Several major housebuilders have made the decision to take optional extras out of the sales centre and into the stand-alone studio or retail store, but none has done it quite on George Wimpey's scale. The housebuilder created its first options centre in Edinburgh a year ago, has since created two more in Cannock and Bromsgrove, opens in Swindon next month and is making steady progress with its strategy to have a centre with 5000 to 8000 ft2 of retail space in each of its 27 operating regions.
The move marks the coming of age of housebuilders' optional extras services in the UK and the emergence of the one-stop-shop home retailer. Once regarded as a digression from the real business of building a house, optional extras are now being seen as a significant potential income stream. Westbury Homes' Direct Solutions range, for example, made a contribution to the group's operating profit of £3.6m over the past year.
In addition, optional extras are now regarded as a way of developing, maintaining and exploiting the customer relationship, just as retailers like Tesco do. Like retailers, housebuilders are relying on stores, the web and catalogues to market their wares, but they are finding that being a retailer brings culture change for them, their subcontractors and suppliers, as well as for the homebuyer.
George Wimpey's option centres are an element of an overall business strategy that has been appropriately named Customer for Life. "My remit is to get as much customer care out of it and it absolutely works. The customer gets a great feel-good factor from the centres," says Graham Hughes, director of customer services at George Wimpey. The move was also driven by a fact-finding mission to the firm's US division, Morrison Homes, where each customer spent an average of £15,000 on extras last year, and by the growth of its own options service over the past six years.
"It had reached the stage where our sales centres looked like a junk shop because of all the options on display in them. Now the sales centres are less cluttered and the sales executives in the sales centre can focus on their job," says Hughes.
In Edinburgh, George Wimpey's options centre has doubled average buyer spend on extras, from £3500 to close to £8000, and Homes' survey of the top housebuilders' optional extras services shows spend is growing across the industry. Homebuyers are now spending an average of £3600 on extras, £400 up on the figure in last year's survey (see page 11). The most popular purchases are still traditional attractions such as flooring and kitchen-based extras like stainless steel appliance upgrades.
But the survey found that extras ranges are being augmented with such diverse items as glass-topped breakfast bars and garden landscaping. When asked what additions to their service housebuilders would be contemplating in the near future, home technology, from WiFi to LCD televisions, emerged as the clear favourite.
We know we’ll be competing with the john lewises of this world but we’re hoping that we’ll build up a rapport and get repeat business
Trisha Lightfoot Bryant Design
Big housebuilders like George Wimpey make the biggest margin, and can offer the most competitive prices to customers, on items that its regular subcontractors can fit, like flooring. But they may struggle to compete with mass market retailers on items like electrical goods. Housebuilders have the advantage over high-street retailers as purchases that are part of a home's fabric are free of VAT. Even so, some buyers remain sceptical as to whether housebuilders give a good deal. "We tell people some things may be cheaper than from a store, and others more expensive, but that our price does include the fully fitted item, ready to use, with a two-year guarantee," says Hughes.
To counter buyer fears that housebuilders are charging high prices for extras, North-east regional housebuilder Bowey Homes has come up with a transparent solution. If a buyer chooses to spend extra on the latest designer taps in its options range, the cost of standard taps is taken off the buyer's overall extras bill in the form of a credit, so that the customer pays for just one set of taps. "It means that people only have to pay a little extra, and they don't feel that they're being ripped off," says Karen Emerson, sales and marketing director.
Tapping into the market
Bowey has been offering extras for three years, but in a low-profile way. Now the company is building up its service, but as a small player in the industry, building only 200 homes a year, it doesn't have the clout to negotiate the good deals with suppliers and subcontractors that players such as George Wimpey can. "Most subcontractors and suppliers see this as a nuisance and would sooner give you 1000 bland identical products than 100 different ones," says Emerson.
The company is getting its own staff to buy into the change by giving a small commission to the sales executive and site manager for every £1000 a customer spends on extras. Site managers are key to making the culture change, reckons Emerson. "They don't always really understand the customer focus."
Although its buyers are now spending an average of £5000 on extras, the housebuilder doesn't reckon it will be making a quick profit out of the business. "It's been a huge investment for us and we're not going to get quick rewards. But it's about customer focus. We see our customers as being in a continuing relationship," says Emerson. "We're all becoming more customer-focused and trying to give the buyer a more personalised home. One of the negatives of a new home is that it is not individual, but homes are almost becoming a fashion item. They are an extension of people's personality."
"Doing this makes you realise how good retailers are," says Mariana Knight, sales director of Westbury Homes' Nottingham region. "Housebuilders have to realise that they need to become retailers." Knight says she is now employing staff with customer service skills rather than house sales skills, and her region's extras centre is run by somebody from retail. Nottingham is one of the first regions to have a Solutions house, a Westbury home dedicated to selling extras. The company has two houses open and a lot more on the way. "They've been a lot more successful than we thought," says Knight. The Solutions house is open to the general public, although they can't buy fitted items. They can however buy items such as paintings, cushions and even teddy bears.
Others are also planning to broaden their market. George Wimpey's Graham Hughes says that the company may look at opening up their options centres to existing customers.
Bryant/Taylor Woodrow began offering a limited list of items, including flooring, conservatories, lighting and gardens, to its existing customer base at the end of last year. The business is now about to be promoted in a major marketing campaign under the brand name of Your Choice. "We know we'll be competing with the John Lewises of this world, but we're hoping that we'll build up a rapport," says Trisha Lightfoot, national director of the housebuilder's options business Bryant Design.
George Wimpey: retail-style option centres
The centres don’t have glass shopfronts as they are not open to the general public, solely to George Wimpey homebuyers (pictured). Every customer passes through an options centre, as it is where they make the basic choices of colours and finishes, and they are under no obligation to buy. Buyers are invited to a preview day the weekend after signing up for a new home where they tour the centre and take a look at what’s on offer. They don’t get down to serious choosing or buying until they return for their individual appointment. Then they have two to three hours of retail therapy, with the undivided attention of the centre manager as their personal shopper because no other buyers are allowed into the centre during appointments.
Analysis of the first four months of operation in Edinburgh showed its sales included: 2000 downlighters, more than 95 security alarms, 120 stainless steel chimney hoods, 30 fires and surrounds, and 14 conservatories. Those sales were made from just 3500 ft2 of retail space, but the Edinburgh centre is soon to move to bigger premises.
Each option centre is managed by its local division. “They need to be, so that they can tailor the products on show to the local market,” says Hughes. If a region’s current and future schemes are primarily for first-time buyers, there would be little point in displaying spa baths and steam showers in the centre, he explains.
Extra, extra! read all about it …
Homes asked the country’s top 10 housebuilders, and 10 more niche housebuilders for good measure, what the buyers’ trends and spends were in optional extras and upgrades. The questions refer only to paid-for items, not choices included in the basic house price
What is the most popular buy?
1 - Carpets
The style mags may be extolling the virtues of limestone and oak, but good old-fashioned carpet remains overwhelmingly the favourite with homebuyers. It looks as if buyers are being influenced by the neutral show home aesthetic. Trisha Lightfoot of Bryant Design says: “Of the top 10 colour choices for carpet, six of them are shades of beige.”
2 - Appliance upgrades
Buyers don’t want the cheapest cooker and fridge in the range – they want the stainless steel hob and oven and the American-style fridge. David Wilson Homes is also planning to add triple A-rated energy-efficient appliances to its range in the autumn, to appeal to the environmentally conscious customer.
3 - Wood flooring
Fashions come and go but wood flooring retains its popularity among the stylish and those drawn to wood’s durability, easy maintainability and environmental soundness.
4 - Sockets
Sockets featured in our list last year and their continued presence in the popularity charts could suggest that housebuilders still aren’t putting enough of these basics into new homes.
5 - Fireplaces
This doesn’t mean that homebuyers are suffering from a serious dose of nostalgia; contemporary designs are featured in the ranges of many housebuilders. David Wilson Homes has recently added them to its Expressions range.
6 - Ceramic flooring
Maybe EasyJet and Ryanair are responsible for this one. All those cheap flights to Italy, France and Spain have inspired UK homeowners to go to town tiling their own floors.
1 - Flooring
Flooring was edged out of the number one slot last year by kitchen appliances, but this year it is back on top. Carpet, wood flooring and Amtico emerged as the top flooring choices among new homebuyers.
2 - Kitchens
Homebuyers love kitchens, and although housebuilders focus a lot of attention on making the standard product look good, buyers are willing to spend to make them look even better. The most popular items are upgrades to granite worktops and kitchen appliances, although some housebuilders are looking beyond the basics. Bellway Homes’ Bellway Bespoke service offers such variations as Belfast sinks and glass-topped breakfast bars.
What is the average buyer spend on upgrades and extras?
This figure is rising steadily as housebuilders learn more about how to cater for their market, and this year is £400 up on last year’s figure. The average given by housebuilders surveyed varied from £500 to £10,000. Some of you out there have some much bigger spenders, however. For example, Westbury Homes’ Nottingham region achieved a record for the company when a buyer spent £47,000 on extras from its Solutions centre.
1 - Home automation
Housebuilders highlighted WiFi, LCD televisions and home entertainment systems as among the many variations on the theme of home automation that they are looking at adding to their ranges (see 'Is home automation the next big thing?').
2 - Furniture
Bryant Design’s link with children’s furniture company Wigwam Kids could be a sign of things to come. Several respondents are looking at additional wardrobes, another is looking at kitting out a home office with furniture and technology, and a few are looking at options for the smallest room, which brings us to…
3 - The bathroom
Although housebuilders are already offering some options for the bathroom, many believe this is still a largely untapped – so to speak – market. “The bathroom is the only fitted area [apart from the kitchen] that can help to enhance the proposition to the homebuyer, and yet developers have so far failed to capitalise on the opportunity to add value here,” says Gill Few, business development manager at bathroom and kitchen manufacturer Kohler.
Is home automation the next big thing?Now could be just the right time for housebuilders to start looking to incorporate home technology into their optional extras services. Costs of the technology are declining, the upcoming Part Q of the building regulations will require homes to be fitted with cable ducting, and consumer interest is growing.
According to forecasts by the Centre for Economics and Business Research published this month, the number of UK broadband subscribers is set to grow from its present 4 million to 6.5 million by the end of next year.
But the UK home automation market is way behind the US, where selling a $1m home without security technology, full structured wiring, the potential for networks and a home-wide music distribution system would be like selling a home without electricity.
“There’s now a client expectation that if they are spending a million dollars on a house, they shouldn’t even have to ask if it has these features. It is five or six years since we’ve had to go out and persuade a higher end housebuilder to include these,” said Jeff Hoover, past president of the Custom Electronic Design and Installation Association. Hoover was speaking at a forum hosted by Homes at the UK Cedia show in Birmingham earlier this month, which brought together housebuilders, technology installers and manufacturers.
US housebuilders are now commonly labelling family rooms in larger homes as media rooms, and fitting them out with entertainment technology, Hoover said. Even more modest homes now include cabling such as Cat 5 as standard and are marketed with technology extras.
To get to this point, housebuilders have gone through an education process, Hoover explained. “Initially, housebuilders saw incorporating technology as an irritation. Then they saw it as a necessity, because they didn’t want to be outmarketed. Finally, they saw it as an opportunity to make income. Now the largest housebuilders are going directly to manufacturers and are partnering with alarm companies.”
But the real driver of home automation in the US has been big business, intent on capturing the market in providing services to new home occupants. “Large companies like Microsoft and Cisco and major retailers have seen an opportunity to offer bundled services down the cable. They want to get homeowners’ lighting bills, water bills and data bills. Companies like Microsoft are going to drive people to want this.”
Bryant Design: keeping up with trendsNow in its fifth year, Bryant Design began with the basics like carpets and curtains but has become a lot more adventurous, most recently adding the Wigwam Kids children’s bedroom furniture to its range.
“We take advice from suppliers and interior designers on trends. We take our design managers to the suppliers to see the new products coming in. We’re constantly bringing in new ideas, and we’ll try something in a show home to see how buyers react,” says Bryant Design national director Trisha Lightfoot. It is also using its website to ask customers what they would like to see added to the extras range.
The housebuilder stays within the confines of its existing supply chain when buying items like sanitaryware, so, for example, if Twyfords is specified for bathrooms as standard, the upgrade will be a more upmarket range from the same manufacturer.
“We do get good deals from suppliers,” says Lightfoot. Latest additions to its range include a removals service and conservatories. The company is also about to offer the service for homes at an apartment scheme in Majorca, so that UK buyers can kit out their holiday homes from the UK.
Westbury: the Solutions house
Knight’s tips to housebuilders setting up an options and upgrades service are:
- Streamline your service and offer a limited number of options
- Keep the impact on your build programme to a minimum by, for example, putting the electrics in the same place for all your kitchen unit upgrades
- Keep a retail focus on what’s happening on the catwalk.
Bowey Homes: creating a catalogue
“We did a couple of months of background research looking at what products were available, whether we could get them and what they would cost.” The catalogue (pictured) includes: curtains, carpets, interior design, garden design, removals, and a range of fittings and fixtures, like towel rails and sockets with a trendy chrome finish.
Within those offers there are some innovative features. Buyers wanting a garden design can opt to buy an individual planting scheme for £250 and then do the planting themselves, or let Bowey handle the entire job. There’s also a removals service that will not only move buyers’ possessions, but pack and unpack them and dismantle and assemble furniture where necessary.
In addition to its catalogue, Bowey has a small dedicated area within its sales centres and is soon to market via the web.