UK Retail Futures 2012: Homewares

UK Retail Futures 2012: Homewares

UK Retail Futures 2012: Homewares
The homewares market is set to achieve growth of 3.8% in 2008, its highest level since 2002...
By 2012 we anticipate that the market will have grown by 17.3%, exceeding overall retail growth of 16.3%. It will comfortably exceed sales of £13.2bn by 2012 and is set to account for 4.1% of the total retail market, a new highest level. We forecast average growth for the next five years of 3.3%, ahead of the average growth of 2002-07 which stood at 3.0%. This is in spite of the rate
of average volume growth dropping from 3.6% to 3.3% and will be a result of deflation dropping from -0.6% to nil.
This new report published by Verdict provides comprehensive, authoritative analysis of the market going forward and supplies an extensive range of key data and metrics essential for participants to fully understand the dynamics of the market and form winning strategies.

Identify and understand the key drivers of market growth and gain insight into the channels of distribution...
• Understand the key market drivers. Use the analysis of major trends in homewares to gain insight into the challenges and opportunities going forward.
• Discover which categories look set to outperform. Compare projected growth rates of the key categories to assess new opportunities and make strategic decisions based on category information.
• Identify which channels are gaining share. Gain insight into distribution channel performance and fully understand the reasons behind the projected changes in market share.
• Gain detailed insight into the specialists channel. Use the detailed analysis of the sector specialists to understand the drivers of market growth, analyse inflationary/deflationary pressures and see the impact of projected store expansion.

This report answers key questions including...
• How fast will the homewares market grow?
• What impact will inflation/deflation have in each category?
• What will be the fastest growing category?
• Which channel is gaining the most market share and why?
• How are specialists set to perform until 2012?
• What is the forecasted space growth for specialists?
• Which retailers will gain or lose market share in 2008?
• Which retailer has gained the most market share between 2002 and 2007?
• What are the sources of market growth?

Key issues examined in this report...
• Specialists set to lose market share. With existing non specialists rapidly expanding their homewares ranges and further non-specialists especially fashion multiples set to enter the market, homewares specialists will continue to lose market share over the forecast period and with it their crown as the most important distribution channel for homewares.
• Competition set to intensify. For specialists, with competition intensifying and consumer choice greater than ever before, investment in propositions, differentiation, product and service enhancements, and promotion of their homewares offer to consumers to encourage trading up and more frequent replacement purchases will be essential if they are to prevent any further loss of market share to the non-specialists.
• Brand, fashionability & broad appeal essential. The dynamics of the market are changing. While strong price credentials will continue to play a pivotal role, to encourage consumers to spend, both specialist and non-specialists will need to develop a homewares offer with a broad product architecture and a strong brand that is fashion focused, differentiated and of high quality.

TABLE OF CONTENTS
CHAPTER 1 EXECUTIVE SUMMARY 15
Key Findings 15
Main Conclusions 16
CHAPTER 2 FORECAST SUMMARY 20
Homewares Overview 20
Homewares Expenditure Growth 21
Inflation 23
CHAPTER 3 KEY MARKET ISSUES 25
Overview 25
Competition Intensifies 28
Shifting Balance of Power 30
Attractiveness of Homewares to Non-Specialists 33
Non-specialists 36
Winners and Losers 38
Specialists 40
Winners and Losers 41
Dealing With the Threat of Non-specialists 43
Differentiating the Offer 45
Educating the Consumer 46
Raising the Profile of Homewares 48
Space Growth 50
Price Deflation Accelerates 52
Multichannel Offer Becomes Essential 54
CHAPTER 4 CHANNELS OF DISTRIBUTION 57
Sales & Spending 57
Sales Channels 57
Online Sales Channel 63
Category Channels 65
Household Hardware & Lighting 65
Textiles & Soft Furnishings 66
Retailers Market Shares 68
CHAPTER 5 CATEGORY FORECASTS 71
Expenditure Summary 71
Expenditure Analysis 72
Expenditure Growth 75
Household Hardware & Lighting 78
Textiles & Soft Furnishings 81
Category Winners & Losers 84
CHAPTER 6 UK ECONOMIC FORECASTS 87
Key Messages 87
Gross Domestic Product – GDP 92
How does it affect retail? 92
What’s happened? 92
What will happen? 93
Earnings Growth 94
How does it affect retail? 95
What’s happened? 96
What will happen? 97
Real Household Disposable Income 98
How does it affect retail? 98
What’s happened? 99
What will happen? 99
Employment 100
How does it affect retail? 101
What’s happened? 101
What will happen? 102
Inflation 103
How does it affect retail? 104
What’s happened? 104
What will happen? 105
Exchange Rates 106
How do they affect retail? 106
What’s happened? 107
What will happen? 107
Interest Rates 108
How do they affect retail? 108
What’s happened? 109
What will happen? 110
Savings Ratio 111
How does it affect retail? 111
What’s happened? 112
What will happen? 112
Consumer Debt 113
How does it affect retail? 114
What’s happened? 114
What will happen? 115
Equities 116
How does it affect retail? 116
What’s happened? 117
What will happen? 117
House Price Inflation 118
How does it affect retail? 118
What’s happened? 119
What will happen? 119
Housing Equity Withdrawal 120
How does it affect retail? 120
What’s happened? 121
Table of Contents
UK RETAIL FUTURES 2012: HOMEWARES DMVT0467 7

What will happen? 121
Housing Transactions 123
How does it affect retail? 123
What’s happened? 124
What will happen? 125
CHAPTER 7 UK RETAILING FORECASTS 126
Key Indicators 126
Retail Expenditure 1997-2012 128
Sales by Location 2007-2012 133
Sources of Growth 1997-2012 136
Store Numbers by Location 1997-2012 138
Space by Location 1997-2012 140
Sales Density by Location 1997-2012 144
Average Store Size 1997-2012 146
Average Store Sales 1997-2012 148
Online Retail Spending 149
CHAPTER 8 GLOSSARY 151
Terminology 151
Homewares Market Definition 152
Location Definitions 153
Town Centre 153
Out-of-town 153
Neighbourhood 153
Non-store Retail 154
Forecasting Methodology 154
Abbreviations 156

LIST OF TABLES
Table 1: Homewares expenditure summary 1997, 2002, 2007 and 2012e 20
Table 2: Non-specialists homewares market shares 2007-2012e 38
Table 3: Expansion plans of main homewares non-specialists 2007-2012 50
Table 4: Homewares retailers market shares 2002-2008e 68
Table 5: Homewares expenditure analysis 2007-2012 72
Table 6: Total homewares expenditure 1997-2012e 75
Table 7: Household hardware & lighting expenditure 1997-2012e 78
Table 8: Textiles & soft furnishings expenditure 1997-2012e 81
Table 9: Category growth values 1997-2012e 84
Table 10: Economic drivers for retail 2008 87
Table 11: Measures of inflation 2008 103
Table 12: UK retailing forecasts summary 2007-2012 126
Table 13: Forecast chronology 2008-2012 127
Table 14: Total consumer retail expenditure 1997-2012 128
Table 15: Sales by location 1997-2012 134
Table 16: Total UK physical store sales & selling space 1997-2012 136
Table 17: Sources of sales growth for physical stores 1997-2012 137
Table 18: Store numbers 1997-2012 138
Table 19: Space by location 1997-2012 140
Table 20: Sales densities by location at current prices 1997-2012 144
Table 21: Average store size by location 1997-2012 146
Table 22: Average sales per store by location at current prices 1997-2012 148
Table 23: Homewares market definition 2008 152

LIST OF FIGURES
Figure 1: Homewares sales growth 1997-2007 and forecast to 2012 21
Figure 2: Homewares annual inflation/deflation 1997-2012e 23
Figure 3: Key issues facing homewares market 2007-2012 25
Figure 4: Key growth factors of homewares market 2007-2012 27
Figure 5: Factors influencing intensity of competition in homewares 2008 28
Figure 6: Factors shifting the balance of market power in favour of non specialists 2008 30
Figure 7: Appeal of homewares to Non-specialist retailers 2008 33
Figure 8: Non-specialists market share of homewares market 2005-2012 36
Figure 9: Focus of non-specialist homewares strategies 2008 37
Figure 10: Specialists homewares market shares 2005-2012e 40
Figure 11: Key specialists market share 2007-2012e 41
Figure 12: Dealing with the threat of non-specialists 2008 44
Figure 13: Strategies to educate consumers 2007-2012 46
Figure 14: Strategies for homewares specialists to raise the profile of the category 2007-2012 48
Figure 15: Planned increase in selling space of homewares retailers by 2012 51
Figure 16: Homewares inflation 2007-2012e 52
Figure 17: Homewares retailers multichannel operations 2008 55
Figure 18: Homewares channels of distribution 2006, 2007 and 2012 58
Figure 19: Forecast changes in shares of homewares market major channels 2012e on 2007 62
Figure 20: Forecast change in sales among key homewares channels 2012e on 2007 62
Figure 21: Homewares online sales 2002-2012e 64
Figure 22: Household hardware & lighting breakdown of categories as channels 2006, 2007 & forecast 2012e 65
Figure 23: Textiles & soft furnishings breakdown of categories as channels 2006, 2007 & forecast 2012e 67
Figure 24: Key homewares retailer changes in market shares 2007-2012e 69
Figure 25: Homewares expenditure 1997, 2002, 2007 and 2012e 71
Figure 26: Homewares spend as a % of total retail spend 1997-2012e 76
Figure 27: Homewares growth (2003 constant prices) 1997-2012e 76
Figure 28: Household hardware & lighting as a % of homewares spending 1997- 2012e 79
Figure 29: Household hardware & lighting growth (constant 2003 prices) 1997- 2012e 79
Figure 30: Textiles & soft furnishings expenditure as a % of homewares spending 1997-2012e 82
Figure 31: Textiles & soft furnishings expenditure growth (constant 2003 prices) 1997-2012e 82
Figure 32: Sub category sales 2005-2007 & forecast 2012e 86
Figure 33: Real gross domestic product (GDP) at constant (2003) prices 1997-2007 and forecast to 2012 92
Figure 34: Inflation vs average earnings growth 1997-2007 and forecast to 2012 94
Figure 35: Tax & Prices vs Average Earnings 1997-2007 and forecast to 2012 95
Figure 36: Real household disposable income at constant (2003) prices 1997-2007 and forecast to 2012 98
Figure 37: UK employment 1997-2007 and forecast to 2012 100
Figure 38: UK unemployment 1997-2007 and forecast to 2012 100
Figure 39: Inflation rates Y-o-Y 1997-2007 and forecast to 2012 103
Figure 40: Sterling, dollar and euro exchange rates 1997-2007 and forecast to 2012 106
Figure 41: UK average base rates 1997-2007 and forecast by quarter for 2008 108
Figure 42: UK average base rates 1997-2007 and forecast to 2012 109
Figure 43: Savings ratio 1997-2007 and forecast to 2012 111
Figure 44: Growth in consumer debt 1997-2007 and forecast to 2012 113
Figure 45: FTSE 100 Index 1997-2007 and forecast to 2012 116
Figure 46: UK house price inflation 1997-2007 and forecast to 2012 118
Figure 47: Housing Equity Withdrawal (England & Wales) 1996-2007 and forecast to 2012 120
Figure 48: Housing transactions (England & Wales) 1997-2007 and forecast to 2012 123
Figure 49: Retail spending value, volume and inflation/deflation trends 1997-2007 and forecast to 2012 130
Figure 50: Retail spending as percentage of total consumer spending 1997-2007 and forecast to 2012 131
Figure 51: Consumer, retail and non-retail spending trends % 1997-2007 and forecast to 2012 132
Figure 52: Retail sales by location 2007 and 2012 133
Figure 53: Share of turnover by location 1997, 2002, 2007 & 2012 135
Figure 54: % share of store numbers by location 1997, 2002, 2007 & 2012 139
Figure 55: % share of space by location 1997, 2002, 2007 & 2012 141
Figure 56: Online retail spending 1997-2012 149
Figure 57: Verdict forecasting methodology 2008 155