As has often been said in TTJ market reports on the fencing sector: the weather is often a crucial factor in how it performs. Focusing on the volume retail fencing sector, it’s clear that when Storm Katie blew in over Southern England over Easter it was of a magnitude that had the large fence manufacturers rubbing their hands with expectation at the orders about to come their way.
With gusts over 100mph, it had the power to damage a lot of fencing and boost demand after what had until then been a quiet first quarter.
“It’s been an interesting season so far,” said one large manufacturing contact servicing merchants, DIY retailers and garden centres. “The weather has had an impact. Weather is always the key driver for fencing, whether it’s good or bad.” “We started the year on plan expecting performance to be broadly in line with last year.”
But Easter was earlier than normal at the end of March and stockists were reluctant to build stock.
“So in quarter one, we were chasing sales because customers were not taking stock in early. That has however reversed after Easter due to Storm Katie in the Southeast.”
The combination of the storm, a high population region with lots of domestic fencing and strong promotional activity among the DIY retailers was enough to get things moving.
Contacts told TTJ that the period after Easter was tracking up around 25% on last year, whereas Q1 had been 15-20% down. One contact estimated 60-70% of activity was down to the storm.
But Easter itself, normally a big boost for the timber garden sector due to extra Bank Holidays and people spending more time in their gardens with warmer weather, was quiet for most of the garden centres and DIY chains.
Trade discounting created sales around the period with big markdowns across product ranges in order to shift volumes and increase footfall, generating cash but hitting margins. One DIY retailer slashed prices by 20% for a limited time on all its products.
“We have started to see it settle down to more expected [better] levels since Easter. If people have had damaged fencing for a while and they have left it, when the weather gets better they then do the repair work,” said a contact.
He said his business was currently 5% up on its annual budget plan for core fencing. Another manufacturer described the year so far as in “two separate buckets” – a wet and damp start creating little demand for garden products, plus the period after the storm on March 28.
“It has led to a significant increase in demand going forward and that has continued,” he said.
The storm released pent-up demand and the contact’s company has experienced mid single-digit growth, but double-digit growth for new product lines.
Demand for core fencing product was flat in January to March and Easter was “a bit quiet”. He highlighted that independent/ specialist customers were doing quite well. On timber prices, one manufacturer said although prices had gradually reduced, he pointed out that Q1 raw timber costs were still 4% higher than before the storms of 2014 (which caused a 10-12% increase in pricing because of huge demand). Customers didn’t necessarily appreciate this, he added.
Another which imports the majority of its wood compared the exchange rate of roughly €1.40/£1 about six months ago, to about €1.27 today, saying overseas mills supplying the UK would need to raise prices if they intended staying in the market. “Six to 12 months ago prices were low and declining. But if the price stays at €1.27 for another 3-6 months, there is only one way prices are going to go and that’s upwards.”
Interestingly, he believes raw material availability and pricing would be more stable if the UK elects to stay in the EU.
Meanwhile, incised timber posts are becoming more prevalent in several markets, including the agricultural sector, and pricing of the product was becoming “more sensible” compared to the 15-20% premium when it first came on the market. Several mills have bought incising technology to produce the product, while others are buying some from third parties and importing redwood treated to UC4 as an alternative
