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Supply Chain Review of the Furniture Industry Market Report - UK 2014-2018 Analysis

Published: 18/12/2014 / Number of Pages: 79 / Price: £795.00

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Introduction and Overview

AMA Research are pleased to announce the publication of the 2nd edition of the report 'Supply Chain Review of the Furniture Industry Market Report - UK 2014-2018 Analysis'. The report includes up to date information on recent trends and issues that continue to impact on the supply of residential furniture through the supply chain into the different retail sectors.

Key content covered:

  • An overall review of the supply structure - analysis of major developments and key driving factors.
  • Review of the major channels across the sector - assessment of each of the key retail channels.
  • Review of the opportunities for growth and change.
  • Forecasts for market developments up to 2018.

The report examines the various aspects driving change in the supply chain throughout the industry and assesses the likely future prospects for the sector through to 2018. The distribution structure for residential furniture has been evolving in recent years and there have been some significant sectoral developments, particularly from 'newcomers' to the furniture sector, such as the grocery multiples and online distributors. In addition, builders' merchants have also gained from significant kitchen furniture sales through Howdens, the trade supplier of fitted kitchens.

Areas of particular interest include:

  • Market performance of Retail Multiple sector, positive performance of some key companies versus failure of others.
  • Assessment of how the supply chain structure has changed during the recession.
  • The changing role and share of the Internet in the supply of furniture is assessed.
  • A high level of imports, particularly from the Far East, continues to put pressure on UK manufacturers and influence certain key sectors of the market.
  • Detailed market data and insight on the supply chain review of the furniture industry market by AMA Research, a leading UK provider of construction market intelligence.

Leading companies mentioned in the report include:

Asda, A. Share & Sons, Argos, B & Q, Barker & Stonehouse, Bensons for Beds, BHS, C.S. Lounge Suites, Canburg, Cargo, Dean House, Debenhams, DFS Furniture, Dreams, Dwell, Furniture Village, Gower Furniture, Habitat Retail, Hammonds Furniture, Harrods, Harveys, Heal's, Homebase, House of Fraser, Howden Joinery, IKEA Group, JB Global, John Lewis Partnership, Laura Ashley Holdings, Magnet, March UK, Mark Wilkinson Furniture, Marks & Spencer, Morrisons, Multiyork Furniture, Neville Johnson, Next, Nobia Holdings UK, Otto Versand GmbH, Reid Furniture, Sainsbury's, Sharps Bedrooms, Shop Direct, Smallbone, Steinhoff UK Holdings, Tesco, Wren Kitchens.

The Structure of the Furniture Supply Chain

  • Structure of residential Furniture Distribution in the UK, overall market definition, size and current situation 2008-2018, recent industry performance.
  • Growth in imports and impact of lower cost imports on the supply chain to 2013.
  • Current retail marketing mix, focus on the manufacturing retailers and their role in the industry, comment on store layouts and design.
  • Future prospects - market size and forecast trends with prospects and forecasts up to 2018.
  • Overall UK furniture industry market size, key drivers and recent trends.
  • Key market influences - including levels of construction, housing market, economic trends, impact of global credit crisis, short term prospects etc.

Key Channels of Distribution in the Supply of Furniture

  • Furniture multiples - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector ie IKEA, DFS, Steinhoff UK Retail, Furniture Village, Dreams etc.
  • Furniture specialists - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector ie Magnet, Wren, Hammonds, Sharps, Neville Johnson etc.
  • Mail Order & Catalogue Retailers - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector ie Argos, Shop Direct, Otto Versand etc.
  • Furniture Independents - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector.
  • Department Stores & Variety Chains - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector ie John Lewis, Debenhams, House of Fraser, Harrods, Marks & Spencer, Next, Laura Ashley etc.
  • DIY Multiples & Builders' Merchants - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector including B&Q, Homebase, Wickes.
  • Internet, Direct Sell, Off-the-Page - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector including B&Q, Homebase, Wickes.
  • Grocery Multiples - structure of the sector, how this has changed in the last 6 years, product shares 2007 and 2013, key organisations in the sector including Tesco, Asda etc.

Assessment of the Use of the Internet in the Supply of Furniture

  • Changes in access to the Internet - changing nature of Internet access, growth of mobile access etc. Internet as a research tool buying in-store yet still using Internet research to improve price, or enhance product knowledge.
  • Purchaser profiles of online buyers and the use of social networking, advantages and disadvantages of trading online etc.

Report Summary

The UK domestic furniture market is highly fragmented and complex. It has moved in a volatile pattern since 2007, but in overall terms has declined by around 7% in that period, adversely affected by the slowdown in the housing market, the financial crisis and falling levels of business and consumer confidence. The market reached its peak in 2007, following a sustained period of buoyant growth in the economy, low interest rates and a growing housing market. Towards the end of 2007, the onset of the housing crisis, the impact of the global credit crisis and the world recession reduced levels of consumer and business confidence which combined to drive the market down, before modest growth in 2010. However, there was a further slight fall in 2011, with the housing market continuing to impact adversely on the furniture sector, before further modest growth in 2012 and 2013. The construction industry was particularly badly affected during the recession, which in turn impacted adversely on related markets, such as furniture, sanitaryware and floorcoverings and contributed to growing uncertainty amongst consumers.

Other pressures within the domestic furniture market have included the rapid penetration of low cost imports from the Far East and Eastern Europe, which has driven down prices and margins. Total furniture imports account for around 35% of the furniture market, although the rates of import penetration differ significantly for different product groups. The upholstered furniture and beds sector still continues to dominate the overall furniture market, with an estimated market share of 46%, followed by the kitchen furniture and dining and living room furniture sectors. Furniture multiples account for 49% of the upholstered furniture sector and 46% of the beds sector, with specialist upholstery outlets and beds specialists dominating their respective categories. Furniture multiples also dominate the dining and living room sector, as well as the bedroom furniture sector, although fitted bedroom furniture specialists are significant in that sector.

The kitchen furniture market differs from other sectors of the furniture industry in terms of the important distribution channels, with the main difference being the 36% share held by builders' merchants, together with trade-only suppliers. Home office furniture currently accounts for only around 4% of the domestic furniture market, with bathroom furniture also taking a relatively minor share. DIY multiples and builders' and plumbers' merchants dominate the bathroom furniture sector. Growing competition in a market, which had been declining in relative terms, is also reflected in the increasing number of business failures in the sector, both at manufacturer and retail level. However, historically the retail furnishings sector has generally had a high failure rate, with a number of high profile companies going into administration/liquidation over the last decade. Although the Internet is playing an increasingly important part in the sales process in the furniture sector, the majority of consumers undertake research online and then purchase in store. Whilst there are a growing number of companies operating solely through e-commerce transactional websites, the bulk of furniture sales via the Internet is directed through established furnishings retailers, using a multi-channel approach to marketing, together with catalogue/mail order retailers. The Internet also provides an opening for new entrants and niche players, allowing smaller companies to succeed in a way that they could not have done if they had to develop a retail network.

In general, it is clear that the improving prospects for the UK economy in the next 5 years are likely to prove beneficial for the furniture industry, with forecasts showing increasing growth in the domestic furniture market in the period to 2018. Total sales of domestic furniture are expected to show steady growth of around 3.0% per annum in 2014 and 2015, with growth of 3.2-3.4% in the following 3 years. Sales are forecast to reach £11,425m by 2018 representing a rise of 13% in RSP value terms compared with 2013 sales. Growth in the furniture market in the longer term looks more assured with forecasts showing a steady increase in the UK population and households, together with a general awareness of the urgent need to increase housebuilding construction, not just to meet this future need, but also to address the current housing shortage. Although the total number of outlets selling domestic furniture is likely to fall in the next few years, particularly in the independent sector, as conditions in the industry remain highly competitive, companies not normally associated with selling furniture, continue to increase their investment and presence in this sector.

It is difficult to imagine import penetration increasing any further, given the current 35% share and the dominance of UK manufacturers in specific sectors of the industry. Imports from low cost producers in the Far East and East Europe seem to have levelled out and, as the market improves, design innovation should provide some opportunities for product differentiation and margin protection for UK manufacturers. In the longer term, technology is likely to drive any fundamental changes in the way domestic furniture is purchased in the UK. The number of UK households with Internet access will continue to grow to near saturation, with a large proportion of these households having a broadband or mobile Internet connection. Use of mobile Internet technology is likely to grow significantly, although as far as furniture is concerned mobile phones are more likely to be used to browse options, to find the best deals and discounts, rather than purchasing products, particularly bulkier items, such as upholstery and beds or products, where installation is required, such as kitchen furniture, fitted bedroom furniture and so on. Nevertheless, it is inevitable that the incidence of online purchasing will increase in the future, particularly as the younger generation become householders.


List of Report Contents

  1. Contents Listing
  2. 1. INTRODUCTION 7
  3. 1.1 BACKGROUND 7
  4. 1.2 SOURCES OF INFORMATION 7
  5. 2. SUMMARY & FUTURE PROSPECTS 9
  6. 2.1 SUMMARY 9
  7. 2.2 FUTURE PROSPECTS 11
  8. 3. ECONOMIC ENVIRONMENT 15
  9. 3.1 GDP 15
  10. 3.2 INFLATION & INTEREST RATES 16
  11. 3.3 UNEMPLOYMENT 17
  12. 3.4 HOUSEHOLD CONSUMPTION 18
  13. 3.5 HOUSING & CONSTRUCTION 18
  14. 3.6 STERLING 20
  15. 3.7 POPULATION PROFILE 20
  16. 3.8 CONCLUSIONS 21
  17. 4. THE OVERALL UK FURNITURE MARKET & HOUSING INFLUENCES 22
  18. 4.1 OVERALL FURNITURE MARKET SIZE AND TRENDS 22
  19. 4.2 CONSUMER CHARACTERISTICS AND TRENDS 24
  20. 4.3 HOUSING TRENDS AND DEMOGRAPHICS 25
  21. 4.3.1 New Housebuilding 25
  22. 4.3.2 House Moving 28
  23. 4.3.3 Household Size 29
  24. 5. DISTRIBUTION SUPPLY CHAIN REVIEW 30
  25. 5.1 STRUCTURE 30
  26. 5.2 RECENT CHANGES IN CHANNEL SHARE 32
  27. 5.3 DEVELOPMENTS IN THE SUPPLY CHAIN 32
  28. 5.3.1 The Current Marketing Mix 32
  29. 5.3.2 The Manufacturing Retailers 35
  30. 5.3.3 The Effects of Import Penetration 35
  31. 5.3.4 Store Layout and Design 36
  32. 6. MAJOR FURNITURE DISTRIBUTION CHANNELS 38
  33. 6.1 MAJOR ORGANISATIONS 38
  34. 6.2 FURNITURE MULTIPLES 40
  35. 6.2.1 Structure of Sector 40
  36. 6.2.2 Key Organisations in the Sector 41
  37. 6.3 FITTED FURNITURE SPECIALISTS 44
  38. 6.3.1 Structure of the Sector 44
  39. 6.3.2 Key Organisations in the Sector 45
  40. 6.4 MAIL ORDER AND CATALOGUE RETAILERS 47
  41. 6.4.1 Structure of the Sector 47
  42. 6.4.2 Key Organisations in the Sector 48
  43. 6.5 FURNITURE INDEPENDENTS 48
  44. 6.5.1 Structure of the Sector 48
  45. 6.5.2 Key Organisations in the Sector 49
  46. 6.6 DEPARTMENT STORES AND VARIETY CHAINS 50
  47. 6.6.1 Department Stores 50
  48. 6.6.2 Variety Chains 51
  49. 6.7 DIY MULTIPLES 52
  50. 6.7.1 Structure of the Sector 52
  51. 6.7.2 Key Organisations in the Sector 53
  52. 6.8 OTHERS 54
  53. 6.8.1 Internet & Direct / Off-the-Page 54
  54. 6.8.2 Grocery Multiples 56
  55. 6.8.3 Builders' Merchants 57
  56. 7. THE GROWTH OF THE INTERNET 59
  57. 7.1 BACKGROUND 59
  58. 7.2 INTERNET ACCESS 60
  59. 7.3 THE INTERNET AND THE FURNITURE INDUSTRY 62
  60. 7.4 ONLINE RESEARCH 65
  61. 7.5 PURCHASER PROFILE 66
  62. 7.6 SOCIAL NETWORKING, USER REVIEWS AND BLOGS 66
  63. 7.7 ADVANTAGES AND DISADVANTAGES OF TRADING ONLINE 67
  64. 8. DISTRIBUTION STRUCTURE BY PRODUCT GROUP 69
  65. 8.1 STRUCTURE 69
  66. 8.1.1 Distribution Structure Definition 69
  67. 8.1.2 Product Definition 70
  68. 8.2 UPHOLSTERED FURNITURE AND BEDS 71
  69. 8.3 KITCHEN FURNITURE 73
  70. 8.4 DINING AND LIVING ROOM FURNITURE 75
  71. 8.5 BEDROOM FURNITURE 76
  72. 8.6 HOME OFFICE FURNITURE 77
  73. 8.7 BATHROOM FURNITURE 78
  1. Tables & Charts
  2. Table 1 The UK Market For Domestic Furniture 2008-2018 (£m RSP) 9
  3. Table 2 GDP Data - 2011-2014 - Key Constituent Elements 15
  4. Chart 3 Interest Rates and Inflation (CPI) from 1994-2018 17
  5. Chart 4 PDI & Savings Ratio at Current Prices 1995-2018 18
  6. Table 5 Exchange Rate Fluctuations 2009-2015 - Sterling To The Dollar, And The Euro, Spot Rates 20
  7. Chart 6 The UK Market For Domestic Furniture 2008-2018 (£bn RSP) 22
  8. Chart 7 UK Market Mix of Furniture 2000, 2005 & 2013 24
  9. Table 8 House Building Completions 2009-2018 - Great Britain (000's Dwellings) 26
  10. Chart 9 House Building Completions (England) 2001-2014 By Type of Dwelling - % 27
  11. Chart 10 Number of Residential Property Transactions - GB - 2009-2018 28
  12. Table 11 Average Household Size For Great Britain 1991-2016 29
  13. Chart 12 Distribution Structure - Residential Furniture Market Value 2013 RSP £m 31
  14. Table 13 Distribution of Residential Furniture 2007 & 2013 32
  15. Chart 14 Distribution of Residential Furniture 2007 & 2013 By Furniture Multiples - Specialists and Generalists 40
  16. Chart 15 Distribution of Residential Furniture 2007 & 2013 - Fitted Furniture Specialists 44
  17. Chart 16 Distribution of Residential Furniture 2007 & 2013 - Mail Order and Catalogue Retailers 47
  18. Chart 17 Distribution of Residential Furniture 2007 & 2013 - Furniture Independents 49
  19. Chart 18 Distribution of Residential Furniture 2007 & 2013 - Department Stores & Variety Chains 50
  20. Chart 19 Distribution of Residential Furniture 2007 & 2013 - DIY Multiples 53
  21. Chart 20 Distribution of Residential Furniture 2007 & 2013 - Internet and Off-the-Page 54
  22. Chart 21 Distribution of Residential Furniture 2007 & 2013 -Grocery Multiples 56
  23. Chart 22 Distribution of Residential Furniture 2007 & 2013 - Builders' Merchants 57
  24. Chart 23 UK E-retail Market - % Share of Total Retail Sales 2007 - 2013 60
  25. Chart 24 UK Households with Internet Access, Broadband and Mobile 2007 - 2013 61
  26. Chart 25 Online Researcher Profile by Age Category 2013 65
  27. Chart 26 Internet Purchasers of Household Goods by Age and Gender 2013 66
  28. Table 27 Advantages and Disadvantages of Trading Online 67
  29. Table 28 Distribution of Upholstered Furniture and Beds 2007-2013 (% of Value) Furniture Multiples, Independents, Mail Order, etc 71
  30. Table 29 Distribution of Kitchen Furniture 2007-2013 Share by Value (%) Furniture Multiples, Independents, Mail Order, etc 73
  31. Table 30 Distribution Of Dining and Living Room Furniture - 2007-2013 by Value Share - Furniture Multiples, Independents, Mail Order, etc 75
  32. Table 31 Distribution Of Bedroom Furniture - 2007-2013 by Value Share - Furniture Multiples, Independents, Mail Order, etc 76
  33. Chart 32 Distribution Structure for Home Office Furniture 2007-2013 by Value - Furniture Multiples, Independents, Office Superstores, etc 78
  34. Table 33 UK Bathroom Furniture - % Channel Share 2007-2013 - DIY Multiples, Merchants, Specialists, etc 79

The 'Supply Chain Review of the Furniture Industry Market Report - UK 2014-2018 Analysis' costs £795+VAT (if applicable) for a PDF version.

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