Review of the UK Domestic Furniture Industry

Review of the UK Domestic Furniture Industry

In this report we draw together and summarize the main findings from the survey, including a general assessment of recent years from the viewpoint of the furniture industry.



The research findings suggest that total sales increased by almost 5% (or £210m) in 2002, with producer prices being fairly static or even declining within certain sectors, whilst sales in 2003 are estimated to have grown by 4.1% (or £185m in value terms). Growth continued in 2004, with sales increasing by 3.1% (or £145m in value terms). However, 2005 proved to be an extremely poor year for the industry, with sales declining by around 4% and several major companies going into liquidation. After this setback estimates for 2006 suggest that sales reached £4950m, an increase in the market of £80m or 1.6%, with further modest growth of £60m in 2007 to reach £5010m, representing an increase of 1.2%. However, the financial crisis towards the end of 2008 dealt a serious blow to the furniture industry, with sales falling by £200m or 4.0%.



Few manufacturers improved sales in 2008 and margins were again under pressure, although the major retailers such as IKEA, DFS, Argos and John Lewis improved their positions in the market. To some extent they had been helped by the previous demise of competitors such as Uno, World of Leather, Kingsway, Landmark and more recently Courts, Allders, Furnitureland, Durham Express, MFI and Land of Leather.



Imports have continued to increase their share of the total market, with imports from outside the EEC now accounting for well over 50% of total imports.

Table of Contents

1.INTRODUCTION 6
1.1Background to the research 6
1.2Terms of reference 6
1.3Methodology 7
1.4Research parameters 8

2.SUMMARY OF FINDINGS 9

3.THE UK ECONOMY12
3.1General economic appraisal12
3.2Consumers’ expenditure on household goods13
3.3Housing construction15
3.4Conclusions17

4.MARKET SIZE AND STRUCTURE18
4.1Introduction17
4.2Past and present market size19
4.3The market by product type26
4.4Geographical distribution of the market29
4.5The market by distribution outlet30

5.THE THREAT FROM IMPORTED FURNITURE39
5.1Analysis of import penetration39

6.ADVERTISING AND SALES PROMOTION44
6.1Direct advertising44
6.2Exhibitions and display50
6.3Sales promotion53

7.MAJOR MANUFACTURERS AND SUPPLIERS55
7.1The market leaders55
7.2Other important manufacturers61

8.THE FUTURE FOR DOMESTIC FURNITURE64
8.1The outlook for the UK economy64
8.2Market forecasts67

APPENDICES
I Boundaries of the Standard Regions
II Summary of interviews carried out
III Definitions of product groups within the domestic
furniture industry

Tables of Charts

Chart1-Share of total sales by product group22
Chart 2-Total sales of kitchen furniture by distribution outlet32
Chart3-Total sales of upholstered furniture by distribution outlet35
Chart4-Total sales of domestic furniture by distribution outlet36
Chart5-Total imports and exports of domestic furniture40

Tables of Charts

Table1-Total gross disposable income in the UK and the personal
savings ratio12
Table2-Total household final expenditure in the UK13
Table3-Total sales through retail outlets in Great Britain14
Table4-Total number of permanent dwellings completed in the UKby sector15
Table5-Comparison of furniture sales in terms of Retail and
Manufacturers’ Selling Prices18
Table6-Total sales of domestic furniture by product group19
Table7-Share of total sales of domestic furniture held by product
group21
Table8-Index of producer prices for domestic furniture23
Table 9-Indices of domestic furniture sales and producer prices for
selected product groups 24
Table10-Indices of domestic furniture sales and producer prices for
selected product groups24
Table 11-Indices of domestic furniture sales volume by product
group25
Table12-Total sales of domestic furniture by selected product type26
Table13-Total sales of domestic furniture by selected product type28
Table14-Geographical location of dwellings in the UK and the location
of sales of domestic furniture30
Table15-Total sales of kitchen furniture by distribution outlet31
Table16-Total sales of upholstered furniture by distribution
outlet33
Table17-Total sales of domestic furniture by distribution outlet35
Table18-Total imports and exports of domestic furniture39
Table19-Total imports and exports of domestic furniture by product
group41
Table20-Rate of import penetration by furniture sector42
Table21-Total direct advertising expenditure by manufacturers in
the domestic furniture industry44
Table22-Direct advertising expenditure by manufacturers compared
with total sales of domestic furniture45
Table23-Proportion of total direct advertising expenditure allocated
to individual product groups46
Table24-Forecasts for the UK economy65
Table25-Forecast by the Treasury65
Table26-Estimated future size of the UK domestic furniture market67
Table27-Estimated future size of the UK domestic furniture market by
product group68