I am constantly surprised by people in the industry who, all too often, need help understanding the industry they are a part of and why you do not see appliance repairers running about in Ferraris or having cash to burn. There are reasons.
The first thing that many need help with, especially a lot of commercial clients that pass work to repairers regardless of flavour, is that the margins in service work are ludicrously small. And in order to understand why that is you need to know a bit of history.
Boom Time!
Way back in the late 1970s and 80s, appliance repairs boomed as the volumes ramped up. The country got richer, so more people could afford appliances. They were not cheap, disposable items as they are today; for example, a washing machine often cost at least a month’s wages.
So people didn’t throw them out, they had to get them repaired, and they lasted a lot longer because of that.
To make it big though you had to have a service agency and, it had to be the right one. Sure, you could do well as an independent as there was plenty of work about and you’d make a decent if not amazing wage for yourself but getting the big bucks, that was rare.
Some of the old Zanussi agents, a few that did, some others made a really good amount of money, but everyone else, not so much.
I am, of course, simplifying here.
Why Appliance Service Became Unviable
I could also have entitled this, “How Appliance Service Made Money” or something along those lines but it’s end up in the same place really.
Back in the old days you’d see the same brands and machines all over the place, you didn’t really have all these smaller own lable brands kicking about. Even Currys, Comet, Clydesdale and so on didn’t really get into that, they had exclusive models to them as did the likes of some buying groups, CIH etc but they didn’t really have own label stuff outside perhaps small appliances.
Of course, all these machines ran on the same components largely so a Candy door latch was used on all models, so were pumps and many other parts. The same was true for other big brands of the time like Zanussi, Hoover, Hotpoint and so on.
That meant that if you were a Candy agent or a Zanussi agent you could load up a van with a couple of grands worth of parts, spend all day repairing that one brand and get a hugely high first time fix rate.
All the easy stuff you could kill first time, it was only more complex jobs or odd parts you didn’t have that you’d have to go back for.
Many days you’d get more no-access calls than you would ones you couldn’t repair there and then!
And if you ask anyone that knows anything about appliance service they wil tell you, completion rate on all but especially volume work, is everything. That alone can make or break you.
It All Changed
In the very late 1980’s and more so into the 90’s we started to see things change, largely I believe due to market saturation. And this serves as a warning for many, I’ve seen this in a number of consumer product areas plus again I am simplifying and leaving out geo-political events and more.
It reached a point where that pretty much anyone that had the cash or, could get it, to buy the appliances that they needed had them at the higher price points that today would be unthinkable.
What’s a manufacturer to do? In the face of dropping sales after the huge boom and expansion of the 80’s boom time then into the 90’s and the party stops.
All they could do, to try to keep volumes up, was to drop prices. At least initially.
At this point, you start to see a bunch of new own-label products and smaller, niche makers; new, own-label products and smaller, niche makers expanding into new markets to try to grow as well, only adding to the problems.
Notably, some of these new entrants were laughed at back then, like Beko and some of the Chinese makers for their low quality and low prices.
When that started to wane they then looked to buy up competitors and kicked off the trend of market consolidation. But, consumer-facing brands were left untouched even though previous behemoth brands of the industry like Zanussi, Hotpoint, Hoover and more were swallowed up by larger fish in the sea.
As all the main product lines were covered we saw niche products started to appear with variation upon variation, huge market diversification from what it had been in the past.
For repairers, this presented a number of challenges, not least of which was how to stock and van stock all these products and how to keep up the completion rates to meet manufacturer targets on customer satisfaction. The short answer is that they couldn’t.
On one manufacturer’s service alone, we went from needing one pump for all washing machine models to over twenty; it was unsustainable. Then layer on top of that what you needed for all these new brands, it became impossible to carry all you needed on a service vehicle to maintain the previously good completion rates.
It was almost a perfect storm of big volume contracts being almost wiped out, huge product diversification and increasing costs into the bargain. Large regional service centres started to wither away over a few years.
Disappearing Service Capacity
A number of years ago myself and Lawrence Carey of Carey’s/WTA presented a talk on how the appliance servicing industry was dying and why. Hardly any other than a few repairers believed what we were telling them or our assessment of how things were going to pan out over the next five to ten years. Apparently in the view of a number, we were just being negative, talking the industry down and suchlike.
We were not wrong, we were proved right.
The reason is that we know this industry, especially from a service perspective, we’ve lived and breathed it for decades.
We knew all this, we’d seen it and lived through these changes, it was relatively obvious and easy to predict what would happen next.
The average age of a repairer was increasing, very little new blood was coming into the industry as there was no money to attract it and less and less training going on. The previous breeding grounds for new techs, refurbishers and large Indies were dying off, most are now gone and so is the ability to train aside the odd national service organisations and they only do it as they have no other option to get staff.
What’s Left
This leaves, in large part, an array of micro-businesses from 1-5 employees repairing appliances with a smattering of larger ones in huge cities like London but outside of that, they’re all small now.
Couple that with the low rates that I’ve discussed in previous articles and you can see that say, a one-man business can do perhaps on average 10 calls a day of which they’ll be doing well to complete 7 on the first go meaning he’s not exactly making a great deal. From that you will be lucky if they are earning more than the median wage, but in all probability less than that.
I’ve often said to people that, on a smaller operation with a few working together well you can make a living from service but, you’ll never make a fortune from it. Once you get above about six techs on the road things dramatically change, it’s a completely different type of business and one that has largely died off.
Perceptions
It seems at times that a number of people, the public certainly, think that appliance repairers are onto a winner, they get paid for every call they make and are coining it.
That notion couldn’t be further from the truth.
When people do this they do not take into account the costs and I’ve seen commercial clients do this also where, for some reason, they think that the rate they are offering somehow buys them an A++ Gold service level when the reality is, it’s barely enough to be bothered with from a repairer’s perspective.
Because once you strip away the costs, on a single call basis, you will often be lucky of there’s a tenner of profit for the repairer and what sort of service level or standard can you really expect for that?
Even if you are passing them ten calls a month, it’s still not exactly great. You’d need to be passing them a hell of a lot more or, paying a lot more to motivate them to care.
No Wolves Here
All of this means that large service operations are all but extinct.
Smaller ones scratch out a living, no more than that.
No repairers are tooling about in Ferraris and living the high life. There isn’t the money in the service sector to support that, the life has been sucked out of it over the space of a few decades.