SUMMARY OF REPORT CONTENTS

              UK Market for Floorcoverings 2007-2014 (£m at MSP)

Following moderate rates of growth 2005-07, the UK floorcoverings market experienced a significant value decline of around 18% in the 2008-10 period, with market value of just under £1.8bn. Decline has been experienced in all sectors, but rates of decline have varied considerably with vinyl recording the most positive performance.

The floorcoverings market has suffered from lower demand in both domestic and contract sectors in 2009-10 leading to significant value decline. The domestic market has been particularly subdued with housebuilding and house moving levels falling by up to 50% from their 2007 peak, depressing demand for floorcoverings such as carpet and laminates.

The contract sector has also been less positive 2009-10, with a significant decline in demand from key sectors such as offices and retail, although some public sectors have remained fairly positive to date – eg health and education.

The overall floorcoverings market has remained under significant price pressures throughout the period with manufacturers in some sectors unwilling or unable to pass on increased costs to consumers. Pricing pressure has also become more apparent in the contract sector, resulting in some product substitution and specification switches for interior finishing trades, such as flooring, as main contractors strive to reduce costs.

The floorcoverings product mix has remained relatively stable with only moderate changes experienced by the major products groups since 2008 – perhaps indicating that the major product groups are establishing their own relative strengths in key end-use markets and applications.

Carpet dominates the product mix with estimated value share of 56% in 2010, down from 57% in 2008. Wood flooring has also suffered slight share decline with reducing sales for laminates 2007-10 and value decline of 30% over the period. In contrast, vinyl has performed relatively well with value decline of only 5% 2008-10 with buoyant demand from health and education helping to sustain the market.

There has been some changes in distribution of domestic floorcoverings with the demise of Allied Carpets and its renewal as a much smaller organisation.  In addition, other channels have continued to change their product ranges - particularly for laminates and vinyl.

Into Q1 2011, the prospects for the overall floorcoverings market are mixed. The market is forecast to achieve value growth of around 3-4% in 2012 as key sectors benefit from the refurbishment activities surrounding the Olympic Games. However, further recovery in the housing market and key commercial sectors is likely to be tempered by significant budgets in public sector capital budgets from mid-2011 onwards, resulting in more moderate value gains for floorcoverings to 2015 when value is forecast to achieve £1.9bn.