Tuesday, August 18, 2015

Growth of 6% in the UK Office and Home Office Furniture Market in 2014

The UK office and home office furniture market showed modest value growth in both 2012 and 2013, followed by stronger growth in 2014 of around 6%, indicating good recovery in the market. However, in volume terms, the market as a whole has continued to decline during much of that period. Current market conditions are looking more positive, supported by strong demand in London and the South East and the SOHO sector.
Despite the recent upturn, profitability among UK manufacturers remains poor. The office and home office furniture market remains fiercely competitive, with a large number of suppliers still operating in the market and there is also still an excess of production capacity in the industry, despite some well-known companies having ceased to trade, and this has resulted in suppliers and dealers having to cut prices further to maintain share. In addition, imports increased in 2014, after being fairly static for several years.
Imports are a significant factor in the market and are estimated to account for around 40% of the market. The most significant change in recent years has been the rise of China to become the major source for office furniture imports, with imports of adjustable seating from that source reaching almost £51m in 2014 (£44m in 2013) alone.
A large proportion of home office furniture is supplied in flat pack form by specialist manufacturers and sold through domestic furnishing outlets. The two main distribution channels for office furniture are the dealer network, which accounts for an estimated 45% of this sector, and direct sales to end users. However, retail outlets and mail order channels are also important, having benefited from continued growth in the SOHO market. Dealers have been losing market share in recent years but are continuing to differentiate through enhanced service levels and added value products, such as storage audits, free planning services, national showrooms, after sales service and maintenance.
In the medium term, demand for smaller desks is expected to continue, reflecting technological developments and changing work practices and additionally, some value will be added through the introduction of more accessories and a greater level of integration with other office products. Whilst technological developments, including better cable management and the increased use of wireless technologies around the office, are likely to stimulate demand in some sectors in the longer term, they are unlikely to affect demand significantly in the shorter term.
There has been an increased demand for bespoke desking in the systems sector, often consisting of small design changes to the colour, finish, shape or desktop size. Demand for ergonomic seating is expected to be resilient, although average prices are expected to experience downward pressure as newer competitors enter the market and the high level of lower cost imports continues. The requirement for more casual seating for reception, meeting and leisure or breakout areas is also set to continue, as more companies adapt to more flexible styles of working.
The storage sector is set to show modest increases in the next few years in line with the market as a whole, but in the longer term some decline may reflect the gradual adoption of electronic storage and the greater use of electronic data. However, there are several new product opportunities open to firms in this sector, particularly the continuing demand for personal storage solutions and the possibility of integrating storage with office furniture designs generally.
“In terms of the distribution structure, there are likely to be some changes, with the growth of the SOHO market benefiting the less traditional channels of supply, such as multiple furnishing retailers, superstores, mail order and the Internet” said Keith Taylor, Director of AMA Research. “The dealers’ market is expected to show modest growth in the next few years, although the share of the market held by dealers is forecast to decline slightly reflecting greater purchases through the SOHO sector.” 
The UK office and home office furniture market is expected to show steady growth in the medium to long term, with annual growth rates of 3-4% from 2015 onwards, following definitive signs that business confidence and the general economic climate are improving. The market is expected to reach a value of around £825m by 2019.
The ‘Office and Home Office Furniture Market Report – UK 2015-2019 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.

No comments: