Tuesday, January 27, 2015

Internet sales of furniture continue to increase in the UK

The UK domestic furniture market was valued at an estimated £10.1bn at Retail Prices in 2014. Highly fragmented and complex, this market has moved in a volatile pattern since 2007, but in overall terms has declined by around 7%, having been adversely affected by the slowdown in the housing market, the financial crisis and falling levels of business and consumer confidence.

However, the market is recovering, having experienced modest growth in 2012 and 2013, and an improved business climate leading to an estimated 3% sales growth in 2014. The UK furniture market has become more competitive in recent years and increases in low cost imports from the Far East and Eastern Europe has continued to drive down prices and margins. Growing competition in the market is also reflected in the increasing number of business failures in the sector, both at manufacturer and retail level.

The upholstered furniture and beds sector still continues to dominate the overall furniture market, with an estimated market share of nearly 50% by value, followed by the kitchen furniture and dining and living room furniture sectors. In terms of distribution, furniture multiples account for 49% of the upholstered furniture sector and a slightly lower share 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, as the highest distribution channel share is share held by builders’ merchants together and trade-only suppliers, which account for over a third of the market. Home office furniture currently accounts for only a small share 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. The internet channel is playing an increasingly important part in the sales process in the furniture sector, however, the majority of consumers undertake research online and then purchase in store.

“Whilst there are a growing number of furniture distributors 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” said Keith Taylor, Director of AMA Research. “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.”

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 3-3.5% per annum over the next 4 years or so, meaning the market should be worth well over £11bn by 2018.

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. In the longer term, technology is likely to drive any fundamental changes to current purchasing patterns and it is inevitable that the incidence of online purchasing will increase in the future, particularly as the younger generation become householders.

The ‘Supply Chain Review of the Furniture Industry Market Report – UK 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Friday, January 16, 2015

Strong demand for powered access equipment in the UK market

The access equipment market, which consists of both powered and non-powered products, was worth an estimated £280m in 2014.

Following a difficult period, an improvement in the powered access equipment sector saw the access equipment market return to growth in 2012. This improvement reflected the resumption of fleet building, fleet refreshment programmes and re-equipping in the rental sector to replace fleet disposals during the construction downturn.

By contrast, the non-powered sector has remained relatively flat over the past few years, though it is thought to have seen reasonable growth in 2014. Following on from growth seen in 2013/14, improving trading conditions are expected to see the overall market grow by around 7% in 2015, primarily due to the strong performance in the powered access equipment sector.

Key non-domestic construction sectors providing good opportunities include infrastructure, offices and industrial construction, while rental demand in non-construction markets, such as event management and manufacturing RMI, have also been relatively buoyant. In overall terms, the rental sector is the key sector for access equipment, particularly in sub-sectors such as access towers and MEWPs, and this has been particularly relevant in recent years as hire companies replenished their stocks following disposal of equipment at the start of the economic and construction downturn.

Overall, powered and specialist equipment is estimated to account for over 55% of the market in 2014, with non-powered access equipment accounting for the remaining share.

“Product growth areas, as seen with the push arounds recently, will positively impact on the market - for instance there is a trend towards tracked spiders, booms and platforms at present” said Andrew Hartley, Director of AMA Research. “Steady growth in construction output, coupled with any future health and safety legislation will also have positive implications for the market - as will price rises, which may occur as a result of raw material prices or other factors.”

The overall market outlook to 2018 is positive, based on increased confidence in the recovery of the UK economy and more importantly that it will be sustained. The access equipment market is forecast to grow by around 20% in the 2015-18 period, with powered equipment accounting for the majority share.

The ‘Access Equipment Market Report –UK 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Thursday, January 15, 2015

Inclusive kitchen and bathroom products to grow by 20% to 2018

With the ageing UK population and the increasing number of people with disabilities, inclusively designed bathroom and kitchen products have been progressively installed in UK homes. In 2014, the inclusive bathroom and kitchen products market was estimated to be worth around £150 million at Manufacturers Selling Prices (MSP). This represents an increase of around 2% compared to the market size in 2013.

Between 2009 and 2012, the UK inclusive bathroom and kitchen products market was comparatively volatile in line with the uncertain economic situation at this time. However, since 2013 the market for these inclusively designed products has seen a notable increase, with demand picking up as the economy improves. This growth can be partly attributed to several changes in legislation that have been introduced by the Government in recent years and also the growing number of elderly and disabled people. In addition there has been a trend towards multi-generation households in the UK.

The showering facilities sector dominates the industry's sales as many baths are now being replaced by easy-access shower enclosures and wetroom areas. This is followed by bathroom accessories, toilet facilities, bathroom brassware and baths. In addition, inclusive kitchen facilities (excluding appliances) are estimated to be worth around £30m at MSP.

A significant proportion of the inclusive bathroom and kitchen products market represents direct sales from the specialist manufacturer or supplier to the end-user, which is common practice with specialised products. Other channels include merchants and distributors plus DIY multiples, many who offer own branded goods. In addition, the level of inclusive bathroom and kitchen products sold via online retailers has seen significant growth in recent years.

Key drivers for growth include the aging UK population and the number of multi-generation households in the UK increasing. The trend towards care in the community has resulted in increasing numbers of elderly and disabled people that remain living at home. These people require inclusive adaptations to assist them with their everyday requirements.

“The number of people aged 65 and over has increased by 17.3% since 2003 and the fastest growing household type in 2013 was households containing two or more families” said Keith Taylor, Director of AMA Research. “The shortage of affordable housing and the increase in elderly relatives in need of care are driving more families to house three generations in one property and this could lead to specialist kitchen and bathroom equipment being installed in a wider range of properties.”

The inclusive bathroom and kitchen market has been positively impacted the trend towards product solutions that are suitable for all users. As such, inclusive bathroom and kitchen products have become much more aesthetically pleasing. The focus is on functionality but style is also now an equally important consideration. With revisions to Part M of the Building Regulations and the Lifetime Homes Standard, inclusive products have been progressively installed in a wider range of end-use applications. These include domestic homes and commercial environments such as hospitals and schools.

The outlook for the UK inclusive bathroom and kitchen products market in Q4-2014 remains positive, with the continuing recovery in the UK economy and the related upturn in housebuilding and consumer confidence. However, with the election in mid-2015, uncertainties do exist regarding Government policy after this time.
 
By 2018 it is estimated that the UK inclusive bathroom and kitchen products market will be worth in excess of £180 million. This represents an increase of around 20% when compared to the estimated market size in 2014.

The ‘Inclusive Bathroom and Kitchen Products Market Report –UK 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.