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In 2004 the
bathroom products market was worth £858m at manufacturer selling prices.
This represents a 5% increase on the previous year, reflecting a
buoyant housing market and high levels of consumer confidence.
Rising house
prices and generally sustained, buoyant levels of consumer confidence and
spending have supported the bathroom market over the last 6-8 years.
The growth of
the bathrooms market was stimulated by a number of factors between 2000
and 2002, in particular higher levels of consumer confidence and a
buoyant housing market were influential. One particular area of growth
was the increasing installation of en suites, downstairs cloakrooms and
utility rooms, particularly in new build.
The high level of house price inflation, which prompted record
levels of equity withdrawal, further supported the growth of home
improvements. Borrowing on a
secured basis remained relatively cheap in line with low interest rates,
and mortgage equity withdrawal reached the £13bn mark in the final
quarter of 2002.
2003 and 2004
were also positive years, particularly for consumer confidence levels,
despite higher interest rates in comparison to previous years.
However, consumer confidence and spending deteriorated towards the
end of 2004 and other influencing factors, such as mortgage equity
withdrawal, were lower than in previous years.
Growth
in 2005 is currently lower compared to 2003 and 2004, with higher
interest rates and lower consumer confidence and spending, impacting on
the market. The recent
decrease in interest rates may boost consumer spending, however the
impact is unlikely to be significant in the short term, as interest rate
cuts can often take 12-18 months before they have an impact on consumer
spending and confidence levels.
Price
competition, particularly in the DIY sector and also by the likes of MFI,
has been a major factor affecting value growth in recent years.
While a greater emphasis is being placed on design and quality,
which adds value to the products, the DIY sector including MFI offer an
increasingly wide range of lower cost products, which appeal to a broad
range of customers. In common with many other industries, this has been
driven by increasing levels of imports from low wage-cost countries, such
as China.
Product
Mix
Baths and
sanitaryware continue to dominate the industry's sales.
However, the brassware, accessories and furniture sectors are
growing in significance.
The
sanitaryware sector continued to
drive the overall market growth in 2004, reflecting the growth of new
installations such as en suites and cloakrooms, in both new build and
existing homes. In addition, the trend towards higher value products in
the sanitaryware sector, in line with the wide range of styles now
available, also added value to this sector.
The
shower market also continued to perform well in 2004, which to some
extent negatively influenced the bath
sector. The trend towards
larger shower enclosures has seen the removal of the bath altogether in
some installations. In addition, the focus on en suite/additional
bathrooms in new homes has favoured showers. Consequently, the bath
market has experienced a slight decline.
The brassware
market has performed extremely well in recent years with the mixer sector
continuing to gain share. Mixers now account for over half of all
brassware, being particularly strong in kitchen brassware. The shift
towards modern contemporary styles is now well established in the
brassware sector, and the wide range of styles and the focus on design is
offering opportunities to add value to sales.
Raw material prices have also increased in 2004, which has
contributed to the overall value growth of the brassware sector.
Accessories
and Bathroom Furniture have also
performed well in recent years. Trading
up to higher quality products has supported the accessories sector and
the wide range of bathroom furniture styles now available has boosted
penetration levels in this sector.
The growth of
hydrotherapy products has also supported the whirlpool
and spa sector. Whirlpools/Spas have traditionally been viewed as an
expensive luxury but are fast becoming more affordable for the mass
market. As awareness and
distribution expands, this market is likely to exhibit significant
growth.
The key
suppliers of baths and sanitaryware include Ideal Standard/Armitage
Shanks, Twyford Bathrooms, Jacuzzi, and Shires.
Armitage Shanks, Ideal Standard, Bristan and Pegler are the major
companies in the brassware sector, with Hansgrohe and Deva Tap Company
gaining share. Imports have
also continued to increase over the last two years.
Key suppliers
of accessories include Croydex, Bemis, Polypipe (incorporating Celmac),
Samuel Heath, Roper Rhodes, Coram etc.
Key furniture suppliers include Roper Rhodes, Utopia, American
Standard, Heritage and Be Modern who are strong in the fitted furniture
sector.
Distribution
In terms of
distribution, the merchants and factors continue to play a dominant part
in the market with around 75-80% of bath and sanitaryware sales from
manufacturers. The DIY
sector has grown in recent years supported by the wide range of products
now available, along with displays, information and advice. The Merchants
and Factors/Distributors continue to dominate the brassware sector, while
the DIY sector has also gained share in this product area over the last
two years.
Distribution
of accessories and free-standing furniture is heavily biased to the DIY
multiples, who take over half the retail share, with bathroom specialists
taking around 9-10%. Fitted
furniture and whirlpool/spa distribution is biased to Merchants and
Bathroom Specialists as neither are yet widely regarded as DIY products.
However, the DIY sector may experience some growth in the medium term due
to the availability of spa products through this sector, e,g, steam
cabins.
Future
Prospects
The overall
market for bathroom products is likely to show slower growth in 2005 and
into 2006, largely due to the overall economic uncertainty and lower
levels of consumer confidence and spending.
A reduction in interest rate levels may boost consumer confidence,
although an interest rate cut or an improvement in the housing market can
take several months to influence consumer-spending levels etc.
In addition with rising raw material prices and inflation rates,
it may be difficult for the Bank of England to justify reductions in
interest rates.
The
medium to longer-term prospects are more positive for the bathroom sector
with new housebuilding expected to support growth in the medium to longer
term, and with the RMI sector likely to show some improvement as the
levels of consumer confidence recover.
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