24 Jan 2018
As widely predicted, Countrywide CEO Alison Platt is gone after presiding over what can only be described, in my view, as a catastrophic tenure at the top.
Shares fell from £6 to £1 since she took over in 2014, plunging almost a quarter in the last week alone (135p to 10op at the time of writing) following the company’s latest damaging profit warning.
You do have to question the decisions that were taken by the board that led to the exodus of top-quality staff and the introduction of an ill-conceived digital strategy that will surely now be shelved for good. In this era of collective decision-making, shouldn’t other heads roll, including the board?
The company has dropped over £1bn in value since she took over, with a market value now of £254m, and profits tumbling.
Yes, the market is sluggish, Brexit uncertainty doesn’t help and we aren’t seeing the upturn in enquiries expected following the changes to Stamp Duty; no doubt most agencies will have their own tales of woe.
But for the UK’s biggest integrated property services group, this has been a real tragedy for a company for which I have had so much admiration over the years.
I warned a few months ago that the only way forward was to break up the company instead of pouring more money down the drain. I reckon they could even get as much as £700m for all the constituent parts, almost three times what it is currently worth.
So what does the future now hold for Countryslide? Up to 300 branch closures? More job losses? How will they be able to pay off their debts with fewer assets? Will they refocus their efforts on their traditional model?
Will someone new at the helm be able to turn around this tanker quickly enough?
Or are we seeing the death throes of what was once one of the most successful estate agency groups in the country, brought to its knees in such a short time and surely a salutary case study for any future textbook on how not to run a business.
And now for the rest of my column:
My predictions for 2018
Here are my top ten market predictions for the year ahead:
- With agency income slashed by the ban on tenants’ fees plus agency fees racing to the bottom, there will be considerable consolidation in the market, with up to 18% fewer branches and online agents. It won’t just be Countrywide reviewing their future plans and closing branches – many agents will join together, particularly in neighbouring towns, to make the most of economies of scale.
- With fewer agents, portals will have to review their prices. Does this mean they will reduce their costs downwards? I doubt it very much. They’ve only ever gone one way – so expect further price hikes during the year ahead.
- Agents will have to become their own media companies, using all channels of communication and learning the art of search engine marketing using search engine optimisation (SEO) and Google Ads (Pay Per Click) as well as content marketing. They will have to work harder on their databases and understand the impact that GDPR will have on them.
- The future will be all about artificial intelligence, big data and propensity modelling, predicting who is likely to sell and when in the coming months – which makes the cost per lead far less than the spray and pray model being offered by the portals.
- Digital is the way forward and will ensure success for those that embrace social media. A good agent is more likely to invest their marketing pound in social media, where the cost per click is minuscule by comparison. We’re paying 8p for a Facebook click whereas this might cost £80 on a Google ad, because everyone is piling in and chasing up the fees.
- The public will put more value on ratings and reviews, particularly on Google, when choosing an agent. They will even open up more emails where emojis are used!
- House Simple, currently second to Purplebricks among the onliners, will waste money trying to chase the leaders – but won’t succeed. Meanwhile, Foxtons will go back to their old model, with big branches and lots of negotiators, but with virtual branches that will fail in their model. Arun Estates (Hadleys in London) will realise just how much it costs (millions of pounds) to build an online presence in the capital. I also predict Connells Sequence will have a number of poor-performing branches in London that opened in 2017.
- Tepilo will divorce Sarah Beeny completely, following her recent switch of status from director to shareholder. Though she currently still fronts it, how long will this continue?
- Following Yopa’s very strange ‘Seriously, why not?’ rebrand under its co-ownership of Savills and LSL, I predict that one will buy out the other and run the business as they see fit; they will still be arguing on how it should be run – but will still be a loser in the internet hybrid race. Talking of weird brandings, have you seen Emoov’s latest marketing campaign, the Emoovement? They will also waste millions!
- Those working in estate agency won’t just undertake training but will have mentors and coaches to help them develop their skills.
Let’s reflect in a year’s time and see if any of my predictions came true.
Landlords don’t understand tax relief changes
We need collectively, as an industry, to educate investors that they will still get a far better return on investment in property than they would on the stock market.
The change to mortgage tax relief for investors may mean they are slightly worse off – but it shouldn’t have become such a big deal breaker.
Perhaps the collapse of Carillion should serve as a warning shot across the bows that investing in a share portfolio is not always a better option.
Property will always grow in value over a long-term investment, so why are investors so shy to buy at this current moment in time when bricks and mortar are still the best way to get real bang for their buck?
- Paul Smith is the CEO of Spicerhaart, whose brands include haart
[ comments ]