UK Retail Futures 2012: DIY & Gardening

UK Retail Futures 2012: DIY & Gardening

Introduction
Verdict Research: For many years one of the fastest growing retail sectors, DIY & Gardening is now especially exposed to consumer belt tightening in response to the squeeze on disposable income, the reduced availability of credit and the housing market downturn. With demand weak, the impetus is falling more heavily than ever on retailers to drive sales growth themselves.

Scope
• Five year forecasts to 2012 for DIY & gardening market expenditure, inflation and volume growth with 10 year historic data.
• In depth analysis of key market issues that will shape demand and retailer responses over the next five years.
• Forecasts and historic data for DIY specialists sales, market shares and analysis of main channels of distribution.
• Comprehensive category analysis covering inflation, volume and sales growth for DIY and gardening. Further segmental analysis for 12 sub categories.

Highlights
The DIY & gardening market will struggle to grow in the short term as key drivers that have powered it in recent years go into reverse. A falling housing market (both by value of housing and number of home moves) is a serious concern, as are new restrictions on the availability of credit.
In hostile market conditions, the economics of further store openings are harder to justify. Instead of the land grab associated with the boom of the late 1990s and early 2000s, DIY specialists have become more conservative about opening new stores and placed increasing attention on driving like-for-like sales and using space more efficiently.
Grocers will achieve the largest gain in market share over the forecast period. A key factor here is the development of DIY ranges by the leading players. DIY has until recently been one of the lower priority sectors for grocers, but as their non-food space has increased it has become an obvious area for them to develop.

Reasons to Purchase
• Use this report to plan strategies that will help capitalise on opportunities and compete effectively against rivals in a highly challenging market
• Enhance your understanding of key issues, trends and dynamics that will impact your business over the next five years.
• Detailed category forecasts allow you to quantify opportunities in fast growing categories and avoid over-investment in weaker segments.

TABLE OF CONTENTS
CHAPTER 1 EXECUTIVE SUMMARY 6
Key Findings 6
Main Conclusions 7
CHAPTER 2 FORECAST SUMMARY 12
Expenditure Summary 12
CHAPTER 3 KEY MARKET ISSUES 19
Overview 19
Deteriorating Macroeconomic Outlook 19
Professionalisation of Home Improvement Work 22
Cautious Approach to Space Development 24
Grocers Target DIY 26
Multichannel Development 28
Strengthening Retail Proposition 31
Building Customer Loyalty 31
Enhancing Service 32
Store Refurbishments 33
Product and Range Development 34
Opportunities in Gardening 35
CHAPTER 4 DIY SPECIALISTS FORECASTS 37
Retail Sales 37
Sources of Sales Growth 39
Share of Total Sales 41
Store Numbers 42
Space Growth 43
Sales Densities 45
CHAPTER 5 CHANNELS OF DISTRIBUTION 47
Sales & Spending 47
Forecast Changes for Major Channels 49
Market Shares 52
CHAPTER 6 CATEGORY FORECASTS 53
Expenditure Summary 53
Principal Components 54
Expenditure Analysis 56
Expenditure Growth 62
DIY 65
Gardening 68
CHAPTER 7 UK ECONOMIC FORECASTS 71
Key Messages 71
Gross Domestic Product - GDP 76
How does it affect retail? 76
What's happened? 76
What will happen? 77
Earnings Growth 78
How does it affect retail? 79
What's happened? 80
What will happen? 81
Real Household Disposable Income 82
How does it affect retail? 82
What's happened? 83
What will happen? 83
Employment 84
How does it affect retail? 85
What's happened? 85
What will happen? 86
Inflation 87
How does it affect retail? 88
What's happened? 88
What will happen? 89
Exchange Rates 90
How do they affect retail? 90
What's happened? 91
What will happen? 91
Interest Rates 92
How do they affect retail? 92
What's happened? 93
What will happen? 94
Savings Ratio 95
How does it affect retail? 95
What's happened? 96
What will happen? 96
Consumer Debt 97
How does it affect retail? 98
What's happened? 98
What will happen? 99
Equities 100
How does it affect retail? 100
What's happened? 101
What will happen? 101
House Price Inflation 102
How does it affect retail? 102
What's happened? 103
What will happen? 103
Housing Equity Withdrawal 104
How does it affect retail? 104
What's happened? 105
What will happen? 105
Housing Transactions 107
How does it affect retail? 107
What's happened? 107
What will happen? 109
CHAPTER 8 UK RETAILING FORECASTS 110
Key Indicators 110
Retail Expenditure 1997-2012 112
Sales by Location 2007-2012 119
Sources of Growth 1997-2012 123
Store Numbers by Location 1997-2012 125
Space by Location 1997-2012 127
Sales Density by Location 1997-2012 130
Average Store Size 1997-2012 132
Average Store Sales 1997-2012 134
Online Retail Spending 135
CHAPTER 9 GLOSSARY 137
Terminology 137
Market Definition 138
Location Definitions 139
Town Centre 139
Out-of-town 139
Neighbourhood 139
Non-store Retail 140
Forecasting Methodology 140
Abbreviations 142
List of Tables
Table 1: DIY & gardening expenditure summary 1997, 2002, 2007 and 2012 12
Table 2: DIY specialists summary 2002, 2007 and 2012 17
Table 3: Major DIY specialist store opening plans 2002-2012 24
Table 4: DIY specialists sales 1997-2012 37
Table 5: Sources of growth for UK DIY specialists 1997-2012 39
Table 6: Total selling space for DIY specialists 1997-2012 44
Table 7: Leading retailers market share of DIY & gardening expenditure 2002-2008e 52
Table 8: DIY expenditure - principal components 2006, 2007 and 2012 54
Table 9: DIY expenditure - principal components change and shares 2006, 2007 and 2012 54
Table 10: Gardening expenditure - principal components 2006, 2007 and 2012 55
Table 11: Gardening expenditure - principal components change and shares 2006, 2007 and 2012 55
Table 12: DIY expenditure analysis 2007-2012 56
Table 13: Gardening expenditure analysis 2007-2012 59
Table 14: Total DIY & gardening expenditure 1997-2012 62
Table 15: DIY expenditure 1997-2012 65
Table 16: Gardening expenditure 1997-2012 68
Table 17: Economic drivers for retail 2008 71
Table 18: Measures of inflation 2008 87
Table 19: UK retailing forecasts summary 2007-2012 110
Table 20: Forecast chronology 2008-2012 111
Table 21: Total consumer retail expenditure 1997-2012 112
Table 22: Sales by location 1997-2012 120
Table 23: Total UK physical store sales & selling space 1997-2012 123
Table 24: Sources of sales growth for physical stores 1997-2012 124
Table 25: Store numbers 1997-2012 125
Table 26: Space by location 1997-2012 127
Table 27: Sales densities by location at current prices 1997-2012 130
Table 28: Average store size by location 1997-2012 132
Table 29: Average sales per store by location at current prices 1997-2012 134
Table 30: DIY & gardening market definition 2008 138
List of Figures
Figure 1: DIY & gardening expenditure - principal components 2007 14
Figure 2: DIY & gardening expenditure - principal components 2012 15
Figure 3: DIY specialists sources of growth 1997-2007 and forecast to 2012 16
Figure 4: Key issues in DIY & gardening retailing 2007-2012 19
Figure 5: Y-o-Y changes % in DIY volume vs house prices and transactions 1997-2007 and forecast to 2012 20
Figure 6: Professionalisation of home improvement work 2008 22
Figure 7: DIY & gardening offer development at grocers 2008 26
Figure 8: Strengthening the retail proposition 2008 31
Figure 9: Key growth drivers for gardening retailers 2007-2012 35
Figure 10: DIY specialists sales as a % of total UK retail consumer spending 1997-2012 41
Figure 11: Total DIY specialists store numbers 1997-2012 42
Figure 12: Space growth for DIY specialists 1997-2012 43
Figure 13: DIY specialists sales densities at current prices 1997-2012 45
Figure 14: DIY specialists sales densities at constant (2003) prices 1997-2012 46
Figure 15: DIY & gardening channels of distribution 2006, 2007 & 2012 48
Figure 16: Changes in shares of major channels in the DIY & gardening market 2012 on 2007 49
Figure 17: Key DIY & gardening retailers change in market shares 2007 on 2002 52
Figure 18: DIY expenditure snapshot 1997-2012 53
Figure 19: Gardening expenditure snapshot 1997-2012 53
Figure 20: DIY & gardening expenditure as a % of total spending 1997-2012 63
Figure 21: DIY & gardening expenditure growth at constant (2003) prices 1997-2012 64
Figure 22: DIY expenditure as a % of DIY & gardening spending 1997-2012 66
Figure 23: DIY expenditure growth at constant (2003) prices 1997-2012 67
Figure 24: Gardening expenditure as a % of DIY & gardening spending 1997-2012 69
Figure 25: Gardening spend growth at constant (2003) prices 1997-2012 70
Figure 26: Real gross domestic product (GDP) at constant (2003) prices 1997-2007 and forecast to 2012 76
Figure 27: Inflation vs average earnings growth 1997-2007 and forecast to 2012 78
Figure 28: Tax & Prices vs Average Earnings 1997-2007 and forecast to 2012 79
Figure 29: Real household disposable income at constant (2003) prices 1997-2007 and forecast to 2012 82
Figure 30: UK employment 1997-2007 and forecast to 2012 84
Figure 31: UK unemployment 1997-2007 and forecast to 2012 84
Figure 32: Inflation rates Y-o-Y 1997-2007 and forecast to 2012 87
Figure 33: Sterling, dollar and euro exchange rates 1997-2007 and forecast to 2012 90
Figure 34: UK average base rates 1997-2007 and forecast by quarter for 2008 92
Figure 35: UK average base rates 1997-2007 and forecast to 2012 93
Figure 36: Savings ratio 1997-2007 and forecast to 2012 95
Figure 37: Growth in consumer debt 1997-2007 and forecast to 2012 97
Figure 38: FTSE 100 Index 1997-2007 and forecast to 2012 100
Figure 39: UK house price inflation 1997-2007 and forecast to 2012 102
Figure 40: Housing Equity Withdrawal (England & Wales) 1996-2007 and forecast to 2012 104
Figure 41: Housing transactions (England & Wales) 1997-2007 and forecast to 2012 107
Figure 42: Retail spending value, volume and inflation/deflation trends 1997-2007 and forecast to 2012 114
Figure 43: Retail spending as percentage of total consumer spending 1997-2007 and forecast to 2012 116
Figure 44: Consumer, retail and non-retail spending trends % 1997-2007 and forecast to 2012 117
Figure 45: Retail sales by location 2007 and 2012 119
Figure 46: Share of turnover by location 1997, 2002, 2007 & 2012 122
Figure 47: % share of store numbers by location 1997, 2002, 2007 & 2012 126
Figure 48: % share of space by location 1997, 2002, 2007 & 2012 128
Figure 49: Online retail spending 1997-2012 135
Figure 50: Verdict forecasting methodology 2008 141