The total market in 2005 is estimated at £426
million at manufacturers selling prices (MSP), reflecting a
relatively flat market over 2004.
The UK
Ceramic Tiles market experienced more than 25% growth between
2000-2005, but has slowed considerably into 2005 – 06, primarily
due to a downturn in home improvement activity and the switch to
lower-priced import sources. 2005/06 is likely to be a
relatively flat 2 year period, though prospects for a recovery
in growth are more optimistic from 2007 onwards.
Other key influences on the ceramic tiles market
include levels of new build housing which increased, albeit
slowly, in 2005, with activity in the private sector estimated
at 185,000 new units. The trend is for a steady increase in new
build which is likely to continue to stimulate demand for tiles
and tiling products, particularly due to the growing trend
towards downstairs cloakrooms, en-suites and utility rooms in
new build properties. Tiles have benefited from the general
trend towards hard floorcoverings at the expense of both carpet
and vinyl in bathroom and kitchen applications.
In general terms, the repair, maintenance and
improvement (RMI) segment of the private sector has been buoyant
as many homeowners chose to renovate their homes. Up to 2004,
the kitchen, bathroom/shower, and conservatories sectors have
all been buoyant, with ceramic tiles benefiting from high
activity levels. However, all these markets have been less
buoyant in 2005/06. For example:
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The
overall UK domestic kitchen furniture market experienced
fairly modest levels of growth reflecting the overall
maturity of this market. In 2005, the total value of the
market fell for the first time since 1999 by 2% to an
estimated value of £1,121 million.
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The
market for conservatories has suffered a dramatic drop in
demand since the second half of 2004. Market values declined
by 13% in 2005 and an estimated 2% in 2006 due higher
interest rates and a decline in consumer confidence, as well
as high levels of price competition.
The use of underfloor heating in conservatories,
kitchens and bathrooms has helped stimulate the ceramic tiles
market, allowing for all year round use of the room. Recent
product developments in the underfloor heating sector have
opened new avenues for using this system of heating as a
provider of full comfort heating, rather than simply
‘background’ heat,which has helped eliminate the ’cold feel’
effect of ceramic tiles.
In addition to domestic key end-use sectors
stimulating market growth, there has been significant activity
within certain key distribution channels, particularly amongst
tiling retail multiples. These players have continued to
stimulate volume demand through strong marketing activity and a
focus on ceramic tiles. Despite the fact that these retailers
are increasingly supplying imported products at lower prices -
imported tiles constitute more than 70% of the UK tiles market -
volume development has been such that value growth has remained
strong until 2004.
In the non-domestic sector the key influences are
the high levels of construction activity, particularly in the
health and education sectors, as well as private commercial.
Non-domestic construction activity is likely to remain buoyant
in the medium-long term underpinned by major investment
programmes in healthcare provision and the ‘Building Schools for
the Future’ programme. 2006 has seen further growth in public
sector investment, though there are rising concerns over the
role of PFI/PPP in major projects. Going forward, indications
are that the non-domestic sector will stimulate growth in the
market, particularly in sectors such as education and
healthcare.
Despite healthy optimism for the ceramic wall
tiles market in the short to medium term, the threat of
substitute products may negatively affect market growth. For
example, products such as UPVC panelling systems for bathrooms
are typically less expensive and faster to install than ceramic
tiles. However, the association of panelling systems with a less
‘luxurious’ finish may dampen growth of these products in the
longer term, particularly in higher value sectors, e.g. hotels,
though they are more likely to be adopted in the social housing
and private rented sectors.
In addition, there has been considerable growth
in the bathroom pod market - particularly in hotels and student
accommodation applications which has 2 implications. Firstly,
this will begin to impact on the procurement route as pod
manufacturers become product specifiers and, secondly, there may
be a trend towards more integrated panellised systems.
On the supply side, product developments by
manufacturers have continued to generate growth opportunities.
New designs, sizes, materials and shapes, coupled with wider
availability of tiles products through specialist and DIY
multiples, have contributed to reasonably healthy value growth.
The market continues to be characterised by the
strength of the import sector, currently estimated to account
for up to 70% of the market, and Porcelanosa continues to be a
major importer. However, as indicated above, there has been a
switch in the last 2 years to lower cost Far East and Eastern
European sources at the expense of traditional importers from
Spain and Italy. As a result, value growth has been undermined
to some extent and may be an increasing factor in the medium
term.
Success in the UK manufacturing sector has been
mixed with H&R Johnson and Pilkington experiencing difficult
market conditions whilst another UK manufacturer, BCT, exhibited
growth. Pressure on margins remain particularly strong for
companies in this market, reflecting its highly competitive
nature, which has resulted in some industry restructuring in
recent years.
In overall terms, despite the current slowdown,
the medium term prospects for ceramic tiles remains reasonably
optimistic. The general trend towards hard floorcoverings is
buoyant and ceramic tiles are a preferred choice for many
homeowners in kitchen and bathroom refurbishment projects, while
the conservatory market is forecast to resume growth in the
2007-2009 period. However, growth rates are likely to be lower
than in the 2000-04 period, though much will depend on
homeowners rediscovering their interest in home improvement
investment.
