Throughout the business value chain the effects were felt. Architects reported more postponed and cancelled projects, and installers showed a drop in their orderbook and turnover development. The effects were clearly the strongest in countries like Spain, where a full lockdown took place and construction sites closed. But even in countries like the Netherlands, where construction continued, the effects of the pandemic were severe.
That being said, the effects and severity of the crisis was different throughout the business value chain. Overall, general builders were least impacted. But what about a target group like electrical installers? How deeply are they affected and what are their outlooks for this year.
German and Dutch installers least affected
In the European Electrical Installation Monitor, a quarterly multi-client research based on 3,200 telephone interviews with electrical installers, we always cover a key trend (i.e sustainability, digitalization, buying behaviour, orientation behaviour and so on) and the economic development of the electrical installers.The image above represents the balance of electrical installers’ turnovers (increase/decrease) for Q2 and their expectations for Q3. It becomes clear that the German and Dutch electrical installers are least affected by the crisis. As mentioned before, one of the reasons is that the industry did not go into a full lockdown in these countries. Moreover, the installation markets in these countries were preforming very well with very high orderbooks before the crisis hit. The installers in Belgium, the UK, France, Poland and Spain were hit much harder, with on average half of all installers reporting a strong decrease of their turnover in Q2 2020 compared to Q2 2019.
The outlooks for Q3 2020 and the remainder of the year
When looking at the outlooks for Q3 2020 (this measurement was taken end of Q2) a more positive image arises. In all countries, electrical installers expect a far better Q3 compared to Q2. Especially in Germany, France and the Netherlands, installers expect that Q3 2020 will be at least on the same level as Q3 2019. Installers in Spain and Poland are the least positive about Q3 2020, but even there a slightly more positive outlook is presented compared to Q2.
This more positive outlook is also reflected by the fact that in almost all countries, the order books were growing again, following a sharp decline in the early phases of the pandemic. With this increase in order book, the outlook for the remainder of 2020 looks even more positive. However, during the measurement the second wave of the virus was not visible yet.
The drivers and barriers for further growth
We have seen that the electrical installers are becoming more positive, but how will this develop mid to long term. What are the drivers for this growth and potential barriers?
First of all, on the demand side of the equation things are looking positive. Even though orderbooks of all stakeholders in the construction industry dropped during the start of the pandemic, they are recovering and remain at a very high level. This in turn is driven by a high labour shortage in many countries and a high demand for (or shortage of) residential new build. Another strong driver is the push towards more sustainability and thus more renovation jobs or new build with more complex and bigger installation parts.
Finally, investments and government support can drive further growth, but most of the effects will be seen later, as many government projects still need to be designed, tendered and so on.
There are of course also some strong barriers. First and foremost the development of the current second wave of infections. This can have a double negative effect. First of all, we could face more uncertainties and new lockdowns. This will again lead to postponed, delayed and cancelled projects. Furthermore, this could also lead to another slump in the residential renovation, maintenance & repair business. When the first wave hit us, many consumers were unwilling or afraid to have a professional working in their houses. The share of DIY jobs done increased, but the share of DIFM decreased sharply. During the summer, the share of DIFM and the willingness to have professionals work in their homes increased again. At the start of the crisis, about 70% of the European consumers were uncomfortable to have a professional working their homes. This share decreased to about 40% in July, but has since been rising again and was at 48% at the end of August.
So what will happen? It is hard to say. If the second wave will not lead to new lockdowns and the impact remains minimal, the electrical market will continue to grow and improve as the drivers for growth are strong. On the other hand, if the impact is more severe, we could face a return to the very negative sentiment and further deterioration of the market. Time will have to tell which scenario will come to be.
About the research and USP Marketing Consultancy
The European Electrical Installation Monitor is a quarterly multi-client survey by phone amongst 3,200 Electrical installers annually. The full reports provide an in-depth view on key topics like sustainability, buying behaviour, orientation behaviour, digitalisation and many more.
This research is part of the multi-client research portfolio of USP Marketing Consultancy. Other multi-client report cover target groups like HVAC installers, contractors and architects.