It’s been a tough year and this year’s shopfitting league table shows how much the market has shrunk. But are things levelling out and are we seeing the new normal? John Ryan reports
So was it good for you? Now, more than ever, those operating in the heady sector that is shopfitting must be hoping the answer is: “Yes. Oh Yes.” In the present climate, such a positive affirmation might be an indication that things are on the mend – and in case you’re wondering, the question to which this is the answer is: “How’s business been so far this year?”
The facts are simple. The past year has been catastrophic for some and, at the very least, tough for many. A glance at this year’s table of UK shopfitters shows that while the pecking order may look familiar, the size of the available cake has more in common with a Chelsea bun than a full-blown Black Forest job.
Once more, Styles & Wood sits at the top of the tree, but with a forecast 40% fall in turnover during the present year, on top of a near 25% reduction during last year, things do not look pretty. Ivan McKeever, chief executive of the embattled firm, has had his work cut out over the past 12 months, but is not giving up the ghost. “It’s very tough. But the significant fall-off in our retail market has abated and now it’s found a level. Retailer’s like-for-likes have been holding up remarkably well and for shopfitters, it’s a matter of levelling out at a lower base point.”
Take 40% off Styles & Wood’s 2008 turnover and you arrive at a number close to £140m, a decline that could see the company toppled from its number one spot during the next 12 months.
Race to the bottom
The question is, which firm would take its place? Styles & Wood is certainly not on its own in being affected by the downturn. George Morris, chairman of seventh-placed Morris & Spottiswoode, is blunt. “First of all, God it’s been awful. There were indications that it was going to be awful and it’s been a matter of getting used to things.”
Morris says that the Morris & Spottiswoode view of events is that next year will be “bad” too, yet curiously, he adds: “I hate to say this, but I’m more optimistic than pessimistic at the moment.”
This seems, to put it mildly, a little counter-intuitive. So what grounds are there for Morris’ optimism in the face of what might seem an overwhelming number of negatives? Talk to Michael Ryan, chief executive of Dublin-based Kleerex Group, which saw its turnover increase by 11%, to £60m during last year, and it quickly becomes apparent that although times have been tough, there is business still to be done. “There are customers, but they are looking for even more value. It’s a bit like a race to the bottom. It’ll be interesting to see who’s around in five years time.”
The “race to the bottom” referred to by Ryan is a complex business. Rumours and anecdotes that some shopfitters are buying work from retailers, in the form of deals where a profit will be impossible to make, are rife. National Association of Shopfitters director Robert Hudson comments: “Shopfitting and interior contracting clearly came off a very big boom when there was a lot of easy credit sloshing around in the market.” He continues: “It will be the drop in money coming into the industry through suicidal tendering, rather than falls in workload that will do most long-term damage [to shopfitters’ fortunes].”
It is an inescapable fact that in the early part of last year, ahead of the looming storm, work and projects were plentiful. Heathrow’s Terminal 5, Liverpool One, Westfield London and Bristol’s Cabot Circus were among the developments that had shopfitters popping champagne corks.
But post-crunch that all appears a little unreal. With this year’s headline schemes, notably the forthcoming St David’s Centre 2, and Stratford beyond that, all rumoured to be a mite tenant light, the amount of work as well as the scope of individual retailer’s projects continues to be severely curtailed.
Still, it’s worthwhile noting that if you were to total the turnovers of the companies on this year’s survey and compare this with the total for the same companies in 2007, the fall would be less than 10%.
The point is that unlike previous years there appears to be little pattern to those that have suffered steep declines and the fortunate few that have actually seen sales and profits rise. At the head of the table, the top three companies have, between them, seen a 23% fall in turnover and yet move a place lower and Havelock Europa has seen turnover and profits heading happily north.
In part, this may be to do with the fact that outfits such as Styles & Wood have, to a large extent, been reliant on framework agreements with large retailers such as Homebase and Marks & Spencer. And the trend among many large retailers has been to encourage competitive tendering – likely to have a negative effect on the larger shopfitters, as smaller operations slash margins to win work.
Realistically, perhaps the answer is focus. Vivid Shopfitting managing director Damien Kenny says: “There will be a tendency for people to go for safety.”
He says that retailers have been looking to play safe this year, choosing shopfitters whose financial credentials look solid and that this will continue into next year. Perhaps this is why Morris remains optimistic: “We’ve got no debts, so we’ll get through this,” he says.
All shopfitters seem united in the view that what we are seeing is likely to be the new normal and that even when better times return, retailers – having got a taste for lower prices – are unlikely to begin paying the sort of premiums for jobs that were seen early last year. There is also a strong chance that the existing economic troubles will hasten the demise of the weaker players and that this trend will not be confined to the table’s lower echelons.
The general sense is: “Thank God for food retailers.” As McKeever notes: “Food retail, which is 50% of what we do, has remained resilient.” Tesco, Sainsbury’s, Morrisons, Asda, et al, have provided many shopfitters with a haven of stability and look set to continue to do so. That said, there are few hiding places and undiversified shopfitters are in the firing line.
Top shopfitters league table 2009
|Rank 2009||Name||Year end||Revenue 2008||Revenue 2007||Pre-tax profit 2008||pre-tax profit 2007||Rank 2008|
|1||Styles & Wood||December||£243,100,000||£315,500,000||£13,900,000||£28,800,000||1|
|5||Morris & Spottiswoode||December||£122,500,000||£125,300,000||£3,060,000||£3,430,000||4|
|6||Simpson (York) Limited||December||£94,500,000||£102,800,000||£1,630,000||£2,390,000||6|
|7||S Dudley and Sons||August||£93,900,000||£50,300,000||£6,700,000||£5,600,000||10|
|8||ISG Retail & Leisure||June||£87,680,000||£87,100,000||£2,980,000||£2,060,000||7|
|10||Marmon Retail Stores Fixtures UK|
(Eden and Sloane Group)
|12||Alan Nuttall Ltd||May||£48,760,000||£48,780,000||n/a||£1,750,000||11|
|14||Bridgford Interiors Ltd||December||£28,900,000||£33,900,000||£845,000||£691,000||15|
|15||Hurst Stores & Interiors||March||£26,700,000||£21,200,000||£648,000||£534,000||22|
|18||Uno Retail Solutions||December||£24,000,000||£18,000,000||£400,000||£200,000||25|
|21||Deane & Amos||March||£19,240,000||£18,880,000||£780,000||£520,000||24|
|24||Cardinal Shopfitting and Systems||December||£17,600,000||£28,580,000||£328,000||£381,000||16|
|25||Newman Scott Ltd||October||£16,900,000||£12,400,000||£10,000||£120,000||29|
|27||Paragon Interiors Group||March||£13,000,000||£17,900,000||£200,000||£100,000||26|
|30||John Richards Shopfitters||March||£12,000,000||£11,000,000||£400,000||£270,000||31|
|34||Europa shopfitting & Interiors||December||£9,740,000||£8,600,000||£300,000||£670,000||33|
|38||Du Boulay Contracts||March||£8,300,000||£8,200,000||£280,000||£480,000||35|