UK market for Upholstered Furniture to reach £1.9bn by 2018

In 2013 the Upholstered Furniture market was worth an estimated £1.6bn (at MSP), with the domestic market accounting for around 90% in value terms and the contract sector 10%. The financial crisis and the ensuing decline in the housing market had a serious impact on consumer confidence, with ‘large ticket’ items suffering badly, particularly where loan facilities were involved. As a mature market, the high level of price competition amongst major retailers has also restricted value growth.

Although sales of 3 piece suites have declined, suites consisting of a sofa and at least one other piece still account for 60% of the market, with combinations of 2 sofas becoming a popular choice. Sales of single sofas and convertibles represent an important part of the market, with a combined share of around a third, while armchairs sold separately account for a smaller share of the market. Sales of action furniture have also increased slowly and now account for almost 20% of the market, with most of the major manufacturers including such products in their ranges.

The share of the total market held by leather furniture continued to grow until the recessionary period, supported by the wide range of styles and designs and the increasing use of leather in other furniture sectors, home furnishings and accessories. The penetration rate has declined since then, although most of this decline has been offset by the increasing popularity of upholstery combining both fabric and leather finishes.

Imports of upholstered furniture reached their peak in 2006 at a level of £797.8m, but have since fallen to £710.3m in 2013 – around 40% of the market – with imports from China now accounting for the major share, although Italy remains an important source, despite declining exports to the UK. Exports have increased steadily since 2010, reaching £71.4m in 2013.

The supply structure of the upholstered furniture market has changed dramatically over recent years following the sale of the Christie-Tyler subsidiaries. The furniture multiples continue to dominate the distribution structure with almost 50% of the market.

The development of the market is likely to continue to be influenced by the high level of price competition, although sectors such as leather/fabric furniture and action furniture are expected to gain share. Sofas and chairs are also expected to gain share at the expense of 3 piece suites, in line with the growth of single person households, combined with the trend towards smaller accommodation.

Multi-functional furniture has made inroads into a number of furniture sectors in recent years, with storage an increasingly important issue. Tailored designs and clean lines are expected to remain popular in line with contemporary trends.

“The value of imported products within the upholstered furniture market has increased in the last three years, although the rate of penetration has not increased and this should provide some respite to UK based manufacturers, who seem to have held their own in those years, although pressures on price are sure to continue for both suppliers and retailers” said Keith Taylor, Director of AMA Research.

Total sales of upholstered furniture are forecast to reach £1.9bn by 2018, following consistent growth in the 2014-2018 period.

The ‘Upholstered Furniture and Beds Market Report - 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.

UK Domestic Window Coverings Market worth over £1.1bn

Research’s estimates indicate that the market for domestic window coverings in the UK was worth over £1.1bn in 2013, having experienced growth of around 3% over 2012. The upturn in the market in 2013 followed two years of decline, though the degree of improvement varied significantly between the different product sectors.

Growth was largely driven by improvements in the housing market, with economic recovery boosting consumer confidence. The market is very mature and replacement purchases are the dominant sector, accounting for an estimated 68% of sales in 2013, though the ‘new housing’ and ‘move to a new home’ categories have also seen growth over the last 2 years.

The UK market for curtains was worth an estimated £535 million in 2013, representing a small increase over 2012. Readymade curtains accounted for over 50% of sales with a share that has remained relatively unchanged over the last 5 years, while custom made curtains and curtain fabric accounted for lower shares.

Demand for window blinds has also been relatively buoyant, with growth of over 3% in 2013. Conservatories, a key end-use application for blinds, still accounted for more than a quarter of sales in 2013, though share has fallen in recent years reflecting the declining consumer appeal of conservatories. Custom made blinds account for over 70% of sales and venetian blinds are still the top-selling domestic blind in the UK.

The supply and distribution of window coverings is both fragmented and diverse, reflecting product mix as well as delivery, installation and service requirements. Mail order, internet and catalogue stores are now the largest distribution channel, but closely followed by department stores/variety stores and grocery multiples.

Andrew Hartley, Director of AMA Research said: “The stronger economy is likely to have a positive influence on future sales. Growth in housebuilding creates new demand, while a recovery in housemoving will also help drive up sales, as new curtains and blinds are seen as a relatively quick and low cost way of improving the décor of a new home.  In addition, we are likely to see an increasing amount of ‘trading up’ to higher value products as householders’ spending power continues to improve.”

The market is likely to experience further fragmentation, as more suppliers and retailers broaden their range of products and services to maximise sales potential and try to add value wherever possible. A further rise in online shopping is also forecast, particularly within the homewares sector, and tablets and smartphones are increasingly used.

Our forecasts indicate that the total windowcoverings market will experience further steady annual growth of around 2–4% up to 2018, with the market forecast to be worth around £1.28 billion by 2018.

The ‘Domestic Window Coverings Market Report - 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.

Major changes ahead for healthcare construction procurement

Under reforms in the Health and Social Care Act, the NHS has undergone major structural change with the management of the NHS, including its estate, decentralized as more power is handed to Clinical Commissioning Groups (CCGs).

In addition, with NHS capital spending now drastically reduced, the process of funding new hospitals and primary care facilities has also changed. For procurement purposes, the most significant change for the NHS comes in the transfer of commissioning functions from PCTs to GP-led CCGs and NHS England, which has lead to the increased provision of services in the primary care setting.

With more healthcare services being driven out of the acute setting and into the primary sector, many GP practices are already expressing concern about how they can comply with the CQC requirements and where funding for property alterations may come from. In February 2014, NHS England announced that it had put the vast majority of GP premises investment on hold while it develops a national framework to evaluate bids for funding. The broader policies of developing GP-led commissioning have undoubtedly lead to greater co-operation between the private and public sectors and more work with private providers and their construction teams.

A further driver of increased partnership with the private sector is also taking place in the acute healthcare sector with the creation of NHS Foundation Trusts, under which hospitals can generate their own income. As a result, there has been a rise in private providers refurbishing part of existing hospitals, adding extensions, new-build facilities or even taking on the full operation of an NHS hospital. Foundation Trusts are expected to be a popular target for construction companies as they tend to be more commercially aware and are usually more financially robust. Furthermore, Foundation Trusts are moving towards more longstanding, partnership-style relationships with the construction supply chain, with the focus on building up long-term relationships.

As a result of these reforms, the nature of future work in the healthcare sector is changing to reflect a more rationalized estate, with the majority of healthcare clients reviewing their healthcare estates in a bid to achieve efficiency savings. The transfer of the NHS estate to NHS Property Services in April 2013 amounts to some 4,000 sites and a maintenance backlog of around £4bn.

The future focus of NHS services will be on moving care within or closer to home, more regional services and the closure of some hospitals. A capital programme is being developed, which is likely to see more healthcare work coming through at local level. In the months during which the PCTs were abolished, a number of healthcare projects were put on hold, but over the next 18-24 months opportunities for work in the sector are likely to re-emerge.

The joint venture structure as seen in PF2 and ExpressLIFT to replace the traditional PFI model now seems to be the way forward for privately financed development in the NHS. LIFT also has experience of bringing in capital investment into rundown areas. As public spending tightens, the shared use of buildings with other public sector bodies may be the only way that investment into new facilities can be achieved.

In the years ahead, NHS trusts and hospitals are expected to focus on the maintenance of their estates with refurbishment programmes and on improving staff and patient facilities. Projects are likely to continue at the smaller end of the scale in value terms, but there will be a high volume due to the need to improve the condition of the healthcare estate and most of these will be procured under P21+.

“The main challenge for contractors will be to reduce build costs and develop standardised designs and techniques. The current economic climate has focused all NHS trusts on capital efficiencies – how to achieve more for less.” said Andrew Hartley, Director of AMA Research. “The construction industry will be looking to work closely with newly formed Foundation Trusts and CCGs in the primary care sector with advice and ideas on how to utilize existing assets to reflect the changing nature of health care needs within their area.”

Despite reforms and austerity measures, investment in the NHS still remains a priority for the Government, with revenue funding for the NHS protected until 2016, and increasing to £115.1bn in 2015-16. At the same time, NHS capital funding will rise to £4.7bn a year by 2015-2016. The Government has indicated that it may need to extend its austerity measures beyond 2016, which will mean further funding constraints for the NHS.

The ‘LIFT and P21 Procurement in Healthcare Construction Market Report – UK 2014-2016 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.

Leisure construction buoyed by rapid growth in budget segments

In overall terms, construction activity in the entertainment and leisure sector has performed relatively well during the downturn compared with other sectors, with construction output values reaching around £5.7bn in 2013, a 14% rise on 2012. However, expansion and investment have been largely confined to the budget hotels, health and fitness and, more recently, the cinema segments, with less buoyant activity in mid-market hotels, pubs and the gaming sectors where some major operators have reigned in capital spending plans.

The largest sector within the UK leisure industry in terms of revenue is the food service industry, worth £45bn in 2014, of which sales in the restaurant and fast food sector account for over 50%. The restaurant sector has experienced a difficult trading environment over the past 5 years and the pub sector in particular has seen considerable restructuring. While spending has not reached pre-recessionary levels, consumers are returning to restaurants and refurbishment activity within the sector is largely driven by international businesses looking to expand in the UK.

After years of being constrained by capital budgets, hotels have now refocused portfolio investment through refits and refurbishment programmes to maximize occupancy levels rather than through new build properties – though the exception has been budget hotels where value chains continue to expand their portfolios through new development. Hotel construction is expected to be one of the fastest-growing sectors in 2014, boosted over the next few years by competition between budget hotel chains.

A further trend emerging from the recession is the rise in popularity of the budget gym sector, where membership prices are around 50% cheaper than for traditional clubs. As in the hotel sector, the budget gym market is forecast to increase market share as consumers look to spend existing disposable income more wisely. Many budget operators have aggressive expansion plans for 2014 and beyond.

In 2014, the fortunes of the UK leisure market are thought to have received a boost from major sporting events such as the Commonwealth Games in Glasgow, stages of the Tour de France in Yorkshire, Cambridge and London, the Ryder Cup at Gleneagles, the World Cup etc., which could have a significant positive impact on both regional and London leisure market performance. However, market performance has been uneven.

“Whilst the outlook for the hotel and leisure sector is now more positive, the implications for construction, fit-out and refurbishment work in the sector remains mixed” said Andrew Hartley, Director of AMA Research. “Significant expansion plans have been announced by budget hotels, value gym, food-led pubs and cinema sectors, contrasting with less buoyant prospects for mid-market hotels and the betting and gaming industry.“

The outlook for the hotel, leisure and entertainment sector as a whole remains positive, with annual output increases of 2-5% currently forecast to 2018. UK tourism spending is also expected to continue to grow strongly to 2025, with inbound tourism the fastest growing sector with growth rates of 5-6% forecast. Much of this growth is being driven by higher consumer spending as the economic recovery gathers pace and is becoming firmly established.

The ‘Construction in the Hotel, Entertainment & Leisure Sector 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.

Energy efficiency and retrofitting drives UK Lighting Market growth

The UK lighting market was estimated to be worth around £1.6 billion in 2013 with good growth prospects for 2014, according to a new report by AMA Research. Forecasts into the medium-term remain relatively optimistic with growth projected at 4-6% per annum until 2018, driven by increased demand for energy efficient lighting and growth of LEDs.

The issue of retro-fitting of more efficient lamp products has been crucial to value growth rates within the market in recent years, particularly where incandescent lamps have been replaced with higher value alternatives. The trend towards LED technologies has also driven up value growth, as has the introduction of a number of finance schemes that allow for lighting refurbishments and replacement to be paid for from future energy cost savings.

The UK lamps market has experienced significant change in recent years as European Directives have impacted on the supply and sales of certain lamp types. The phased removal of inefficient lamps from both the residential and non-residential sectors has continued to see the replacement of the traditional incandescent lamp in the domestic sector with compact fluorescents which in turn have been replaced by LEDs. In addition the trend for improving lighting quality, particularly the trend for “whiter” light in the private commercial sector has increased demand for higher value LED and fluorescent products.

Luminaires account for the largest share of the UK lighting market accounting for a share of around 61% in 2013. The sector is reliant on the levels of new build and refurbishment activity, particularly in the non-domestic sector, and was affected by the decline in output for the private commercial sector from 2009-12. The recent trend has been positive with moderate market growth in 2013 underpinned by investment in street lighting as well as the beginnings of recovery of private sector offices and retail.

Although the lamps and luminaires sectors have experienced more positive conditions 2013-14 than in previous years, it is the controls sector that is experiencing the most positive growth.  Again this is due to the focus placed on efficiency and cost savings with organisations recognising the need to reduce unnecessary lighting provision.

“The key driver for the whole lighting market is LED lighting which has gained significant share in the non-domestic sector in recent years.  This technology represents an innovative aspect for the lighting market and is likely to promote a period of innovation and expansion particularly in terms of more integrated products, control and lighting solutions” said Keith Taylor, Director of AMA Research. “The adoption of more efficient lighting products in the medium-term will boost value growth, however these products have increased life cycle expectations which may have more negative implications for the market into the longer-term”.

The current trend for retro-fitting LED lamps into existing luminaires is likely to be superseded by the development of integrated LED luminaires into the medium-term, though the large established base of existing luminaires will sustain the trend for some years to come. However, increased demand for LED technologies is likely to lead to an increase in average prices for some luminaires.

The controls market is currently in a particularly innovative stage where new products are introduced on a regular basis thereby underpinning good value growth. This innovation stage is likely to transform to more moderate developments into the medium-term, though the integration with LEDs has created a good platform for increased use and benefit of lighting controls. However, the longer term trend for lighting solutions – where control, luminaire and lamp are incorporated into a single unit may dampen demand for separate controllers in future years and make market segmentation by product far more difficult.

The ‘Lighting Market Report UK - 2014-2018 Analysis’ 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.

Good weather boosts growth in the UK Garden Leisure market

The Domestic Garden Leisure market fell in value terms during 2012, but has since started to recover and was estimated to be worth over £500 million in 2013, reflecting an estimated growth of 12% compared to 2012. This estimate relates to domestic sales only and excludes the wider commercial market for garden furniture.

Expenditure on garden leisure products has been volatile in recent years due to a combination of key factors such as consumer confidence, the economic climate, and the weather. Positive drivers for the market include; good weather on bank holiday weekends, sporting events and the trend for greater utilisation of outdoor space.

The largest sector of the garden leisure market is garden furniture, which accounts for over 60% in 2013. Metal and plastic garden furniture have gained share at the expense of wood as consumers have moved away from traditional towards more contemporary styles. The plastic category has been boosted in recent years by the popularity of rattan style garden furniture made of all-weather materials.

The barbeque sector has benefited from the trend to trade up from charcoal to gas barbecues, the increasing interest in dining outside and added value from product development, with 2014 a good year for the sector. Own brands dominate this sector of the market accounting for an estimated 45-55% share.

Garden leisure products are increasingly sourced and manufactured abroad, particularly in the Far East and Eastern Europe. The main route to market for garden leisure products is through DIY multiples which dominate the market with over 40% market share.

However, garden centres are losing share in this sector, with the more recent trend towards greater internet sales continuing – both from specialists and general retailers. The garden centre market is dominated by a number of large national and regional groups and there has been some consolidation in this market which is expected to continue in the coming years.

Sales will always be subject to the impact of the weather which can cause wide fluctuations on an annual basis, but our estimates for the domestic garden leisure market for 2014 and beyond are for good underlying growth given continued improvement in the economy and favourable weather. The trend for outdoor dining and use of the garden for socialising has benefited the garden leisure market - and is likely to continue.

Other factors driving growth in the garden leisure market in the medium to long term include; a general interest in environmentally friendly products creating added value, continued media interest in the garden as an aspirational living space, continued product development and a trend towards higher quality/value products in both furniture and barbecues, though average prices for better quality products have fallen in real terms.

“Overall, the garden leisure sector is likely to remain a vibrant market, with plenty of suppliers and a wide range of products on offer.” said Andrew Hartley, Director of AMA Research. “Future product developments are likely to be driven by fashion, demographics and housing/garden styles and sizes, and the ageing population will result in more people having time to spend in the garden – with older age groups also more inclined to use barbecues than 15-20 years ago.”

The ‘Garden Leisure Market Report - 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.

Gradual recovery in the UK wall cladding market

Including facing bricks, rendered block and insulated render systems, AMA Research estimates that the total installed wall cladding area declined from over 45m m² in 2008 to 39 m², before showing gradual improvement to 48m m² in 2012 and 2013.

Since 2011, there has been some improvement in private housebuilding output, social housing refurbishment, waste management infrastructure and the central London office market.

Driven largely by the Help to Buy schemes and a shift back from flats to houses, demand for facing bricks has outpaced supply, with imports needed to make up the shortfalls. This has been due to the time taken to restart ‘mothballed’ brick plants combined with a marked shortage of bricklayers. Energy efficiency legislation and initiatives (e.g. CERT) and requirements of Part L of the Building Regulations have driven up demand for insulated external walls, in particular render coated external wall insulation systems and composite panels.

The social housing refurbishment sector originally seemed as if it would be a key area of demand for insulated render systems, due to the introduction of the ‘Green Deal’, and, more relevantly, the Energy Companies Obligation (ECO) in 2013. However, should the government’s proposed changes for more moderate targets for solid wall insulation go through, then projected growth levels will be negatively affected. Other potential market drivers for cladding products are likely to arise from the waste management, recycling and renewable energy sectors.

By value, the largest sector is the curtain walling and structural glazing sector, while the share taken by facing bricks is considerably lower by value. Other higher value sub-sectors include the high specification zinc, copper and aluminium metal cladding systems, natural stone cladding and pre-cast concrete cladding systems.

Over the 2008-2012 period, lower levels of construction activity in the commercial sector have fed through to reduced demand for up-market cladding, particularly unitised curtain wall and other architectural products. Since 2012, there has been renewed demand in Central London office projects and a growing trend among architects for copper and zinc rainscreen systems and roofing.

With so many different types of cladding products on the market, the supply base is highly fragmented, although there is a high degree of market concentration in some sub-sectors. In the clay bricks industry, the top three producers account for around 80% of the market. These companies are also leading suppliers of other types of ‘niche’ clay cladding material such as brick slips and terracotta rainscreens. However, imports account for the majority of terracotta rainscreen systems installed in the UK.

The metal cladding panel market is a little more fragmented while the profiled panel market is even less concentrated. Systems companies and their approved fabricators / installers mostly account for the lower-middle sectors of the curtain wall market. The remainder of the wall cladding market is highly fragmented in terms of material types and in each sub-sector there are relatively few suppliers.

“Over the short to medium term, reasonable volume growth of between 5-8% per annum is expected, largely driven by private housebuilding activity and the government’s Help to Buy and other affordable homes programmes.” said Keith Taylor, Director of AMA Research. “Other end-use sectors likely to show increased demand are commercial offices, waste management and leisure, reflecting expected recovery in the commercial new build sector as well as commitments to further expansion in sectors such as waste.”

The overall value of the wall cladding market is difficult to estimate due to the fact that some elements are system based and the product and material is integral with the installation. Keeping this in mind, the product value at trade purchase price was estimated at around £1.8 billion in 2013.

The ‘Wall Cladding Market Report - 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.