Fraay Coatings is a more than 100-year-old Purmerend company owned by our good friend, Gert-Jan DE WOLF. Fraay provides painting companies and industries in North Holland and elsewhere with materials and advice. The consumer market is served from a shop in the centre of Purmerend. Earlier this week, I spoke to Gert-Jan and asked him whether the business market was not collapsing due to the crisis? The market is under pressure due to the corona crisis, but this is more than compensated by consumer spending because they use the situation to do odd jobs. Excellent, of course, for Gert-Jan and his people that there are positive developments in these challenging times.
Consumers are by-catch
The vast majority of the training institutes we contact focus on the business market. Percentages of 80% to 90% are mentioned regularly. Consumers are a kind of by-catch. The one-sided focus on the business market is now breaking many people up—for example; a major bank cancelled critical training' at one of our customers. Turnover has fallen sharply at many institutes. If we had followed Gert-Jan's example and bet on two horses, how would that have turned out?
€800 million
According to seo economic research, the more than 14,000 private vocational training providers generate an annual turnover of approximately €3.3 billion. The market did not grow between 2010 and 2018, which is unusual given the positive economic developments. The market division between government, business and consumers is also constant. Why are so many educators ignoring an $800 million needs to a greater or lesser extent?
Government
Business
Consumers €800m
LIFO
Training institutes are sensitive to economic cycles. Only when the economy is reasonably up to speed again will substantial money be spent on training and education ('Last In'). And in the event of a headwind, it is one of the first things to be cut back ('First Out'). We know LIFO applies to corporate spending. They cut costs ruthlessly if developments go wrong. The government is a little slower in that regard. However, it is striking how robust the consumer market is!
Even in difficult times, consumer spending is sustained or increasing. In this unprecedented crisis, we see this, especially with customers with certified courses such as 'data scientist', 'software developer' and 'digital marketer'. That makes sense because the opportunities in the labour market improve enormously with such certificates and the training courses lend themselves well to e-learning.
Consumer market
The corona crisis means that countless organisations now have to tighten their belts. Even without a crystal ball, it can be foreseen that there will be relatively little to gain from the business community and government immediately after the crisis. The importance of the consumer market will increase.
The Dutch working population consists of approximately 9.3 million people. More than 5.6 million (60%) of these have a permanent employment contract. The situation looks reasonably favourable for them, given the circumstances, because collectively negotiated wages will rise by an average of 3% in 2020. Outliers are, for example, municipal employees who gain no less than 6.25% and the medical staff plus 8%.
Labourforce Netherlands | 9.3million
Employees | Fixed
Employees | Flexible
Freelancers
Self-employed
Unemployed
Marketing & Financing
Consumers spend their own money and are perhaps - after all, nothing human is strange to us - more price-conscious. There is deliberation and weighting before spending money on more expensive courses. What could help enormously with those considerations is “affordability.” If consumers had access to longer-term financing, it would facilitate the sale of training and education. Finance4Learning has developed a unique proposition for training institutes: generating 'sales-qualified leads and providing funding to students/participants.
