The new chief executive of Purplebricks believes hybrid agents could win ’20-30% market share’ in the UK.
Vic Darvey, who replaced Michael Bruce as the agency’s chief executive in May, says the hybrid sector remains ‘a very nascent opportunity’.
“People forget that the sector is only around five years old,” he says in an interview with Estate Agent Today, following the publishing of the agency’s full-year figures for the year ending April 30 2019 yesterday.
“At Purplebricks, we are now only talking to some consumers for the first time as they look to move home.”
Darvey says Purplebricks is aiming for 10% total market share within a ‘three to five-year horizon’ after achieving market share of around 4% in its first five years of operation.
Yesterday, the agency reported an operating loss of £52.3 million, up from almost £30 million in 2018, despite annual revenue rising by 55% to £136.5 million.
The agency also reported a UK operating profit of £5.3 million and confirmed it would be withdrawing from the US market by the end of 2019.
“We wanted to use this trading statement to highlight how well the UK business has performed and that the flagship UK business is now in a position of cash generation,” says Darvey, who was previously managing director of the MoneySuperMarket Group.
When asked about the fortunes of the property market and what this means for Purplebricks and the hybrid sector going forward, Darvey is optimistic.
“The UK property market can thrive in the medium-term after a period of stabilisation and recovery,” he says.
He adds the online sector can ‘return to growth’ and that Purplebricks believes there is a ‘continued willingness’ among consumers to ‘use hybrid agents’.
“The challenge for hybrid agencies, without bricks and mortar, is to build a brand,” says Darvey. He explains this is usually done through ‘broadcast marketing’, which is expensive.
He acknowledges consumers’ brand recognition of Purplebricks, saying it has reached an ‘incredible’ level for a brand that only communicates with customers every six to seven years when they come to move home.
Darvey describes the opportunity to grow in the hybrid sector as a marketing and branding ‘arms race’ and that although Purplebricks has not won this race, it has established itself as a ‘firm preference’ among many consumers.
When asked if Purplebricks will ever be ‘accepted’ into the wider agency industry, he says that Purplebricks remains a ‘challenger brand’ that values consumers at the ‘heart’ of its business.
He says it will be difficult to be accepted when trying to win market share from competitors is the ‘nature of the business’.
Darvey also confirms that there are currently ‘no plans for Purplebricks to enter any other market’. The agency says it is now focusing on extending ‘market leadership’ in the UK and learning from the 18-year old Canadian business it acquired in 2018.
2019 has been a turbulent year so far for the agency, following the departures of several senior members of staff including founders Michael and Kenny Bruce, UK chief executive Lee Wainwright and US boss Eric Eckardt.
At the time of Michael Bruce’s departure in early May, Purplebricks also announced it would be closing its Australian business.
Meanwhile, its share price has faltered in recent months, down below its starting price of 100p from highs of over 498p recorded in July 2017.
Following the release of yesterday’s figures, the Purplebricks share price closed on 95p, up 2.15%.