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.