But he insists this fame is wasted by being restricted to London, especially as the market in the capital is, in his opinion, highly cyclical - either booming or, as now, suffering badly. This means Foxtons has closed six branches in recent months and just last week reported that its sales income plummeted from £43m in 2017 to £36m in 2018.
“Surely where business is concerned such pronounced commercial twists and turns are undesirable? Strapping yourself in and riding between euphoria and oblivion is for teenage thrill seekers, not pension fund shareholders” says Quirk.
“Given its brand awareness outside of London, let alone within, you would think that Foxtons would venture to calmer waters as a hedge against predictable choppiness. To me it’s obvious that Foxtons must stretch its legs into areas around the UK that match its demographic – Aylesbury, Sevenoaks, Wilmslow, Harrogate, Oxford and the like. I’ve researched over 60 towns where the Foxtons brand ‘works’ demographically.”
The former Emoov chief says the traditional barrier to such expansion would be the cost of premises and staff, but he insists that an online/hybrid strategy could work.
“Rightmove stats show that Swansea has an 18 per cent market share of listings by estate agents without a bricks and mortar branch. Aberdeen holds a 10 per cent market share and the likes of Leeds, Doncaster, Birmingham and Sheffield punch similarly. Revenue without the traditional costs” says Quirk.
He makes the suggestion in a LinkedIn article to be posted later today: you can see it in its entirety below.
Foxed – What Foxtons Must Do
Imagine if Coca-Cola only sold drinks in Hampshire. Or Mercedes Benz refused to entertain any car orders unless they related to a Manchester home address. Ordering from Amazon using a YO postcode? No, not allowed.
Building a brand is tough stuff and takes time, money and execution. Most businesses never achieve big brand status despite mass spending and resorting to every channel that they can, both above and below the line, to achieve cut through in prompted and unprompted awareness whereby they are recognised in their sector as totally synonymous with it. Modern examples of such great successes are, for instance, Just Eat – when you think ‘take-away’ many of us automatically think of that brand (and trust it). And Rightmove or Zoopla – the term ‘property search’ flicks a switch in our heads that immediately conjures these aggregating behemoths.
In the estate agency industry there are brands of course but not many that are household names. Most of the big corporate names sit under little known holding entities, Countrywide and LSL. With dozens of ‘house brands’ its very difficult indeed to promote them all and in particular where traditional agents are unlikely to spend on TV.
There are some exceptions of course. At the top, the very thinnest end of the market are the Savills and Knight Franks, renowned for selling homes that 99% of the UK market will never be able to buy. Then, in the mainstream, Purplebricks has built a household name quickly (65% unprompted awareness) and thanks to about £50m in TV spend and huge supporting Google adwords costs. One brand - one budget has allowed it to spend relentlessly in places that the mainstream consumer easily sees and not just where estate agents have traditionally marketed, in other words via local press and leaflets.
In my opinion the other ‘bread and butter’ property business that is famous is Foxtons. Famous for being ‘the London agent’ and also for being somewhat aggressive and, back in the day more than now perhaps, ruthless. No matter why it is recalled by numerous home buyers and sellers as a brand that is recognised so strongly, the fact remains that it is. It’s a ‘house-sold name’ (trademarked).
So back to my Coca-Cola and Mercedes Benz point. Foxtons is known as a London agent. London plus a smidgeon of metropolitan Surrey. But in my view it’s SUCH a big brand that its’ wasted, thoroughly wasted, existing in just 25% of the country (by listings volume).
In recent years as the capital’s market has slipped into a shadow of its former self, Foxtons’ fortunes have also waivered. Once a business generating profits of £35m annually with a share price of £3.50 plus, a share can now be snapped up for 50 pence or so. It’s now loss making and experiencing reducing revenues year after year propped up a tad by its lettings activities that, as ever, compensate in a slower sales market. Consequently, Jon Hunt’s legacy has turned from a company that expanded by five to six offices each year to one that closed six in just a few short months at the tail end of last year with a provision in its accounts of millions of pounds to close more.
The London property market is notoriously cyclical. There seldom seems to be a middle ground, rather a continuing boom and bust that its agents have little choice but to mirror in an ebb and flow that raises and sinks boats with its perpetual rising and falling tides. The archetypal rollercoaster.
But surely where business is concerned such pronounced commercial twists and turns are undesirable? Strapping yourself in and riding between euphoria and oblivion is for teenage thrill seekers, not pension fund shareholders.
Given its brand awareness outside of London (20%+ in some areas according to my research via YouGov), let alone within, you would think that Foxtons would venture to calmer waters as a hedge against predictable choppiness. To me it’s obvious that Foxtons must stretch its legs into areas around the UK that match its demographic – Aylesbury, Sevenoaks, Wilmslow, Harrogate, Oxford and the like. I’ve researched over 60 towns where the Foxtons brand ‘works’ demographically.
The traditional barrier to such an expansive pivot of course was always the cost of opening a branch. But if there’s one thing that the online/hybrid sector has demonstrated to the industry (notwithstanding arguments about the viability of ‘cheap fees’ etc), it’s that market share can be grabbed in areas that are not represented by a shopfront. Rightmove stats show that Swansea has an 18% market share of listings by estate agents without a bricks and mortar branch. Aberdeen holds a 10% market share and the likes of Leeds, Doncaster, Birmingham and Sheffield punch similarly. Revenue without the traditional costs.
Hubs, if you want to call them that, are not new. Us onliners pioneered the approach of ‘no-branch’ a decade ago and if Foxtons and others were to embrace this new way of doing business and push themselves out of their comfort zones, they’d quietly evolve whilst driving margins through the roof - adding massive shareholder value swiftly.
It’s not necessarily easy to execute upon operationally or from a marketing and a technology platform perspective – much harder than you’d think actually. But it’s surely what it must do. And fast.