The UK Furniture Industry
The information in this report is largely based on data for 2011 which is the last year for which we have full and complete reporting. While 2011 saw difficulties in the furniture sector, 2012 has seen increased challenges and the industry continues to be a difficult one to be successful in.
* Furniture and furnishing stores declined by 3% in current value terms in 2011 * The sector was rocked by the collapse of iconic furniture manufacturer and retailer, Habitat * Consolidation continues, as the top three retailers increase their shares in 2011 * Growth rates in furniture and furnishing stores are set to stabilise, but the sector is still expected to decline. * Since 2006, sales have fallen by 13.2% and the UK has seen nearly 3000 furniture and furnishings outlets close. * The current outlook is not a favourable one for the industry: while the number of outlets is expected to see a small growth in 2011-2016 (0.7%), value of actual sales is forecast to fall by more than 10% over the same period. * The recession has had a lasting impact on all home-related sectors, including the furniture and furnishings industry, due to the downturn in the housing market. * Within the furniture and furnishing sector, the majority of retailers are positioned at the lower-end of the spectrum, with price an important factor in the decision for UK consumers. This became even more important in 2011, as consumers were less willing to spend on expensive furniture. * Independent specialists: small stores dependent on one category will continue to suffer reflecting market share gains by the largest players. * Larger chained retailers have managed to increase their brand share over the 2008-2011 period whilst smaller retailers have struggled to maintain theirs. * Furniture retailers who have been most successful in recent years have been those who have moved away from a single product offering and diversified, including small ticket items in their offering. * While large chains have faced increased difficulties, smaller independents retain the advantage of being more versatile and flexible, able to adapt to changing circumstances and shifting customer needs. * Despite the economic climate, a customer base still exists in particular for high end goods. * There is little room for complacency however and retailers must stand out from the crowd to attract customers; innovation, choice and perceived value for money are critical in a recession.
Trends and News in the Furniture Industry
* June 2011 saw the announcement that Habitat, founded by Terence Conran, would go into administration. Three of its stores were sold to Home Retail Group, whilst the remainder are due to close once stock is depleted. Approximately 750 staff are likely to lose their jobs, and the closure of Habitat was one of the biggest retail stories in the UK in 2011.
* The number of furniture and furnishings stores declined by 2% in 2011, as a weak housing market and concerns over the future of the UK economy continued to suppress consumer demand. In addition, internet retailing has rapidly become one of UK consumers’ preferred methods of purchasing furniture, due to the fact that large items require delivery anyway.
* Ikea, DFS and Dunelm all increased their shares in 2011, as independent retailers struggled to maintain their sales revenues. For the majority of UK consumers 2011 was a year of austerity, and many decided to hold off on buying big-ticket items such as sofas and beds. Weakness in the housing market, exhibited by a fall in volume sales, also claimed its share of retail victims, with service-oriented specialists such as Moben Kitchens and Dolphin Bathrooms collapsing.
* Since 2008, Ikea has been the largest furniture and furnishings retailer in terms of value sales. 2011 saw the retailer increase its store-based sales by £8 million, a 1% increase...
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