It’s rare for an incumbent to pivot to a disruptive business model, even in the face of compelling logic that they should. Blockbuster didn’t. HMV haven’t and Thomas Cook seemingly won’t.
Generally, established infrastructure prevents such agility but more so, the attitude of the bosses steering the ship whereby either they simply don’t acknowledge the iceberg ahead or they see it but think that it’s smaller than it really is and that they’ll either steer round it or successfully smash straight through it (not forgetting that icebergs are much, much bigger below the surface).
In terms of revolutionary industry changes, estate agency is late to the party. Insurance, travel, gambling, music and media, retail… have already undergone the metamorphosis that technology and the internet allows and that the consumer then dictates. Amazon killed Borders and Woolworths; Expedia is killing First Choice and killed Lunn Polly; Spotify is the new Our Price and Confused.com and ComparetheMarket have all but eaten Swinton.
Countrywide, the UK’s largest basket of estate agency brands, has hired a new CEO, a ‘non estate agent’. Alison Platt comes from a healthcare background and is busy strategising a transformation plan to modernize their approach to how the company’s 1400 branch offices should function in the 21st century. To facilitate this, a cull of the old guard is unfolding on an almost weekly and ever bloodier basis with the replacement of high level, die hard property folk with those of a retail pedigree albeit not, interestingly, eCommerce.
Platt has acknowledged that modernization means offering an online proposition. ‘We will have to play in that space..’ she is reported to have said. It’s the first time that we have heard such a public admission from a bricks and mortar agency business and which, if it’s not just to appease shareholders and board members, is a commitment to doing something about the threat from the inevitable.
But what exactly? Will Countrywide risk a full blown online estate agency offering to match the fair fees, high service, technology focused approach that some of us are very busy progressing? Given the risk of them then eating themselves rather than others just eating their lunch as currently, I doubt it, even despite a remark internally to investors recently that consideration was being given to an acquisition. Platt has stated that her group will not buy an online player based on brand or market share. In other words, if an online agent is purchased it will not be one that is established, successful and knows what it is doing. Seriously? To take a route that avoids the very knowledge and acumen that is most important in understanding and excelling in this new space, is rather to grab defeat from the jaws of victory, potentially speaking.
The so called ‘Project Shoreditch’, a cursory look at associative technology players, is also to completely miss the point.
So it seems certain though that sufficient arrogance abounds to make the mistake of, in effect, doing their own thing as opposed to acquiring an established player that knows the sector. Cue memories of iSold… (Sorry to salt that particular wound Mr Smith)
Big fees (1.7% average) are precious and will not be given up lightly even though the consumer wind is blowing in the direction of dictating such. And despite Countrywide’s lip service to the customer on the matter of service levels improving, they won’t because they can’t. As I may have said to them at a meeting that I may or may not have had with them earlier this year, it is unfeasible to try to disseminate an exceptional customer experience culture amongst so many subordinates in so many branches, against a stiff backdrop of apathy and low customer standards.
Ensuring a genuinely impressive customer experience is going to be out of reach for such a Jurassic entity. And reducing costs by 90% in order to slash fees to an appealing level, is an utterly impossible feat.
Therefore in any ‘new order’ at Countrywide, service and fees will remain as is however they will adopt and improve on one thing I suspect…. technology. And this appeared to be their priority whenever I may (or may not) have met them.
Tech is a great enabler. It can provide customer empowerment, lower costs of servicing and ensure transparency. All attributes that the incumbents fail at right now.
But technology alone will not transform Countrywide. The correct response to the invention of the motor car was not just to try to make your horse run faster.
And merely redefining the business within multiple retail territories will not change it into something better for the consumer. Indeed if Platt’s modernising agenda were a credible one, the City would now be reflecting that. Yet in the past three months, whilst the bodies have been flung out of Countrywide Towers in an growing heap, its share price has plunged 13%. In fairness, the value of Foxtons, LSL and Savills, to name but a clutch, have also receded similarly but no doubt because they haven’t acknowledged at all that they have to make some sort of move toward the new way of things.
Incidentally, those that cite the latter plight of established estate agency business’s share prices as ‘housing market led’, should take a second to note that the market capitalization of Bellway, Persimmon, Barratt Homes, Rightmove and Zoopla have all increased in the same period. Significantly.
The jury is definitely out as far as many are concerned albeit that the sudden resignation of the group’s Head of Digital, Alex Bailes, fresh from agreeing with me at the recent Property Future panel event, would rather indicate that Platt may not exactly have won the hearts and minds of even her most avant-garde of foot-soldiers?
In trying to predict how this all plays out, forget the online vs high street distraction. That’s something engineered by the property media for page views and comment fodder. The ensuing battle will be won by those that understand and execute on the basis of better customer value (yes, that means lower fees), epic customer service delivered via an exceptional culture and with a sprinkling of technology and automation. Not the other way around.
To think that winning in this industry is about anything more ‘virtual’ is to be heading toward a Titanic failure. And Countrywide may well be.