|
The contract furniture sector is primarily influenced by the level of commercial
and construction activity within the economy and is subject to general levels of
business and consumer confidence.
The contract furniture market is worth an estimated £658 million in 2001 and
current forecasts indicate growth levels of 3-4% per annum, with the market
expected to reach an estimated £759 million in 2005.
The sector tends not to be as volatile as the domestic furniture sector but is
still susceptible to downturns in economic activity and overall levels of
commercial and industrial growth.
Recent performance has been a little subdued compared to the buoyant performance
during 1997/98. However, some sectors are performing better than others
resulting in reasonable growth rates overall. The market was affected by the
economic slowdown experienced in 1998, which resulted in a fall in the level of
new construction orders and a significant reduction in refurbishment and new
build activity in the leisure sector.
A wide range of Millennium projects helped boost the market during 2000.
However, the leisure market has suffered from lower margins and postponement of
refurbishment and new build developments during the second half of 2000 and
2001, due to the impact of the fuel crisis, severe flooding, foot and mouth
epidemic, slowdown in tourism and the recent terrorist attacks in the US.
Prospects for 2002/03 are reasonably optimistic with pent-up demand and
postponed refurbishment expected to feed through into the second half of 2002
and 2003. Medium term prospects indicate growth rates of 3-4% to reach an
estimated £759 million by 2005. Expectations are that the market will benefit
from a number of PFI projects within the healthcare sector, higher government
expenditure in the education sector, and greater investment in image in many
application areas.
Contract dining furniture dominates the market in terms of product mix and is
estimated to account for 28% of the market in value terms in 2001. Key
influences include substantial growth in the UK restaurant, pubs and clubs
markets, and an emphasis on investment in image, new styles and designs.
Upholstered furniture is estimated to account for 21% of value share of the
contract furniture market, due to the increased demand within hotel/leisure and
entertainment sectors. Beds and bedroom furniture combined were estimated to
account for 23% of value share of the contract furniture market. Growth is
underpinned largely by the substantial rise in student accommodation.
The remainder of the market is comprised of educational furniture, which
accounts for approximately 13% and 'other sectors' which includes MOD, prisons
etc, and accounts for an estimated 15% of the market.
In terms of key suppliers, the structure tends to differ between the major
product sectors. The contract market for beds and upholstered furniture is
similar to that of the domestic market, with a number of manufacturers supplying
both sectors. In the bedroom and dining furniture market, the supply structure
is highly fragmented and educational furniture suppliers tend to be more
specialised and, in many cases, also offer office furniture.
In terms of end-use application, the leisure sector is dominant accounting for
approximately 45% of the market and is likely to remain the leading sector
within the foreseeable future. Education accounts for approximately 30% of the
market due to the substantial increases in student numbers and accommodation
requirements, and growing competition experienced within the sector. The health
sector is also significant, accounting for 15% of the market, with 'others'
accounting for 10% of the market. The healthcare and education sectors are
expected to benefit in the short to medium term from substantial increases in
PFI projects and government funding, which should increase their importance as
end-use applications over the next 5 years.
Overall, the distribution of furniture within the contract sector is dominated
by direct supply to end-users. However, depending on the end-user, the
distribution channel is likely to change accordingly. For example, the leisure
industry are more likely to use architects, interior designers, contract
furnishers and hotel buying groups. Conversely, the healthcare sector tend to
use a central buying group as the market is highly fragmented and the education
sector, such as state schools, will use central buying groups or specialist
catalogue suppliers.
| 
