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Between 2005 and 2007, the kitchen and bathroom distributor market
experienced consistent growth supported by the buoyant housing
market, a general shift towards more upmarket, higher value
products, along with consumers undertaking large scale
refurbishment projects in the kitchen and bathroom sectors.
However, towards the end of 2007 the market growth began to slow,
as fears over the ‘credit crunch’ started to take effect in the US,
spreading to the UK, depressing consumer confidence. During 2008
and 2009 the economy went into recession, resulting in difficult
trading conditions for companies within the kitchen and bathroom
industry. The ‘credit crunch’ affected house building, domestic RMI
and most high ticket deferrable projects within construction or
building in particular.
Activity
in the housebuilding and housemoving sectors remained sluggish in 2010,
although there was some evidence of a slight increase in home improvement
activity with consumers opting to ‘improve rather than move’. The market
was estimated to be worth £739 million at distributors’ selling prices at
the end of 2010. Consumer and business confidence remains depressed and
with falling disposable income levels and increasing unemployment, it
seems likely that 2011 will be a difficult year.
The short
to medium term outlook indicates only moderate growth at best. An upturn
in housebuilding levels and an improvement in refurbishment activity may
support underlying growth; however the level of activity remains
historically low influenced by high inflation pushing up the cost of
living and a low level of house moving activity. There is therefore some
prospect of growth in 2012 to 2015, though this is expected to be modest,
at least initially.
A large
proportion of the distributors’ sales are bathroom products, with 39% of
sales falling into this category. Kitchen furniture has a 29% share,
whilst showers and kitchen appliances each account for 16% of the market.
The ‘don’t move, improve’ trend has supported the replacement bathroom
sector somewhat, although the decline in the housebuilding sector has had
a significant impact on the level of installations.
Sales to
kitchen and bathroom specialists dominate the distributors’ market,
accounting for 40%. Builders’ merchants are also a key customer
accounting for 28% of the market. Other customers include DIY Outlets,
other retailers such as department stores, electrical independent
retailers and others including sub contractors and end users such as
local authorities or housebuilders. Following the economic decline, there
has been a greater emphasis on RMI activity rather than new build, with
the kitchen and bathroom specialists and department stores faring better
than the builders’ merchants over the last two years.
Some of
the DIY multiples reported growth in their sales of kitchens, bedrooms
and bathrooms in 2010, although this was also supported by improved
merchandising and product ranges, in addition to continuing to benefit
from the withdrawal of MFI and more recently the failure of Moben in
2011. |
