Rumblings at Countrywide
With pre-tax profit at Countrywide down by 25% year-on-year for the first six months of 2016 and the company’s share price dropping like a stone over the past year, I wonder what their shareholders now think of the CEO’s ‘retail’ plan for the future?
Can a management team who have supervised a massive £838m drop in value (from its peak in May 2015 to its recent low) survive?
Most FTSE bosses would have been fired long before now – yet the CEO’s remuneration is reportedly now close to the £1m mark, with a base salary of £575k.
I’m sure most companies are tightening their belts and cutting their cloth in the current economic climate but it appears Countrywide have tightened it so hard, they’ve severed an artery and are cutting branches and jobs in the process.
There have been a lot of rumblings about the way the company is now doing business.
They are losing really good people, many who have been with the firm a long time – and people are the lifeblood of any business, even companies moving towards a hybrid model with the squeeze on income that will inevitably follow.
I’m told they say the leavers are stale and they need new blood – that’s not the way to treat your most loyal teams.
People tell me that Countrywide has lost its way – and I’m sad to hear this. It’s a company I’ve always looked up to.
However, I can’t help but wonder if the current management team will be in place in six months’ time.
Is corporate market share on the decline?
For the past three months, we have been closely monitoring market share in the areas where we operate and have observed a downward trend collectively among the three biggest corporates – Countrywide, Connells and, to a lesser extent, LSL.
It’s obviously good news for independent agencies and, on a much smaller level, the internet agents. But for the corporates to lose traction suggests they are losing touch with their customers. Which leads me to question why they are losing out and what should they do about it?
I believe not being with OnTheMarket is part of the problem: they are missing out on valuable leads.
Our experience at Spicerhaart is that it continues to drive much better quality leads than other portals and has definitely helped us gain market share in many of the places where we trade.
Every month the portal continues to grow and make inroads. Whatever the detractors say, it is here to stay and will go from strength to strength. It only takes a leap of faith by agencies and it will jump into the number two position behind Rightmove and knock Zoopla off its feet.
There has also been a significant amount of cost cutting by corporates. Has this affected market share, with sales teams shrinking and combining with lettings branches, with the inherent reduction in customer service which inevitably follows?
I’m intrigued to know if you have seen a decline in market share among the corporates in your area and, if so, what do you think are the reasons why?
The ‘Psychology of Brexit’
We have also observed another trend which we are dubbing ‘The Psychology of Brexit’.
In towns where the majority of people voted for Brexit, the housing market is still buoyant. Conversely, areas voting overwhelmingly to Remain in the EU are those where the market has slumped.
We studied the data from a sample of 20 of our haart branches, looking at registrations, listings and sales post-Brexit.
Overall, areas who voted predominantly to Remain saw a 6% fall in the number of listed properties, while Leave branches saw a 1% increase.
Wisbech, in the district of Fenland, Cambridgeshire, voted 71% for Leave and saw a 9.6% jump in the number of registrations compared to nearby Great Shelford, in South Cambridgeshire, where 60% voted to Remain and where there was a 42% drop in the number of registrations.
In our Leytonstone branch in East London, an area which voted 59% for Remain, the number of properties listed fell by 20% after the referendum. However, in Dagenham, an area which voted 62% for Leave, there was a 1.2% increase in the number of properties listed.
It seems Leave voters are more relaxed and positive about the economy, compared to the Remainers who are less confident.
Let’s just hope the Government can continue to provide a strong vision for the UK’s post-Brexit future and a clear timetable for an EU exit, bringing greater stability and confidence to the market during the months ahead.
* Paul Smith is CEO of Spicerhaart
Countrywide’s success or failure has nothing to do with On the market, Brexit or anything else, it is the nature of corporate estate agency agency to fail and for failed previous high flying executives to wander of into the garden for some leave consequently the experience of failure never gets handed down.
If independent agents don’t sell property they and their staff go hungry, consequently the good ones survive, the bad ones close. Corporate agency isn’t like that, corporate agency pays away other people’s money in the hope that the agency will generate more money than has been spent. Corporations repeatedly spend fortunes buying up good agents believing they will continue to be good agents. For a good while now under Grenville Turner’s stewardship Countrywide has bucked the trend of cyclical failure and that really did earn him my respect, but here we have corporate agency doing what it does, a new executive team, ignorant of agency and how agency works repeating errors that have been repeated for a full 30 years.
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I can only assume you know nothing about Countrywide.
When Harry and Gerry ran it, there was something called ownership. Each MD acted as if they owned it, within certain parameters and the then 800 offices made 110 million. Harry left and Granville who was just head of intermediaries atLBG spent much of his time ingratiating himself in the stock exchange. Hell he even left his 1st MD FSD meeting after 20 mins to go to the exchange, that was either poor time management or contempt for his audience. Then came BOB who progressivley dismantled it and the best people left and Grenville just watched on. From memory the last P&L showed about 6 rest exchanges per branch average under BOB and Grenvilles stewardship. What Grenville did do however is bring in new streams of income, but as i,ve said before The busker on the street sells the big issue and plays the fiddle to get diverse income but he is still unfortunately in the gutter. Alison has been left with a pup due to past mismanagement and whilst not want would condone what she is doing she was left with few options. She has demotivated staff, poor leaders, and a legacy of change that showed negative results.
Corporate agency is not doomed to failure but it is doomed by a couple of things.
1 A failure to grow successors
2. The allure of short term gains.
3. remote ownership by large corporates.
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I have said this before, if Paul Smith is so confident on how OTM provides better leads than the other two portals and lets bare in mind his company only advertise on Rightmove as the only other portal why doesn’t his pull all his properties away from Rightmove and fully back the sinking ship and the misguided captain at its helm??
The reason…!! He knows that without the supplementary leads from Rightmove his business will sink just like OTM.
Now there’s the pot calling the kettle..
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Haarts just cheap pot shots with onthemarket because that is his only usp against the corporates. What are they doing on it anyway?? corporate as a corporate thing aren’t they?
I have now ditched onthemakret and gone to rightmove and coming off zoopla as cant afford both..
so thanks on the market members who stayed with rightmove, you have cost me £900 per month more by setting up your joke of a rightmove loving portal. You killed David and Goliath with kill you.
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From 3/12/15:
“I d rather go bust then sell out to rightmove.”
“ZOOPLA is our david against goliath.”
“Remember rightmove needs your property to attract buyers.”
“Weak agents seem to think that they need rightmove to find buyers.”
What the chuff changed YOUR world?
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Because survival Is my main objective. And I cant fight 1000’s of agents who have been caught up in the onthemarket mess.
You can now change my words to
I ‘will’ go bust if I don’t sell out to rightmove
zoopla ‘was’ our david
I ‘am’ now a weak agent because of onthemarket..
my staffs jobs are more important then being right I am afraid.
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It’s what we will be doing in the future. Not yet, but in the future.
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Countrywide – I’ll bet my pension the current senior management team is still there in 6 months time – they are in it for the long haul and have set out a strategy – for better or worse – for the long term. Platt has stated objectives up to 2020. Nothing to see here, move along please – its a non story.
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Personally I think everyone should be VERY worried about the developments at Countrywide.
Purple Bricks (love or hate them / respect or disrespect them) have made some serious inroads and although most of us bricks & mortar businesses don’t get why internet businesses get the stock market valuations that they do, they are still worth more than the rest of us – which gives them more money to spend.
If Countrywide convert (almost) overnight to a hybrid agency then how are you going to cope?
The articles about their method have been on PIE for weeks now and it makes sense to me, as follows:
1) Advertise a rate so cheap that most sellers say “Oh, go on then”
2) Money in the bank straight away – whether it sells or not – pays for the staff to be there in the first place
3) Referral fees galore on top of the original sign-up fee (mortgage, solicitors, decorators, insurance, removals)
4) They concentrate on “UX” the user experience – internet & call centre staff are targeted on positive reviews
5) If it doesn’t sell the owner gets offered an upgrade to a full package where the initial payout is refunded on completion but the fee is probably 25%-50% higher than it would have been if they had toughed it out on the high street
As long as the user experience is good enough, Countrywide don’t get the blame when the “bronze” marketing package fails – the owner then pays a premium for extras like professional photos and automatically gives them a price reduction, because they don’t value the property for the bronze service, the sales patter is more along the lines of “So, what price do you want to put it on the market for?”
I know this is not the way that we are all used to working, but I’m afraid that the UK public seems to be obsessed by “Cheapest Is Best”. It’s not true, but 80% of the home owning public seem to believe it.
Websites like eBay have also taught us all that we can actually do it for ourselves.
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I read an article this week about a worrying rise in the number of companies who are valued highly but don’t actually make any money. Rather like the .com bubble that burst. The author said that this was going to lead to some huge problems for our economy. Purple Bricks could possibly fall into this category.
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Ms Emmerson
I am both delighted and worried that for once we are in agreement on a matter.
The ‘worried’ aspect being only related to the warning in your words and the affect this could have on our industry and its’ customers.
Now – can we get back to Conveyancer vs. Estate Agent type discussions, please – I want to disagree with you again to redress the balance!
Have a good weekend!
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Countrywide have the backing to become the leading agent in most towns, but due to becoming more about a business before the customers they’ve employed business people at senior level who have never sold a house in their lives, but try to preach about how to. There lies the issue.
The only benefit countrywide have is that they are a huge company, and have offices that do make substantial profits and have used their common sense to a degree to shut those offices that are constantly in a loss.
I’d say Smith is worried, as he’s spoken about CW to quite an extent in his last few articles.
Worry about yourself Mr Smith.
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