I have heard it said that “success comes from looking forward and not standing still”, and never has this statement been more poignant in UK estate agency than right now. For as long as I can remember UK wide estate agents have relied upon largely traditional methods to sustain themselves – but now the rules of engagement are changing, as our collective relationship with the internet evolves.
So, what has changed? I guess the most obvious answer is quite simply all of “us” as consumers, and perhaps more pointedly our interaction when acquiring goods and services on-line. To illustrate this point, you need to look at consumer spending behaviour on a much broader level.
Firstly, it is important to understand that the online retail sector is the main driver of growth in European and North American retailing, achieving in Europe growth rates of 18.2% (in 2015),15.6% (2016), 14.2% (2017) and 13.8% in 2018. By contrast, the annual growth rates for High Street retailing across Europe and the US have averaged between 1.5% to 3.5% per annum (figures from the Centre for Retail Research).
So, what does this say about the UK consumer? Well, I am no psychologist, but I would surmise that on-line shopping is perceived as both practical and convenient, allowing choice and price comparison with remarkably little effort. Also, it could be argued that it is cheaper and less effort, as putting the price of goods purchased aside, we save on both the cost of fuel and parking.
But how does this relate to estate agency? Well firstly, as I have stated above, the mindset of “all of us” as consumers has changed – quite possibly for ever, with the Millennial generation more specifically having grown up knowing little else other than purchasing goods and services via their mobile phone, tablet or laptop computer. So in essence, you really don’t have to be Mystic Meg when it comes to understanding why the traditional estate agency model needs to change.
Secondly, the evolution of the internet has progressively raised our collective expectations in terms of knowledge, choice, service and immediacy. So quite naturally we have all come to expect 24-hour opening, a plethora of service options, and price/value comparison like never before, with this benign influence feeding into the public’s dissatisfaction with our traditional system of buying/selling and renting property.
Thirdly, buyers, sellers, landlords and tenants all have direct access to property related on-line data, so self- education can often (through the eyes of the general public) alleviate the need to talk to a “property expert”. A triumph of consumer choice or just a recipe for confusion or worse? Well, I will let you all be the judge of that, but either way it is an inescapable fact that human interaction during the various stages of buying, selling or renting property is steadily being diminished.
So, is traditional High Street estate agency trading on borrowed time? Well to a point the answer is of course yes – at least in terms of office numbers and staff. However, it would still be true to say that there are still many people who both appreciate and cherish human contact when selling or renting their home, and perhaps more importantly, are still prepared to pay for it. But sadly, I am not confident that this fact (in itself) will be enough to sustain High Street estate agents in their present number here in the UK.
So just what is the future? Well in a nutshell change needs to occur in 3 principle areas – 1) Less costs, 2) technology, and 3) flexibility. Firstly, costs – High Street estate agents need to fundamentally revise their historical cost structures or market pressures and falling profits will ultimately take their toll. Broadly, this means offices rather than shop fronts, regional coverage rather than local, technology rather than people.
Secondly, technology – There are currently any number of tech- based support services that if managed correctly will improve the speed and efficiency of the average UK estate agency business. Yomdel, Callwell, Viewber and Evolve all offer services that will enhance and indeed improve upon traditional estate agency methods – accepting that generally speaking all businesses have differing requirements or emphasis.
Thirdly, flexibility – Estate agents need to accept that the internet has no opening hours or geographical limitations. So naturally, clients, tenants, landlords and purchasers will look to book appointments, check availability or simply email your business 24 hours a day from anywhere around the world.
It remains to be seen whether the UK estate agency firms will come to properly embrace this not so new dawn – but if you are looking for some food for thought, you need look no further than recent casualties in the retail sector to be reminded of what happens if you don’t adapt your trading operation and cost structures to compete effectively in today’s online trading environment. You have been warned!
The author of this article is Peter Nicholls, CEO of Ideology Consulting.