We ask directors at Hill’s Panel Products (HPP) what is impacting the KBB industry, how they are mitigating these challenges to find out what retailers can adopt from their experience

Pictured left to right: Newly-promoted deputy managing director Gareth Evans, managing director Keith Wardrope, marketing and business development director Dan Mounsey and purchasing director Alan Bolton

Interest rates, energy prices, difficulties recruiting, and general economic uncertainty created by the growing number of conflicts around the world are impacting the KBB industry.

These are the views of four directors at the board, doors, fittings and accessories supplier to the fitted furniture industry.

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Managing director Keith Wardrope, deputy managing director Gareth Evans, purchasing director Alan Bolton and marketing and business development director Dan Mounsey spoke about combating an uncertain market, how it is navigating and mitigating changes, and we discover how their experiences can relate to KBB retailers.

Combating uncertainty

“How do you combat uncertainty? By staying positive,” says MD Keith Wardrope. “2023 started with a certain amount of optimism but the market softened as the year went on, particularly in the last three months. Costs had increased significantly, and interest rates were starting to bite.

“I hope the market at least stays stagnant in 2024, although there are some signs it’s slipping again. I’d like to see prices start to change to some sort of normality again, especially in certain product categories such as maintenance and tooling costs. They’re the areas that have really shot up that nobody really sees.

“But in these circumstances, you need to concentrate on what you can influence, what you can do to keep the business thriving. There’s always work out there, it’s how long and how hard you have to work to get it.”

Pointing out how HPP has developed its business, deputy managing director Gareth Evans agrees, explaining  how it has influenced the company: “We have to be the best we can to give people less reason to do business elsewhere. T

“he service that we offer, and the range of products has to be as good as it can be. We’re looking at new products all the time and we’re being as competitive as we can on price. We’re always trying to push forward, and we’ll continue to do that.”

Inflation ‘blip’

The need to focusing on competitive pricing, has been exacerbated by high interest rates. Keith Wardrope comments” “I’d be interested to know how many kitchens in the UK are bought on finance.

“I believe people have really pulled away from buying like this because there’s a massive difference between paying 2% and 3% percent interest to having to pay something approaching double figures.”

Although interest rates have fallen, they are still above the Bank of England target of 2%, at the time of going to press. Alan Bolton commented: “Interest rates are definitely stifling the market and if they stay where they are nothing is going to change.

“When interest rates started biting, I think businesses thought they could ride it out for a while, but as it got progressively worse, that’s when the market started to soften.

“But as the older members of the team know, these things go in cycles, so this is a blip that could change with it being an election year.”

Energy costs

The KBB industry has also been impacted by greater costs, from energy prices through to maintenance.

Energy price rises were starting to slow, but worldwide unrest could send prices soaring again, while organisations emerging from long term arrangements could feel the pinch as the price gap between old and new tariffs take effect.

Marketing and business development director Dan Mounsey comments: “We’ve been very diligent about how we’ve purchased our energy, and our proactive approach with a fixed arrangement has worked very well over the last couple of years when prices have been increasing.

“But the arrangement’s coming to an end soon, so we have to decide what we do next.

“I think there are going to be a lot of businesses in that position who are not as robust as we are, and they could find the situation difficult.

“Do they fix again – which probably isn’t the best option at the moment – or opt for day-to-day or month-to-month prices?

“Following the market rate looks a good option for now but another conflict in the world could send prices soaring again. It all depends on your attitude to risk.”

Recruitment challenges

Like many KBB business, HPP has also been confronted by the changing jobs market.

Mounsey comments: “From a recruitment point of view, it’s been very challenging from a supply and demand point of view for certain jobs.

There’s been a big shift in the relationship between employers and employees. The sort of workplaces that are quite common now, you could never have imagined 20 years ago – with hybrid working and flat structures, there isn’t as much ‘the boss is the boss’ culture any more. You have to do more to attract staff these days.

“We haven’t recruited in a little while, but I think there’s probably more people being let go than being recruited at the moment, so that might change the dynamic in the future.”

However, he adds: “We’ve done really well at retaining staff, so hopefully we’ve done a lot right through communicating regularly with staff and creating the right work balance.”

Conflict concerns

While all four directors agrees the industry has come to terms with the Russia-Ukraine conflict, and the west had ‘weaned’ itself off Russian gas, future conflicts could impact the economy – and therefore markets – in many ways.

Alan Bolton explains: “If you’d told members of the public that Russia invading Ukraine would put up the price of their new kitchen by 25% in three months, they would never have believed you.

“That’s the type of scenario you could be looking at again if Europe has to face up to more conflicts.”

Keith Wardrope agrees, explaining it could be an area of trepidation for the KBB industry. “If conflicts keep happening around the world, then that is a reason for concern. The impact (of conflict) is bigger than many people appreciate.

“Costs will go up again and the markets will dip. It’s all on a knife edge that could go the wrong way in the wrong circumstances.”

However, he concludes: “You have to question how long the Russia-Ukraine war will last? If it was to end that would create a whole lot of positivity that would be welcome in all walks of life.”