During the
latter half of the 1990’s and into 2000, the French economy performed
well, with strong GDP growth, low levels of inflation and high consumer
confidence, all supporting household expenditure. In September 1999, a
reduced rate of VAT on RMI works was introduced, which prompted an
unusually high level of RMI activity. These favourable conditions
supported the growth of the bathroom market up to 2001.
However, in
2002 and 2003, the level of competition in the bathroom sector
intensified, with an increasing number of manufacturers entering the
market and a growing level of imports from lower cost sources. The lower
levels of RMI expenditure also negatively influenced the overall value
growth of the bathroom products market.
2004 was a good
year for both the French economy and the bathroom market. The bathroom
market achieved slightly higher growth, supported by improved economic
conditions, higher RMI expenditure and a significant increase in the
number of construction starts in the housing sector.
However, these
positive conditions failed to continue into 2005 and the overall
bathroom market experienced lower growth. This was due to a slowdown in
the economy, static levels of RMI expenditure and a slowdown in the
growth of construction starts compared to 2004. In
addition, the increasing strength of the DIY sector, along with the
growth of lower cost imports also influenced the value growth of the
bathroom market.
The economic
situation was slightly more
favourable in 2006, which supported the growth of the bathroom market at
similar levels to 2005. The
bathroom market should
remain stable in 2007, although
many
macro-economic factors, including potential further interest rate rises,
could impact on consumer confidence and spending.
In terms of the
product mix, the brassware sector continues to account for the largest
share, with approximately 26% of the market by value, followed by the
sanitaryware sector, with around 18%. However, it is noteworthy that
these sectors have lost share in recent years, with both markets
relatively mature and suffering from intense price competition.
Both showers
and furniture have performed well in recent years with the shower sector
experiencing an increase in share from 13% to 15% since 2001, while the
furniture sector now accounts for 17% of the overall market in value,
compared to 16% in 2001. The increasing popularity of showers is
affecting the growth of the bath sector, with bath sales fairly static
in recent years.
The shower
market has notably benefited from higher levels of installation in new
build dwellings. Showers are also replacing baths in refurbishment
projects to an increasing degree. Despite higher levels of price
competition in recent years, the shower market is likely to experience
healthy levels of growth in the short to medium term.
The furniture
market has also benefited from higher levels of installation,
particularly in the new build sector. Most new build dwellings are
equipped with a worktop or a vanity unit, the latter being particularly
common in higher value properties. Value growth has also been supported
by the significant improvements made in this sector, both in terms of
quality and design.
In terms of
distribution, the building and plumbing merchants account for around 60%
of the market. Although they have lost share in recent years, they
remain the main distribution channel of bathroom products. The DIY
sector has progressed significantly and now accounts for approximately
34% of the market in value.
The merchants
are usually stronger in the distribution of heavy bathroom products
which require professional installation, while the DIY multiples focus
on the distribution of lighter bathroom products which can be easily
installed by individuals. The merchants also tend to offer higher
quality products, compared to DIY multiples, which are more focused on
the lower end of the market. Both merchants and DIY multiples however
have been expanding their catalogues in order to reach a wider range of
consumers.
