The International School Gold Rush
Signs of it Ending?
By Dr Denry Machin
As markets tighten, they change.
Consider the iPad. Following its 2010 launch, sales rose rapidly. The peak came in early 2014, with demand falling thereafter. Today, the tablet market is mature. Apple is no longer the only seller of tablet computers and it no longer has the benefit of being the primary innovator. There are now plenty of alternatives to the iPad, at a range of price points, each offering various ‘unique’ features.
As it has for Apple, a tightening market can often signal important changes in a market’s competitive environment.
This article considers what market tightening might look like for international schools.
Sure, as well signalled in EDDi’s companion article, Opportunity is Knocking, we may be about to enter a renewed phase of post-Covid growth, but conditions are currently tight; in some markets very tight and they may not recover anytime soon.
Gold rush conditions?
One signal of tightening markets are gold rush conditions.
The famous California gold rush lasted from 1848-1855. Seven short years.
When it comes to writing the history of the international school gold rush, how will things compare?
We can probably pin the start date of our own gold rush to 1996, the year Dulwich College became the first British private school to make a foray into overseas territory. It set a strong precedent. Back in 1996, there were fewer than 2,000 international schools, today there are over 12,000.
So, we’ve already out-lasted California’s gold rush. But, lest we forget the lessons of history, for how long might the international school gold rush last?
For signs it might be ending in your location, ask yourself these questions:
Has there been an increasing focus on price, service and/or promotional activities by schools in your market?
Are parents becoming more discerning, and more demanding?
Have schools in your market been rapidly investing in facilities and equipment?
Does your school have surplus capacity (spaces for additional enrolment)?
Do other schools in the market have surplus capacity?
Have schools started to change/offer new curricula or new modes of education?
Do schools in the market offer an increasingly similar school experience?
Is the ‘quality gap’ closing (the difference between the ‘best’ schools and others narrowing)?
This isn’t one of those glossy magazine personality tests (heaven forbid), but, if you mostly answered ‘yes’, then you are likely in a tightening market.
And Covid has likely only accelerated and sharpened many of these factors. We are now playing a new game, by new rules.
New game, new rules
As market (and/or school) growth slows, competitive attention turns to other schools.
Tightening market conditions mean attracting children away from competitor schools, and working harder to ensure that you are first choice for new entrants (at Kindergarten level, for example, or for parents newly arrived in a city).
No longer is there enough demand for everybody.
Critically, this shift changes the nature of competition – it changes the rules of the game. Two (real but anonymised) post-Covid examples serve to illustrate:
On entering an increasingly tight market, one now stretched further by Covid, a branded school marketed itself heavily as the best of its type. Much to the chagrin of incumbents, the new school’s marketing implied that rival schools were lacking - you can imagine their reaction.
Heavy marketing was a feature of the market, but nobody had previously dared be this direct. Needing to make an impact, the new entrant changed the rules.
A longstanding and well-respected school suffered an enrolment dip. In response, the school lowered various financial requirements of enrolment and offered new entry points for children. In terms of both price and product offering, it moved into space occupied by its competitors.
For many years, the school had been resilient to increases in the number of competitors, no longer. In turn, those competitors now faced a newly active rival; and a game with new rules.
These rule shifts are often subtle. Day-to-day, they may be hardly noticed, or might be passed off as the actions of one rogue competitor. Cumulatively though, they represent shifting market dynamics, from growth to market tightening.
More knowledge (for them), less power (for you)
In tightening markets, international schooling is no longer a new idea and parents are now longer new to the concept. The more schools there are the more parents will know (from word-of-mouth) about them.
As they learn more about international schooling, they become more selective and more demanding in their requirements. They now have choices and, unlike when the market was young, they are better informed about those choices.
For schools in tight markets, this might sound ominously familiar.
Post-Covid, where once families may have been enrolling in an international school for the first time, in some locations this will become (and may already be) less and less the case. Rather than transitioning from local schools, many children will be moving from other international schools; as a result, their parents will place greater demands on the new school.
Feeling the squeeze
As a result of slower growth and more knowledgeable buyers, competition becomes:
more cost-oriented;
and/or more service-oriented.
For the former, to maintain financial health, there is pressure to better control (and reduce) costs - the recruitment of cheaper teachers or restrictions on pay and benefits, for example.
For the latter, service improvements increase capital requirements as competitors engage in an ‘arms race’ for the most modern facilities, equipment and the best offering. A British school might start to offer the IB Diploma; a US school might offer A-Levels in specialist subjects.
As is being seen in locations from the Middle East to Thailand, there is a flurry of building and expansion. Competition to have the best, most up-to-date facilities becomes part of the game.
Schools also start to mirror and match each other’s co-curricular elements. Where once school golf societies were distinctive, they become de rigueur. The school with a climbing wall is no longer novel, it is the norm.
World-class facilities, expertly qualified teachers, outstanding IT provision, school coffee shops and a full range of school branded merchandise…all become the expectation.
It becomes difficult to be unique.
If that sounds contradictory – lowering costs while improving services and facilities – that’s because it is. Therein lies the challenge of tightening markets, they require squeezing more out of less. Â
 Overcapacity to undercutting
As industry growth slows, the rate of capacity addition must also slow.
Attitudes to adding capacity must fundamentally shift and be disassociated from the euphoria of the past. However, just like the forlorn California gold miners, this rarely happens…at least not in time.
As many of you will be experiencing, new schools keep entering the market and incumbents keep adding new classes, new year groups and new boarding houses.
As a result, as markets slowly tighten, excess capacity is all too common.
This overcapacity accentuates the tendency toward price-based competition. For example, if you are a boarding school with spare places, price discounting (whether in the form of scholarships, fee reductions or other financial benefits) is an obvious strategy.
The danger is that when competitors follow suit it can become a race to the bottom, cheapest wins.
A (different) new normal
How many of those tendencies are present in your market?
If you reflect on the initial questions again, and on the descriptions above, are you in a tightening (or already tight) market? Are these conditions caused by Covid or will they remain when we return to ‘normal’?
When doing this reflection try to consider your school’s situation objectively.
It is all too easy to assume that your school is special and unique, that the conditions don’t apply to your market or that you are immune from the changes.
Maybe, but many a California gold digger thought that he/she had a claim nobody else knew about, an undiscovered plot of land rich in gold. Most were suffering from the same ‘gold fever’ as everybody else.
To mix my metaphors, remove your gold-tinted spectacles.
We’ll return to this theme in a future EDDi, looking at how you might respond to tightening conditions.
By Dr Denry Machin
WHERE’S YOUR COPY?
International Schooling: The Teacher’s Guide is getting around. Seen here in Bali, courtesy of Cheraine Escott of Staffroom.school.
Where’s your copy?
Send us a picture and we’ll feature you in EDDi and on social media.
About the book
Practical and easy-to-access, this comprehensive guide provides insight into one of the biggest, and most exciting, career transitions and life adventures many teachers ever make.
Whether you are new to this world or experienced, this authoritative text introduces, examines and unpicks the highs, the lows, the perks and the pitfalls of international schooling.
For anyone aspiring to, new to, being recruited into, or currently enjoying international teaching, it is essential reading.
AVALIABLE VIA
Amazon (US)
Amazon (UK)
Barnes & Noble
Book Depository
Books A Million
Enjoying EDDi?
As ever, if you are enjoying EDDi, please consider forwarding it to someone who would get a lot out of it.
If you were forwarded this email, you can subscribe to receive EDDi every fortnight.