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HOUZZ UK

2020 State of The Industry

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Big Ideas

Over three in five of businesses reported an increase in

the costs of doing business, such as products and

materials and employee wages (62%).

RISING BUSINESS COSTS

The majority of businesses across the industry plan to

increase marketing and sales efforts and bring in larger

budget projects to bolster revenue growth over the

coming year (59% and 56%, respectively). Interior

designers are also likely to improve customer

experience (35 percent), while both design and build

firms, as well as architects, will increase prices, mark-

ups, or margins (57% and 39%, respectively).

While revenue continued to increase in 2019, there was

a slight reduction in the number of businesses reporting

an increase (59% in 2018 versus 54% in 2019). That said,

a majority of businesses met or exceeded expectations

in 2019 (62%), including five percent of businesses who

saw results that were significantly higher than their

expectations.

REVENUE GROWTH WAS LESS WIDESPREAD IN 2019

Design and build firms experienced the greatest impact

(67%), compared with interior designers and architects

(54% and 49%, respectively). On a related note, more

than a third of businesses reported that managing

customer concerns over cost was a top business

challenge (35%).

TAKING ACTION TO SUPPORT GROWTH

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61%

54%

33%31%

33%30%

59%56%

40%38%

27%25%

Increasemarketing/sales efforts

Bring in larger budgetprojects

Increase prices/mark-up/margins

Improve customerexperience

Offer newproducts/services

Improve employeeproductivity

Top Growth Strategies in 2020

Top Two Expected Strategies to Grow Revenues in 2020

Bring in larger budget projects 67%Increase marketing/sales efforts 54%

Charts show the percentage of surveyed businesses on Houzz UK expecting revenue growth in 2020 (vs. 2019)

Top Expected Strategies to Grow Revenues 2019 2020

Architect

Bring in larger budget projects 57%Increase marketing/sales efforts 57%

Interior Designer

Bring in larger budget projects 67%Increase marketing/sales efforts 67%

Design and Build Firm

1

2

1

2

1

2

© Houzz Inc. 4

Revenues & Profits in 2019

Charts show the percentage of surveyed businesses on Houzz UK reporting performance in 2019 (vs. 2018).

Gross Revenues Increase in 2019 Gross Revenues

Increase in 2019 Gross Profits

Architect 44%

Interior designer 65%

Design and build firm 44%

Architect 32%

Interior designer 58%

Design and build firm 44%

1

1

Gross Profits

1

1

2018 2019

2018 2019

54%

20%

26%

59%

21%

20%

Increased

No Change

Decreased

45%

23%

32%

46%

25%

29%

Increased

No Change

Decreased

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11%

26%

42%

20%

1%

9%

28%

40%

18%

5%

Significantly belowexpectations

Somewhat belowexpectations

Met expectations Somewhat aboveexpectations

Significantly aboveexpectations

2019 Comparison to The Initial Expectations

2019 Comparison to The Initial Expectations

Met expectations 43% Above expectations 20%

Charts show the percentage of surveyed businesses on Houzz UK reporting how 2019 business performance compared to the initial expectations for 2019 (vs. 2018).

Gross Revenues Relative to Expectations 2018 2019

1 2Architect

Met expectations 42%Above expectations 21%

Interior Designer

Met expectations 44%Above expectations 21%

Design and Build Firm

1

2

1

2

1

2

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Staffing & Business Costs in 2019

Charts show the percentage of surveyed businesses on Houzz UK reporting performance in 2019 (vs. 2018).

Number of Employees Increase in Number of Employees in 2019

Increase in Cost of Doing Business in 2019

Architect 9%

Interior designer 13%

Design and build firm 26%

Architect 49%

Interior designer 54%

Design and build firm 67%

1

1

Cost of Doing Business

1

1

2018 2019

2018 2019

16%

72%

12%

20%

73%

7%

Increased

No Change

Decreased

62%

32%

6%

66%

30%

4%

Increased

No Change

Decreased

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32%34%

27%25%

20%

15%

41%

35%

32%

21% 21% 20%

Weak/uncertainnational economy

Consumers - overlyconcerned about costs

Difficulty findingprospective customers

Consumers -unreasonableexpectations

Increased cost of doingbusiness (overhead,

wages, etc.)

Weak/uncertain localeconomy

Top Business Challenges in 2019

2019 Top Challenges

Weak/uncertain national economy 49%Consumers - overly concerned about costs 36%

Charts show the percentage of surveyed businesses on Houzz UK reporting challenges in 2019 (vs 2018).

Top Challenges Affecting Business 2018 2019

Architect

Interior Designer

Design and Build Firm

1

2

1

2

1

2

Difficulty finding prospective customers 47%Consumers - overly concerned about costs 34%

Difficulty finding prospective customers 39%Weak/uncertain national economy 31%

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Description of Businesses

The percentage of surveyed businesses on Houzz UK with the specific characteristics in 2019

Share of Businesses by 2019 Business Characteristics

More Than £100K In Gross Revenues

(Up to £2M or more)40%

One Or More Employees

(Up to 500 or more) 68%

Ten Or More Years In Business

*Up to 30 or more years in existence 46%

Sole Owner Responding To Survey 65%

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Methodology

The survey was sent to businesses with profiles on Houzz UK and fielded between 4th

December, 2019 – 14th January, 2020. N=375.

Pro Categories in Survey (Sample N) Top Pro Types in Survey (Sample N)

Architect/Designer (N=183) Architect (N=92)

Builder/Installer (N=44) Interior designer (N=73)

Design and Build (N=59) Design and build firm (N=36)

Speciality - Building & Renovation (N=26)

Speciality - Decorating (N=38)

Speciality - Landscaping & Outdoor (N=25)

Business groups were defined based on services that contributed to the

largest share of business gross revenues in 2019, as identified by

respondents in the survey.

Description of Business Groups by Core Services*