This issue Mintel takes a look at the current state of the UK Furniture market for 2016, highlighting issues in the market for the next five years.
Mintel’s 2016 Furniture Retailing report forecasts that consumer spend on furniture and furnishings will grow by 8.8% between 2016 and 2021 to reach £16,777 million. The report finds that an increase in the number of UK households will provide underlying growth. In the short term consumers may delay making big-ticket purchases because of uncertainty about the economy, but as confidence stabilises the market will pick up once more.
While a wide range of generalist retailers carry furniture, the specialist sector is robust, with some excellent retailers building share of the market. There are many retail multiples, which are growing sales of furniture, helped by a combination of new store openings and online developments. However, competition is tough and several general ‘home’ shops are expanding their footprint, catering for the customer who wants to see furniture and accessories under one roof.
“THERE ARE MANY RETAIL MULTIPLES, WHICH ARE GROWING SALES OF FURNITURE, HELPED BY A COMBINATION OF NEW STORE OPENINGS AND ONLINE DEVELOPMENTS.”
Internet browsing is a core activity these days and online shopping is growing. But Mintel research shows that when people buy furniture they like to judge comfort, colour and quality by touching and seeing the products, and they enjoy the experience of visiting furniture shops. Many businesses that originated as online sellers have opened stores and most that operate shops now trade online. Multichannel retailing is and will continue to be the right business model in this sector.
Although the market is buoyant at present, uncertainty hits big-ticket purchases fast so branding and marketing need to be robust in order to ride out the lows as well as the highs. Retailers must craft their image, shaping expectations of choice, styling and prices in order to attract customers and convince them of their relevance.
The rise in private renting has meant an increase in budget-conscious consumers, interested in price and less concerned about quality. Even so, they are creating a look in their homes, often using accessories to add personality to their homes. So, if the trend to private renting continues, this will grow the market for budget-priced furniture and increase interest in low-priced home stores that offer home accessories alongside furniture. While IKEA is the preferred retailer for these consumers, others, including Argos and general online sellers, are also in the running. Anecdotally we believe that private renters are also most likely to buy second-hand items to fill a gap in their homes and so furniture retailers have an opportunity to position new as something they deserve.
The furniture retailers growing fastest operate online and in-store but the fastest growth is coming from those opening shops. Mintel research finds some 58% of purchasers bought online in the last three years, while 84% had bought in-store. While all age groups buy online, there is a bias towards the under-45s. Four in ten (41%) purchasers mention that websites they can use to browse or shop influence their choice of store, highlighting the importance of online media for retailers these days.
The combination of a website that allows consumers to browse and begin to narrow down their choices, together with a showroom where they can make judgements about quality, comfort or colour, gives consumers the shopping options that suit a variety of needs. While many will buy online at the cheapest end of the price spectrum, as prices rise people are more likely to want to discuss their purchases, seek advice or simply experience the items for themselves before they buy. And more than this, our research illustrates that shopping for furniture gives people a lot of pleasure – they actually enjoy the process of visiting stores. But there is a balance between convenience and cost.
IKEA has created large destination shops and positioned them in high-density catchments, making them fairly accessible to a large audience, even though they are few in numbers, but is now expanding its reach with ‘order and collect’ outlets which do not have the signature IKEA warehouse on-site. Others, like Dreams and Bensons, over-extended their store chains and have rationalised, realising that customers will travel a little further to find what they want. Oak Furniture Land is still opening new shops, realising that its successful brand can generate even greater market shares from a larger chain. And disruptive start-ups like Loaf are realising that showrooms complete their service to customers.
Finally, the report looks at consumer interest in technology. Research finds that the idea of apps to help plan or visualise the room is popular, and particularly so with under-25s. This highlights that those who have been brought up with gaming software and digital media are most likely to respond to digital innovations by furniture retailers. The report concludes that digital developments will make a significant competitive difference to retailers in the future. They will allow consumers greater scope to visualise designs and in turn this is likely to build average transactions for retailers by encouraging add-on sales. Those retailers that are at the forefront of developing quicker, more responsive and more realistic digital services are likely to forge ahead of the rest, building market share in the ever-more competitive marketplace for furniture.