, part one covers economic updates and industry news and part two focuses on an upcoming topic. The next issue of this report will be available in April 2015.

2 2 2 APL Market Update Contents Section One Market performance and indicators 3 Market Status overview of the market s performance and what s driving it 4 Consumer Mind-set 5 Business Confidence 6 State of Trade 7 Inflation and Pay 8 Employment 9 Vehicle fuel prices 11 Garden Design on TV 12 House Purchases 13 Housing Completions 14 Water availability 15 Water availability forecast Section Two Hire cost benchmarking 16.Background to survey 17.Hire costs: Equipment 19.Costs: Vehicle Fuel 20.Upcoming APL projects 21.Your feedback Notice and disclaimer This report is copyright to the Horticultural Trades Association (HTA) except where otherwise noted. To the extent permitted by law, the HTA will not be liable by reason of breach of contract, negligence or otherwise for any loss or consequential loss (including loss of anticipated profits, damage to reputation or goodwill, loss of expected future business, damages, costs or expenses payable to any third party or other indirect losses) occasioned by any person or entity acting or omitting to act or refraining from acting in reliance on this report or the data and/or information used to compile the same.

3 3 3 APL Market Update Market status A summary of market drivers The diagram shows the strong and weak market drivers impacting the garden landscaping industry. APL business confidence was high by the end of Q with over 70% of respondents ranking business in the next 12 months as above average. Many APL members have found that the value and volume of customer enquiries have been higher than the same quarter in In addition to this the major purchase index which measures the consumer attitudes to making a major purchase rose sharply from September to November Media was a weak market driver for this quarter as garden shows were more consumer focused rather than specific to garden design.

4 4 4 APL Market Update 5 Consumer Mind set Consumer confidence in general and to make major purchases is improved on a year ago Source: GFK/NOP -45 Consumer confidence index Confidence in making major purchases GFK recorded the climate for major purchases in December 2014 up 18 points from the same time in This means that going into 2015 more consumers are likely to be confident to make major investments and purchases such as a major garden redesign or landscaping project. Overall consumer confidence fell to -4 by December 2014 but was still much higher than the 2013 level of -13 in the same month. GFK report that consumers feel their personal finance will improve in the next 12 months from what it was last year which is encouraging for consumer spending.

5 Number of respondents 5 5 APL Market Update Business Confidence Most APL members are optimistic about the next year How do you feel about the outlook for your business(es) for the next 6 and 12 months with 1 being very negative and 7 being very positive? very negative very positive next 6 months next 12 months Sources: APL survey APL members were asked in a survey what their business expectation were for the next 6 and 12 months. The graph below shows that most APL members appear to be very positive about their business prospects. This likely reflects the improved position on a year ago for APL members compared with a year ago (see next page).

6 no of resspondents no. of respondents 6 6 APL Market Update State of Trade A majority of APL members saw the value and volume of enquiries in Q increase on the same time in How would you describe this quarter s volume of enquiries in comparison to the following time frames? considerably less less not much change more considerably more How would you describe this quarter s value of enquiries in comparison to the following time frames? considerably less less not much change more considerably more previous quarter same quarter last year previous quarter same quarter last year The graphs show landscaper perception of last quarter s enquiries in comparison to the previous quarter and the same quarter in Respondents were asked how they perceived the value and volume of enquiries.. On the whole, the picture is positive. Compared with a year ago volume and value are up. Compared with the previous quarter (e.g. Jul-Sept) most APL members were getting either similar or greater levels of enquiry. For landscapers with a larger turnover (more than 1 million) volume and value for both time periods were considerably more. Sources: APL survey

7 7 7 APL Market Update RPI inflation and pay growth The rate of pay growth exceeds rise in inflation for an optimistic end to % 5% RPI inflation Ave. total pay growth 0% Dec 2011 Feb 2012 Apr 2012 June 2012 Aug 2012 Oct 2012 Dec 2012 Feb 2013 Apr 2013 June 2013 Aug 2013 Oct 2013 Dec 2013 Feb 2014 Apr 2014 June 2014 Aug 2014 Oct 2014 Dec % Source: ONS The Office of National statistics reported that from the period of September to December the rate of earnings grew faster than the cost of consumer goods. The RPI (Retail Price index) was at a 5 year low in December at 1.6%, influenced by the decline in fuel prices. The cost of fuel fell 5.9% in November 2014 and in turn food prices followed by falling 1.7% (BBC.co.uk). The ONS recorded the consumer prices index inflation measure (which assess the cost of basic household goods) at a 12 year low down to 1% from 1.3% in October. Wage growth has also risen exceeding the rate of CPI inflation, suggesting a positive start to the new year and good signs for consumer spending in although the possibility of deflation remains a potential risk to the economy.

8 8 8 APL Market Update Unemployment rate and employment numbers Employment continues to grow and unemployment to fall 9% 8% 7% 6% 5% 4% 3% 2% 1% % Unemployment rate Number in employment (000s) (000 s) 32,000 30,000 28,000 26,000 24,000 22,000 20,000 Source: ONS Around million people aged were working full-time by October which is 560,000 more than for a year earlier. There were 455,000 fewer unemployed people in August to October 2014 (1.96million unemployed) compared to the same time in 2013, and was the first time unemployment has fallen below the 2 million mark since the financial crisis in late The rise in the number employed is reflected in the improving consumer expectations for their personal finance for the next 12 months.

9 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Pence per litre 9 9 APL Market Update Vehicle fuel prices Fuel prices falling to five year lows, helping to reduce business costs and boost consumer confidence Source: The AA fuel price report Unleaded petrol in PPL Diesel in PPL Fuel prices have fallen from the period September to December with unleaded prices down 13p to ppl and diesel prices down 11p from ppl to ppl. Indeed at the time of publishing prices had fallen even further than these data show, helping bring down inflation. Falling fuel prices could lower business costs for transport, again with the potential to limit business costs for landscapers and designers.

10 10 10 APL Market Update Garden designs on TV Garden designs recently featured or set to feature on TV include best back gardens and pub gardens, and Buckingham Palace s gardens The RHS has teamed up with BBC2 in its search to find the best aspiring garden designer in the UK through a competition show. The winner of the show Designs on Chelsea (working title) will proudly be able to display their garden design at RHS Chelsea Flower Show in In January Alan Titchmarsh returned with 3 episodes of Britain s Best Back Gardens where to celebrate 50 years as a gardener he will pick out his top 10 s within each episodes theme. This coverage has the potential to provide consumers with ideas for their own garden or landscaping projects. The shows theme is to illustrate that great gardens can be anything as simple as the tiniest pub garden to gardens that survive the harsh conditions of the UK (ITV.com). The Queen s Garden aired on Christmas day on ITV and part two on the 28 th December which followed Alan Titchmarsh s visits at Buckingham Palace Gardens throughout the year.

11 Jan Apr Jul- Oct Jan Apr Jul- Oct Jan Apr Jul- Oct Jan Apr Jul- Oct Jan Apr Jul- Oct Jan Apr Jul- Oct Jan Apr Jul- Oct Jan Apr Jul- Oct APL Market Update House purchases Home purchases have fallen back in the UK in the last year and remain at long term low levels 150, ,000 Approvals of loans secured on dwellings for house purchase (source: Bank of England) 50,000 0 The number of approved loans for house purchases fell every month in 2014 with the exception of June, this is a contrast to the steady rise in house purchases in Research by Lloyds Bank found that more than 2 million UK home owners choose to improve their home rather than move as a result of rising house prices making it difficult to afford 1. The research concluded that 1 in 5 home owners in the UK bought a house smaller than they would have liked and a quarter of those had the intention of extending or improving the property (read more). There is a possible opportunity in this to position a garden landscaping project as an improvement to the home and its value. However the risk is also that home improvements such as extensions constrain the available space for gardens in the future. 1)

12 12 12 APL Market Update Housing completions Number of new dwellings completed per year is at a long term low level, restricting the opportunity for landscaping new-build developments Source: ONS The annual number of homes built in the last 20 years shows a peak from 2005 till the housing slump and credit crisis of 2008 when house completions dropped dramatically. In the last 3 years home completions have become stable. Given the rising population, especially in the south east, house building initiatives may represent an opportunity in the coming years, especially in light of initiatives such as Garden Cities. The Institute for Fiscal Studies reports one in four 22 to 30-year-olds still live at home with parents (ifs.org), and many parents are giving financial help to get them onto the housing ladder. The risk to the landscaping market is that these parents who could have potentially put their savings towards their retirement, leisure or having their garden landscaped may put this money towards their child s first home. Source: ONS Read full regional data

13 13 13 APL Market Update Water availability Rainfall in England and Wales was stable at the end of 2014 but saw exceptionally high rainfall at the beginning of 2014 with a flood crisis in many parts. The maps show the rainfall levels across most of the country have been at or above normal levels, with the exception of north west England in the three months to December. Rainfall in England during February 2014 was 200% more than the expected rainfall for this time. By December 2014 the rainfall levels were recorded as above normal in most places and in Scotland were above average at 136.1mm ( This rainfall at the right time is positive news for the garden landscaping and design industry as it helps to minimise the risk of water use restrictions in future which can affect willingness to commission landscaping projects. Source: Environmental Agency Read full report

14 14 14 APL Market Update Water availability forecast There s a low forecast level of risk of water shortages for the 2015 season Forecast river levels to September 2015 Forecast ground water level to September 2015 The Environment agency forecasts ground and river water levels based on current water availability, recent rainfall and historic rainfall averages. This lets them look out to September 2015 and estimate the probability of water shortages by then. Basically, the bigger the red and orange slices are in the maps opposite, the greater the chances are that river or ground water will be running at low levels by September As most of the pie charts are mainly green or blue, this shows a probability of good water availability in Full details of the data and method are available in the full report. Source: Environmental Agency Read full report

15 15 15 APL Market Update Part 2: Hire cost benchmarking Survey results collected from November 2014 December 31 st 2015 We surveyed APL members to collect data on typical day rates for hire of different types of equipment. It s not a statistically robust study, but aims to help you compare what you re paying for different equipment. Of course hire rates depend on how long the hire period is, what you put in a skip, and lots of other factors. But we hope this gives you an at-a-glance way of seeing how what you re paying compares to the average so that if it looks like you re over spending you can look into this a bit more.

16 16 16 APL Market Update Background to the survey An survey was sent to all 220 APL members in November/December. 53 responses (21%) were received. Businesses turning over less than 100,000 per year were less likely to respond. 50% 40% Survey sample representation against all APL members (sample size 53) This may have an impact on the average costs of fuel and equipment as hire costs may vary depending on businesses size and location so this needs to be considered when understanding the results. More than 62% of respondents were from the South East (incl channel islands) and no respondents were from Scotland or Wales. 30% 20% 10% 0% APL members Sample Sources: APL survey

17 17 17 APL Market Update Hire costs: equipment Average equipment costs for a day s hire were calculated from the survey responses. Not all respondents put a value against each equipment therefore sample size ranged from 5-30 responses. Even on a sample of 30 there is significant margin for error, and results should be treated as indicative only. The range shows the highest and the lowest response given. 0.8 tonne micro digger 75 Range: No of respondents: 18 Rough terrain Tele-handler (5 m) 86 Range: No of respondents: tonne micro digger 84 Cement mixers 20 Range: No of respondents: 21 Range: 8-25 No of respondents: 5 3 tonne micro digger 98 1 tonne dumper 50 Range: No of respondents: 15 Range: No of respondents: 15 Sources: APL survey

18 18 18 APL Market Update Hire costs: equipment Average equipment costs for a day s hire were calculated from the survey responses. Not all respondents put a value against each equipment therefore sample size ranged from 5-30 responses. Even on a sample of 30 there is significant margin for error, and results should be treated as indicative only. The range shows the highest and the lowest response given. Powered wheel barrows (250kg capacity) 36 Range: No of respondents: 9 Wacker plate (320 x 400mm) 29 Range: No of respondents: 7 Hydraulic breakers (300m) 31 Skip 8 yards 175 Range: No of respondents: 8 Range: No of respondents: 30 Skip 14 yards 248 Rotavator 42 Range: No of respondents: 5 Range: No of respondents: 5

19 19 19 APL Market Update Costs: vehicle fuel The survey showed that around half of APL members do use a fuel card. However all of the respondents with a turnover of more than 1 million used a fuel card. From those landscapers with a turnover of less than 100,000 only 6% used a fuel card. No 47% Yes 53% Do you use a Vehicle Fuel Card? (A fuel card allows you to purchase fuel and track your fuel spend and savings) Sources: APL survey

20 20 20 APL Market Update Upcoming APL Projects: Customer Segmentation The HTA is planning to create a profile(s) of potential APL clients. It ll help us better target our marketing for APL, ultimately increasing customer preference for APL members over other landscapers. The profile will help us tell what magazines and TV programmes prospects watch and read, work out where they live, and give us a better understanding of their motivations and aspirations in life so we can better speak their language. To create the profile we need to collect information on APL members domestic clients that have had their garden landscaped in the last few years. So soon we ll be writing to ask you for (anonymous) client details such as post code and first line of address. The information supplied isn t used for any purpose other than the analysis. We use it to work out average information about domestic landscaping clients such as house size, age, income, job types, hobbies all of which relies on having post code and ideally address details. We ll be writing with more details in the coming weeks spelling out in detail what we re doing, and above all how we ll keep any data supplied secure.

21 21 APL Market Update What did you think of this first edition? Let us know your thoughts and how we could improve this in our very short survey, please click here or copy and paste the following link into your browser: Many thanks in advance! For more information on the HTA s market information and how it can help your business visit: