UK Retail Futures 2012: Furniture & Floorcoverings
Introduction
Comprehensive forecasts for the UK retail market over the next five years, including a full explanation of macroeconomic, consumer and sector specific factors influencing market performance.
Scope
Value data, growth rates and forecasts broken down by subsector and detail for nine subcategoriesCoverage of key market issues and growth drivers, including inflationary trends, multichannel development and non-specialist participation.Furniture & floorcoverings market expenditure, inflation and volume growth (1997-2007), plus full five-year forecasts for each of the categories.Market shares for 2002-2007 and eforecasts for 2008.Highlights
Weak consumer sentiment towards big ticket purchases will negatively affect market performance, particularly of furniture and floorcoverings specialists. Consumers’ discretionary spending will be limited over the next two years as disposable incomes are eroded by rising living costs, increased taxation, higher borrowing costs, and slow wage growth.We expect space growth to slow as a result of the challenging trading conditions. Many leading furniture specialists have downgraded previously ambitious expansion plans for the next five years amid the downturn in consumer spending and pessimistic sales growth predictions.With non-specialists enhancing their furniture offer, specialist retailers will need to compete on more than just price to survive. As consumers have more choice, competing on price alone will not be sufficient.Reasons to Purchase
Plan confidently for the future with reliable independent forecasts for market growth and action points to guide strategies.Optimize buying, identify emerging trends and allocate resources so that you can capitalise on them. Incentivise managers to outperform by setting your growth forecasts against an independent source.
CHAPTER 1 EXECUTIVE SUMMARY 6
Key Findings 6
Main Conclusions 7
CHAPTER 2 FORECAST SUMMARY 11
Expenditure Summary 11
Specialists Summaries 13
CHAPTER 3 KEY MARKET ISSUES 16
Overview 16
External Drivers 18
Housing Market 18
Housing Equity Withdrawal 20
Cost of Borrowing 21
Disposable Income 23
Retailer-led Drivers 26
Expansion of Furniture Specialists 26
Impact of Non-specialists on the Market 28
Expansion of Specialists vs Non-specialists 29
Specialist Survival 30
Creating Growth in a Difficult Market 32
Keep Ahead of Trends 33
Compete on More Than Price 33
Replicating Non-specialist Advantages 34
Manage Cost Structure to Ensure it is Competitive 35
Differentiate Proposition 37
Increase Multichannel Offer 38
Customer & Service Initiatives 39
Increasing Multichannel Development 42
Impact of e-Retail 45
CHAPTER 4 FURNITURE & FLOORCOVERINGS SPECIALISTS OUTLOOK 49
Retail Sales 49
Share of Total Sales 53
CHAPTER 5 FURNITURE SPECIALISTS OUTLOOK 54
Retail Sales 54
Sources of Sales Growth 56
Share of Total Sales 57
Store Numbers 58
Space Growth 59
Sales Densities 61
CHAPTER 6 FLOORCOVERINGS SPECIALISTS OUTLOOK 63
Retail Sales 63
Sources of Sales Growth 65
Share of Total Sales 66
Store Numbers 67
Space Growth 68
Sales Densities 70
CHAPTER 7 CHANNELS OF DISTRIBUTION 72
Sales & Spending 72
Furniture - Sales & Spending 74
Furniture - Forecast Changes for Major Sectors 75
Furniture - Market Shares 77
Floorcoverings - Sales & Spending 78
Floorcoverings - Forecast Changes for Major Sectors 79
Floorcoverings - Market Shares 81
CHAPTER 8 FURNITURE & FLOORCOVERINGS CATEGORY FORECASTS 82
Expenditure Summary 82
Principal Components 84
Principal Components 84
Expenditure Analysis 85
Expenditure Growth 88
Furniture 91
Floorcoverings 94
CHAPTER 9 UK ECONOMIC FORECASTS 96
Key Messages 96
Gross Domestic Product - GDP 101
How does it affect retail? 101
What's happened? 101
What will happen? 102
Earnings Growth 103
How does it affect retail? 104
What's happened? 105
What will happen? 106
Real Household Disposable Income 107
How does it affect retail? 107
What's happened? 108
What will happen? 108
Employment 109
How does it affect retail? 110
What's happened? 110
What will happen? 111
Inflation 112
How does it affect retail? 113
What's happened? 113
What will happen? 114
Exchange Rates 115
How do they affect retail? 115
What's happened? 116
What will happen? 116
Interest Rates 117
How do they affect retail? 117
What's happened? 118
What will happen? 119
Savings Ratio 120
How does it affect retail? 120
What's happened? 121
What will happen? 121
Consumer Debt 122
How does it affect retail? 123
What's happened? 123
What will happen? 124
Equities 125
How does it affect retail? 125
What's happened? 126
What will happen? 126
House Price Inflation 127
How does it affect retail? 127
What's happened? 128
What will happen? 128
Housing Equity Withdrawal 129
How does it affect retail? 129
What's happened? 130
What will happen? 131
Housing Transactions 132
How does it affect retail? 132
What's happened? 133
What will happen? 134
CHAPTER 10 UK RETAILING FORECASTS 135
Key Indicators 135
Retail Expenditure 1997-2012 137
Sales by Location 2007-2012 143
Sources of Growth 1997-2012 147
Store Numbers by Location 1997-2012 149
Space by Location 1997-2012 152
Sales Density by Location 1997-2012 155
Average Store Size 1997-2012 157
Average Store Sales 1997-2012 158
Online Retail Spending 160
CHAPTER 11 GLOSSARY 162
Terminology 162
Market Definition 163
Location Definitions 163
Town Centre 163
Out-of-town 164
Neighbourhood 164
Non-store Retail 164
Forecasting Methodology 164
Abbreviations 167
List of Tables
Table 1: Furniture & floorcoverings expenditure summary 1997, 2002, 2007 and 2012e 11
Table 2: Furniture & floorcoverings specialists summaries 2002, 2007 and 2012e 13
Table 3: Online furniture & floorcoverings sales forecast 2007-2012 45
Table 4: Furniture & floorcoverings specialists sales 1997-2007 and forecast to 2012 49
Table 5: Sources of growth for UK furniture & floorcoverings specialists 1997-2007 and forecast to 2012 51
Table 6: Furniture specialists sales 1997-2007 and forecast to 2012 54
Table 7: Sources of growth for UK furniture specialists 1997-2007 and forecast to 2012 56
Table 8: Total selling space for furniture specialists 1997-2007 and forecast to 2012 60
Table 9: Floorcoverings specialists sales 1997-2007 and forecast to 2012 63
Table 10: Sources of growth for UK floorcoverings specialists 1997-2007 and forecast to 2012 65
Table 11: Total selling space for floorcoverings specialists 1997-2007 and forecast to 2012 69
Table 12: Leading furniture retailers market shares 2002-2007 and 2008e 77
Table 13: Leading floorcoverings retailers market shares 2002-2007 and 2008e 81
Table 14: Furniture spend - principal components 2006, 2007 & 2012 84
Table 15: Floorcoverings spend - principal components 2006, 2007 & 2012 84
Table 16: Furniture expenditure analysis 2007-2012 85
Table 17: Floorcoverings expenditure analysis 2007-2012 87
Table 18: Total furniture & floorcoverings expenditure 1997-2012e 88
Table 19: Total furniture expenditure 1997-2012e 91
Table 20: Floorcoverings expenditure 1997-2012e 94
Table 21: Economic drivers for retail 2008 96
Table 22: Measures of inflation 2008 112
Table 23: UK retailing forecasts summary 2007-2012 135
Table 24: Forecast chronology 2008-2012 136
Table 25: Total consumer retail expenditure 1997-2012 137
Table 26: Sales by location 1997-2012 144
Table 27: Total UK physical store sales & selling space 1997-2012 147
Table 28: Sources of sales growth for physical stores 1997-2012 148
Table 29: Store numbers 1997-2012 149
Table 30: Space by location 1997-2012 152
Table 31: Sales densities by location at current prices 1997-2012 155
Table 32: Average store size by location 1997-2012 157
Table 33: Average sales per store by location at current prices 1997-2012 159
Table 34: Furniture & floorcoverings market definition 2008 163
List of Figures
Figure 1: Furniture & floorcoverings expenditure growth 1997-2007and forecast to 2012 12
Figure 2: Furniture & floorcoverings specialists sources of growth 1997-2007 and forecast to 2012 15
Figure 3: Comparing current economic climate with recession in 1991 and the effect on furniture & floorcoverings market 200 16
Figure 4: External drivers of furniture & floorcoverings market 2008 18
Figure 5: Housing transactions 1997-2007 and forecast to 2012e 19
Figure 6: Housing Equity Withdrawal (England & Wales) 1996-2007 and forecast to 2012 21
Figure 7: Variance between BoE Official Interest Rate and the LIBOR Rate ( An indication of true cost of borrowing) 1997-2008 22
Figure 8: Disposable income 1997-2007 and forecast to 2012 23
Figure 9: Estimated space expansion of key existing furniture specialists 2007 and 2008e, 2012e 26
Figure 10: Impact of non-specialists on the furniture market 2008 28
Figure 11: Main factors affecting specialist survival 2008 30
Figure 12: Key issues and implications for furniture & floorcoverings retailers 2007-2012 32
Figure 13: Customer service matrix 2008 40
Figure 14: Multichannel offers 2008 42
Figure 15: Reasons consumers are drawn to e-retail when purchasing furniture & floorcoverings 2008 47
Figure 16: Furniture & floorcoverings specialists sales as a % of total UK retail consumer spending 1997-2007 and forecast to 2012 53
Figure 17: Furniture specialists sales as a % of total UK furniture & floorcoverings specialists sales 1997-2007 and forecast to 2012 57
Figure 18: Total furniture specialists store numbers (000) 1997-2007 and forecast to 2012 58
Figure 19: Space growth for furniture specialists 1997-2007 and forecast to 2012 59
Figure 20: Furniture specialists sales densities at current prices 1997-2007 and forecast to 2012 61
Figure 21: Furniture specialists sales densities at constant (2003) prices 1997-2007 and forecast to 2012 62
Figure 22: Floorcoverings specialists sales as a % of total furniture & floorcoverings specialists sales 1997-2007 and forecast to 2012 66
Figure 23: Total floorcoverings specialists store numbers (000) 1997-2007 and forecast to 2012 67
Figure 24: Space growth for floorcoverings specialists 1997-2007 and forecast to 2012 68
Figure 25: Floorcoverings specialists sales densities at current prices 1997-2007 and forecast to 2012 70
Figure 26: Floorcoverings specialists sales densities at constant (2003) prices 1997-2007 and forecast to 2012 71
Figure 27: Channels of distribution - furniture & floorcoverings 2006, 2007 & 2012 73
Figure 28: Channels of distribution - furniture 2006, 2007 & 2012e 74
Figure 29: Changes in shares of major channels in the furniture market 2012e on 2007 75
Figure 30: Channels of distribution - floorcoverings 2006, 2007 & 2012 78
Figure 31: Changes in shares of major channels in the floorcoverings market 2012e on 2007 79
Figure 32: Furniture expenditure 1997, 2002, 2007 & 2012e and five-year growth rates 82
Figure 33: Floorcoverings expenditure 1997, 2002, 2007 & 2012e and five-year growth rates 83
Figure 34: Furniture & floorcoverings expenditure as a % of total retail spending 1997-2012e 89
Figure 35: Furniture & floorcoverings growth at constant (2003) prices 1997-2012e 90
Figure 36: Furniture expenditure as a % of furniture & floorcoverings spending 1997-2012e 92
Figure 37: Furniture expenditure growth at constant (2003) prices 1997-2012e 93
Figure 38: Floorcoverings expenditure as a % of furniture & floorcoverings spending 1997-2012e 95
Figure 39: Floorcoverings expenditure growth at constant (2003) prices 1997-2012e 95
Figure 40: Real gross domestic product (GDP) at constant (2003) prices 1997-2007 and forecast to 2012 101
Figure 41: Inflation vs average earnings growth 1997-2007 and forecast to 2012 103
Figure 42: Tax & Prices vs Average Earnings 1997-2007 and forecast to 2012 104
Figure 43: Real household disposable income at constant (2003) prices 1997-2007 and forecast to 2012 107
Figure 44: UK employment 1997-2007 and forecast to 2012 109
Figure 45: UK unemployment 1997-2007 and forecast to 2012 109
Figure 46: Inflation rates Y-o-Y 1997-2007 and forecast to 2012 112
Figure 47: Sterling, dollar and euro exchange rates 1997-2007 and forecast to 2012 115
Figure 48: UK average base rates 1997-2007 and forecast by quarter for 2008 117
Figure 49: UK average base rates 1997-2007 and forecast to 2012 118
Figure 50: Savings ratio 1997-2007 and forecast to 2012 120
Figure 51: Growth in consumer debt 1997-2007 and forecast to 2012 122
Figure 52: FTSE 100 Index 1997-2007 and forecast to 2012 125
Figure 53: UK house price inflation 1997-2007 and forecast to 2012 127
Figure 54: Housing Equity Withdrawal (England & Wales) 1996-2007 and forecast to 2012 129
Figure 55: Housing transactions (England & Wales) 1997-2007 and forecast to 2012 132
Figure 56: Retail spending value, volume and inflation/deflation trends 1997-2007 and forecast to 2012 139
Figure 57: Retail spending as percentage of total consumer spending 1997-2007 and forecast to 2012 140
Figure 58: Consumer, retail and non-retail spending trends % 1997-2007 and forecast to 2012 142
Figure 59: Retail sales by location 2007 and 2012 143
Figure 60: Share of turnover by location 1997, 2002, 2007 & 2012 146
Figure 61: % share of store numbers by location 1997, 2002, 2007 & 2012 150
Figure 62: % share of space by location 1997, 2002, 2007 & 2012 153
Figure 63: Online retail spending 1997-2012 160
Figure 64: Verdict forecasting methodology 2008 166
