Bank says Countrywide’s digital offering is failing – and shares in agent are ‘uninvestable’

A new report into Countrywide by analysts at Berenberg bank has issued a damning verdict on the UK’s largest agent’s digital strategy.

Berenberg said that 30% of Countrywide’s branches “have no digital strategy at all” and that the firm last week had paused the roll-out of its online offering, despite raising nearly £40m last March expressly for that purpose.

However, Berenberg says the offering has failed to attract new business, that sales listings at Countrywide have dropped 20%, and that management now judge it as a cost.

The Berenberg report says: “Nobody pauses a successful growth initiative.”

It goes on: “Management tells us it is considering continued roll-out as part of the 2018 spending plans, but if we are correct that it is failing, the highly geared balance sheet means management is unlikely to continue.”

Berenberg says: “While we think general management has improved with the arrival of Himanshu Raja as CFO, until the group comes up with clear growth initiatives that address the digital threat and the increased competition as overall transactions decline, we consider the shares uninvestable.”

The report says that Countrywide currently has £14.5bn worth of property listed for sale, down from £15bn a month ago. All of its largest 12 brands which offer the digital service have seen a reduction in listings and total value.

The report says Countrywide’s digital offering is not competing with Purplebricks, but is more likely to be competing with the traditional service that Countrywide itself offers.

It says that Countrywide markets its digital offering as inferior to its own traditional service, and that its marketing is defensive and uninspiring.

Shares in Countrywide yesterday edged down slightly, to finish the day at around 120p.

Purplebricks shares had a volatile day, bobbing around between 318p and 290p, but ending little changed at 308p.

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22 Comments

  1. Typhoon

    The report says Countrywide’s digital offering is not competing with Purplebricks, but is more likely to be competing with the traditional service that Countrywide itself offers.

     

    NO KIDDING SHERLOCK !!!

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  2. Chris Wood

    Estate agency is a people and service business. It is not retail, it is not a service where you want the cheapest denominator looking after your largest financial asset during a major life event with no incentive other than to list your home and sell you expensive add-ons.

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  3. AgencyInsider

    Kindest thing to do would be to take CW and OTM down to the vet and have them both put to sleep.

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  4. Philosopher2467

    The ‘smoke and mirrors’ of project ayella appears to be becoming apparent to everyone. The ‘so called’ digital offering was a nonsense from the get go. No-one (or at least anyone who has a some understanding) believed in it or thought it would do anything other than damage the existing offering when you use existing brands. Did Mrs P really thinknotherwisw or genuinely expect anything else? What is for certain; anyone who has even a modicum of experience would know that a ‘top down’ poorly planned and executed radical departure from what your normal business is was likely to be detrimental. Core business degraded to try and copy an unproven low cost/revenue alternative. Madness!

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  5. GPL

    I’m sure Countrywide still has a part to play even although many would be happy to see a corporate agent of its size fail.

    I dislike intensely the thought of those good staff being driven in a direction which is clearly failing.

    It’s lamentable that those in charge are allowed to continue however it seems the way these days – clear evidence of business/strategic failure yet those guilty allowed to stumble blindly on, and rewarded for their failures?

    I think the CW staff should do the next Performance Review of Ms Platt and her team, I think we know what the results would be. I suspect the staff have bought the management their leaving gifts already – suitcases &  vouchers for taxis.

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    1. Ric

      Totally agree.

      IMO they should have halved their brand count, by rebranding the worst 50% of their brands to the best 50%, therefore creating a “New Kid On The Block” in their struggling locations. Then re-trained staff on Customer Service the basics, and then for me drop the heavy sell tactics, and fee structures, allowing their more than capable Managers (in most cases) to list in whatever way was required to offer the customer what they wanted and therefore get back to the theory “Boards Breeds Boards” or “Digital Listings Breed Digital Listings”.

      Their fight should have been to compete with the independent on face2face service not the online bunch! who’s days are numbered as the market is changing in my opinion!

      Having worked 10 years corporate and 15 years independent, what made me a better agent was being able to be me and that I think is CWs biggest issue, they employ people on merit and then change their personalities.

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      1. FSAndrew

        Provide all the support, guidance and expertise to your staff and they will thrive and bring you profit.

        Recruit newbies and/or superstars and brow beat them into robots following incongruous directions leads to self destruction.

         

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  6. AgentV

    Not sure how much Countrywide have spent overall on this knee jerk copycat project, but surely that money could have been far better spent on promoting the virtues of their core offering.

    Notices in local branches to us, advertising ‘Sell your property for £995’ just says to past customers ‘our previously high fees were a rip-off!’

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    1. localagent735

      from memory when I was working there it was at least a few million on the first launch and next year another few million.

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  7. smile please

    Just last night i was with an old colleague who is still very much at CW.

    Interestingly they have admitted (internally) that they made a mistake, hence why the leaving of many of the directors and heads of department.

    The question is now, as the story points out. “What is the plan?” – That is not clear. I do think you will see a more traditional return to its roots with more area managers and i think you will see another reduction in offices in the coming 12 months.

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  8. BuxtonBeauty13

    They have just parted company with their 2nd Marketing Agency in 2 years, relieved a number if their regional marketing managers of their posts, and haven’t even told the troops that there is no one making marketing decisions.  They put too much reliance on PPC and cut short any press commitments that they made earlier in the year.  How can the tier two brands compete if they aren’t given a single penny towards marketing????

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  9. WillW72

    Ah, a lot of hype. Countrywide have problems, just as LSL, Spicerhaart and other nationwide firms have problems. We exist in an era of evolving estate agencies. Small firms can adapt quickly. Large firms will have a lot of interim problems adjusting. I doubt the proliferation of brands will continue, even Countrywide see the need to rationalise. Similarly the online brand will need a lot of work. But the depth and strength of the network, referral systems and one of the best referral networks I have worked in (now becoming easier cross brand) will mean it will continue. Yes a few branch closures probably are ahead, but they are for everyone- any branch in any company without a strong lettings portfolio and manager will be feeling the pressure. Yes, it will probably take years not months to sort out. But ultimately, they are open to change and I think will come through it stronger than before.

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  10. ClaytonJames89

    Hopefully the uninformed guesswork in Berenberg’s ‘report’ will nudge Countrywide’s share price a little lower so that I can buy even more of them before the price inevitably corrects.

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    1. smile please

      Guess you are looking at a LOOONNNNNGGGGG term investment 😉

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  11. Ostrich17

    “It says that Countrywide markets its digital offering as inferior to its own traditional service”

    Buy cheap, Buy twice !

     

    Not sure I would be happy, if I were the client, to be receiving the second class service.

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    1. GeorgeHammond78

      Ostrich17 – shurely you mean 3rd Class, given the starting point of their traditional service?

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      1. Ostrich17

        GeorgeHammond78

        Do they still offer the Prestige/Premier/Premium listings with the extra special For Sale signs?

        Marketing Depts trying to offer different levels of service are likely to conflict with an Agent’s Fiduciary Duty to the Client.

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  12. whatdoiknow58

    Not too sure which part of this headline  article is ‘ uninformed ‘ as someone has suggested unless you actually work for CW at Branch level which i do.  Pretty much hits the mark in my opinion  as  take up at my Branch of the on-line proposition  (and most of those Branches  in the wider area)  has been non – existent or worse! Interestingly we have NEVER been shown or seen any actual numbers of how many customers have taken up the service and there are no targets in place to hit. Our Brand continues to lose market share and is definately not helped also  by a complete lack of good quality marketing material. Believe it or not we have to make up our own marketing packs to send/leave with potential vendors – not everyone likes an emailed report and pretty much all we have is boxes of ‘ sell your home for £995 ‘ flyers which continues to trash our respected  ‘ Brand ‘ to Poundland status.  Market share has  fallen off a cliff  right across the board together with our fees  – we all talk – and most of us are dreading the next few weeks as we all think something is a foot interms of our CEO’s recent ‘ continue with cost cutting ‘ statement and we all know what that means. Merry Xmas.

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    1. localagent735

      having worked for a countrywide brand, which was one of the first to luanch the online option was being no deffiencial on the online and traditional service. everything is marketed under that brand and clients and buyers just think the brand only does cheap fees and a rubbish service.
      the office i worked in 7 people left and now only one remains!

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      1. WillW72

        Uninformed, maybe not, sensationalist over simplification definitely. We live in tough times. Shrinking markets mean fewer estate agents. Countrywide is the largest so the easiest target. There are no free hand outs. Its a business in a weakening market, but it is well placed to ride the storm. And to the above any estate agency is a long term investment right now. There are no magic bullets other than a reversal of Brexit.

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  13. Purpleperson94

    “Defensive and uninspiring marketing” – how long have Leadbetter, Briggs and Longden been enabling this fiasco while taking fat paychecks? Platt should have gone 12 months ago – one can only assume her ‘poison chalice’ strategy is the only thing keeping her in a job as they can’t find a decent CEO to take on this self inflicted catastophe.

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  14. Property Paddy

    They appear to not have any clear direction, strategy or commitment, the company really needs a heavy weight at the top to consolidate and reorganise PDQ.

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