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TODAY'S OTHER NEWS

Foxtons could blossom 'by moving beyond London and going online' - Quirk

The former chief executive of Emoov says he has the answer to Foxtons’ current downbeat performance - it should exploit its famous brand by spreading well beyond London, and should even consider going online.

Russell Quirk, who now runs the property-focussed public relations firm Properganda, says that Foxtons’ brand is one of the best known in estate agency - more famous than larger ‘generic’ firms like Countrywide or LSL Property Services, which each own many individual brands.

“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’” explains Quirk.

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.

  • icon

    Interesting perspective - and one they tried more than 10 years ago in Surrey. Time has moved on and hubs with the right brand, people, operations and technology combination can achieve a lot more today

  • Michael Riley

    Those who can do, those who cant teach.

    Our industry press and linkedin are full of people who fundementally have no experience of actually running a profitable, well managed estate agency or even been an agent in some cases.

    Its remarkable how much airtime they get.

    Whenever someone predicts something I ask... what have you correctly predicted in the past or done successfully and profitability over a long period.

    Foxtons group earnings are down from 118m to 111m. I'd say thats pretty impressive given the market in London.

    Their strategy is totally correct and diluting outside London would be a mistake now as it was before.

    Its still a well managed business with management not afraid of making strong decisions.

    Lastly..... the more agents that turn into 'hubs' the stronger the ones left on the high street become. Foxtons have class retail assets, they will benefit from their weaker competitors withdrawal to cyberspace.

  • Tony Sinclair

    Britain Loves Losers

    Yes folks, first we had 'Britain's Not Got Talent' now we have 'Britain Loves Losers'. The same thing really but more to the point.

    There are many things wrong with this country, but one of the strangest is why the establishment makes heroes out of losers. Be it the World Cup, Olympic Games or none talented entertainers and so on. The Mainstream Media glorifies losers and seems to ignore winners.

    Russel Quirk is yet another example.

    How can anybody be stupid enough to take this guy seriously after his company failed big time?

    PR Guru my arse. And ask for 'Estate Agent Today'... shame on you for encouraging this ego-tripping maniac by giving him a platform to enrage the rest of us... Shame On You!

    Rob  Davies

    I take it you're a fan of RQ then?

     
  • icon

    Why would anyone listen to Russell Quirke after his recent predictions about the property market?!

    I certainly don't think Foxtons will!

  • Chris Arnold

    Brand awareness is not the only requisite for scaling a business.. Running up numbers and putting your logo on as many people & places as possible just isn't enough.
    In the race to make a lot of noise, the enrolment of vendors is often overlooked. Something that many online & hybrid agencies seem increasingly to dismiss. It's not a transactional process, no matter what many soi-disant 'experts' might suggest.

    There seems to be a 'story' about how certain people would improve Countrywide and now Foxtons. The terrible trio of illusion, impatience & incompetence are ever-present in these 'experts' when in fact a healthy dose of worry & self-doubt would better serve.

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    • Mr B
    • 05 February 2019 09:35 AM

    Do you think Mrs Q listens to RQ?

  • James Robinson

    "Hey listen I know I sank my daddy's boat but you need to let me teach you how to sail yours"

  • Rob  Davies

    "It’s a ‘house-sold name’"

    I don't know whether to laugh or groan. It's something I can totally imagine Mr Quirk saying!

    To be fair, he's not wrong about Foxtons being a very well-known brand - even if that's sometimes for the wrong reasons. It's certainly something it could lean on heavily to improve its fortunes.

    I'm not sure how well it would do outside London, though. It feels like a brand that can thrive in the capital's dog-eat-dog market - where a more aggressive, ruthless approach is perhaps less controversial - than it would in regional cities/towns or out in the sticks. It tends to rub people up the wrong way quite a bit - and I think a Marmite brand like that is much more suited to a huge global city like London rather than somewhere more provincial.

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