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Buying for the Home Online - UK - May 2009

Despite the downturn in the wider economy and the housing market in particular, sales of home goods online are growing rapidly. Two thirds of internet users have made some kind of purchase and the choice they are being offered by retailers has widened dramatically over the past two years.

Specialists in the home goods sector have been caught napping in many cases and are still often playing catch up with their non-specialist rivals on crucial services like in-store collection.

Despite a difficult economic background, rising internet penetration, the wider spread of broadband, better website design and improving possibilities in terms of delivery and service levels will all be among positive factors for home goods online. The question is, which of the major players are doing the right things to fulfill the potential this market has to offer?

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definitions
          • Abbreviations
          • Future Opportunities

            • What do over-45s want?
              • How to cross the high street gender divide?
                • Men Shopping Badly? (from Mintel’s Inspire)
                  • That’s Home Entertainment (from Mintel’s Inspire)
                  • Market in Brief

                    • Buying home goods online now a mass market phenomenon
                      • Online spending grows rapidly despite downturn
                        • Widening internet access boosts market
                          • Extended ranges attract customers
                            • Broadband and other positive factors
                              • Housing decline a negative influence
                                • Consumer spending hit by recovery in saving
                                  • More retirees but family lifestagers see no growth
                                    • Retail price deflation and sourcing inflation
                                      • Online gender differences copy the high street
                                        • Argos and other non-specialists take the lead
                                          • Convenience and price biggest draw to home goods online
                                            • Still some problems online
                                              • Delivery and security still pose problems
                                                • Medium and long-term prospects extremely good
                                                • Internal Market Environment

                                                  • Key points
                                                    • Internet reaches 55-64s, C2s and DEs
                                                      • Figure 1: Internet penetration, by age group, 2003, 2006 and 2009
                                                      • Figure 2: Internet penetration, by socio-economic group, 2003, 2006 and 2009
                                                    • Online purchasing patterns
                                                      • Figure 3: Purchasing of various product categories online, January 2008-January 2009
                                                    • Broadband takes over
                                                      • Figure 4: Type of connection to the internet, 2004-08
                                                    • Growth of mobile internet
                                                      • Figure 5: How people access the internet, 2004-08
                                                    • Improvements to customer experience and range availability
                                                    • Broader Market Environment

                                                      • Key points
                                                        • Housing market will hit larger home goods
                                                          • Figure 6: Household transactions, 2004-14
                                                        • Inflation fall and pound’s decline will hit margins
                                                            • Figure 7: UK actual and projected price inflation – all items, white goods and household goods, 2004-14
                                                          • Consumers to rein back spending
                                                            • Figure 8: UK real personal disposable income growth, consumer expenditure growth, bank base rate and savings ratio, actual and projected, 2004-14
                                                          • Housing equity withdrawal goes into reverse
                                                              • Figure 9: Housing equity withdrawal, 2006 Q1-2008 Q4
                                                            • More upmarket population
                                                              • Figure 10: UK adult population 15+, by socio-economic group, 2004-09 and 2009-14
                                                            • Rise in retirees a challenge
                                                              • Figure 11: UK adult population 15+, by lifestage, percentage change, 2004-09 and 2009-14
                                                          • Market in Context

                                                            • Key points
                                                              • Home goods sales
                                                                • Figure 12: Total consumer spending on home goods, 2004-09
                                                              • Online becomes significant home goods distribution channel
                                                                • Figure 13: Consumer spending on home goods online, total home goods and total consumer spending, 2004-09
                                                            • Strengths and Weaknesses in the Market

                                                              • Strengths
                                                                • Increasing internet penetration
                                                                  • Widening product ranges online
                                                                    • More ABC1 consumers
                                                                      • Improving customer service
                                                                        • More consumers have broadband access
                                                                          • Weaknesses
                                                                            • Decline in the housing market
                                                                              • Rising unemployment
                                                                                • Selling price deflation
                                                                                  • Sourcing prices rising
                                                                                    • Rising numbers of retirees
                                                                                    • Who’s Innovating?

                                                                                      • Mydeco.com cashes in on MFI’s demise
                                                                                        • John Lewis offers consumers even faster delivery
                                                                                          • Making sure the customer is waiting for you
                                                                                            • Delivery to home, to store and now to box
                                                                                            • Market Size and Forecast

                                                                                              • Key points
                                                                                                • Rapid growth but slowing
                                                                                                  • Figure 14: Online market for home goods, 2004-14
                                                                                                • Main factors for the future
                                                                                                  • Product price deflation
                                                                                                    • Import cost rises
                                                                                                      • The housing market and mortgage finance
                                                                                                        • Price sensitivity
                                                                                                          • Breadth of offer
                                                                                                            • Rising access to broadband
                                                                                                              • Factors used in the forecast
                                                                                                              • Purchasing of Products for the Home Online

                                                                                                                • Key points
                                                                                                                  • Electricals lead buying for the home
                                                                                                                    • Figure 15: Products for the home purchased using the internet for browsing or buying, February 2009
                                                                                                                  • How they browse and buy: Demographic analysis
                                                                                                                    • Women keener on furniture online
                                                                                                                      • Men buy lighting
                                                                                                                        • Buying in-store dominates for carpets
                                                                                                                          • Tableware female-led but cookware more unisex
                                                                                                                            • DIY retailers failing to convince key age groups to buy online
                                                                                                                              • DIY tools remain a male domain
                                                                                                                                • Gardening favoured by the over-45s
                                                                                                                                  • 35-44s key for white goods
                                                                                                                                    • Non-specialists far ahead of specialists
                                                                                                                                      • Figure 16: Websites used for buying products for the home, February 2009
                                                                                                                                    • Where they buy: Demographic analysis
                                                                                                                                      • Ikea appeals to the young
                                                                                                                                        • Argos has classless appeal
                                                                                                                                          • B&Q could attract more women
                                                                                                                                            • Homebase
                                                                                                                                              • Comet male-focused
                                                                                                                                                • John Lewis middle class but not middle-aged
                                                                                                                                                  • Debenhams peaks among 25-34s
                                                                                                                                                    • M&S very female-led
                                                                                                                                                      • Next’s regional coverage patchy
                                                                                                                                                        • Tesco ‘stealing’ Asda customers
                                                                                                                                                          • Repertoire analysis
                                                                                                                                                            • Figure 17: Number of home goods categories browsed or bought online, February 2009
                                                                                                                                                        • The Consumer – Buying Behaviour and Preferences

                                                                                                                                                          • Key points
                                                                                                                                                            • Convenience the main driver of online purchasing
                                                                                                                                                              • Figure 18: Buying behaviour and preferences when buying products for the home online, February 2009
                                                                                                                                                            • Men are more price driven
                                                                                                                                                              • Choice-led consumers are young and affluent
                                                                                                                                                                • Parents like to save time
                                                                                                                                                                  • Women keen on multichannel
                                                                                                                                                                    • Over-35s check stock first
                                                                                                                                                                      • Under-35s are lazy searchers and shoppers
                                                                                                                                                                        • 35-44s keen on customer reviews
                                                                                                                                                                        • The Consumer – Attitudes

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Online: Good on price, but has limitations
                                                                                                                                                                              • Figure 19: Attitudes towards buying for the home online, February 2009
                                                                                                                                                                            • Internet pricing appeals to men
                                                                                                                                                                              • More teenagers prefer the high street
                                                                                                                                                                                • Men and under-25s hate waiting for deliveries
                                                                                                                                                                                  • Women cautious about who they buy from
                                                                                                                                                                                    • Teens are impatient
                                                                                                                                                                                      • Delivery charge puts women off small items
                                                                                                                                                                                      • The Consumer – Typologies

                                                                                                                                                                                        • Key points
                                                                                                                                                                                            • Figure 20: Consumer typologies for buying goods for the home online, February 2009
                                                                                                                                                                                          • Online savvy (20%)
                                                                                                                                                                                            • Time motivated (19%)
                                                                                                                                                                                              • Combination shoppers (18%)
                                                                                                                                                                                                • Online avoiders (14%)
                                                                                                                                                                                                  • Unconcerned (28%)
                                                                                                                                                                                                  • Retail Competitor Analysis

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • The competitive line-up
                                                                                                                                                                                                          • Figure 21: Leading home goods online retailers, 2009
                                                                                                                                                                                                      • Retailer Profiles

                                                                                                                                                                                                        • Furniture/housewares specialists
                                                                                                                                                                                                          • Ikea
                                                                                                                                                                                                            • DFS
                                                                                                                                                                                                              • Nobia/Magnet
                                                                                                                                                                                                                • Carpetright
                                                                                                                                                                                                                  • Dreams
                                                                                                                                                                                                                    • Habitat
                                                                                                                                                                                                                      • Lakeland
                                                                                                                                                                                                                        • DIY stores
                                                                                                                                                                                                                          • B&Q
                                                                                                                                                                                                                            • Homebase
                                                                                                                                                                                                                              • Electrical stores
                                                                                                                                                                                                                                • Currys/Dixons.co.uk
                                                                                                                                                                                                                                  • Comet
                                                                                                                                                                                                                                    • Department/variety stores
                                                                                                                                                                                                                                      • John Lewis
                                                                                                                                                                                                                                        • Debenhams
                                                                                                                                                                                                                                          • Argos
                                                                                                                                                                                                                                            • Marks & Spencer
                                                                                                                                                                                                                                              • Next
                                                                                                                                                                                                                                                • Grocers
                                                                                                                                                                                                                                                  • Tesco
                                                                                                                                                                                                                                                    • Asda
                                                                                                                                                                                                                                                      • Pureplayers
                                                                                                                                                                                                                                                        • Amazon
                                                                                                                                                                                                                                                          • Others
                                                                                                                                                                                                                                                          • Appendix – Internal Market Environment

                                                                                                                                                                                                                                                              • Figure 22: British internet penetration at home/work/place of study or elsewhere, by gender, socio-economic group, age and region, April 2002-Jan 2009
                                                                                                                                                                                                                                                          • Appendix – Broader Market Environment

                                                                                                                                                                                                                                                              • Figure 23: Number of housing transactions, 2004-14
                                                                                                                                                                                                                                                              • Figure 24: UK actual and projected price inflation – all items, white goods and household goods, 2004-14
                                                                                                                                                                                                                                                              • Figure 25: UK real personal disposable income growth, consumer expenditure growth, bank base rate and savings ratio, actual and projected, 2004-14
                                                                                                                                                                                                                                                              • Figure 26: Housing equity withdrawal, 2006 Q1-2008 Q4
                                                                                                                                                                                                                                                              • Figure 27: UK adult population 15+, by lifestage, percentage change, 2004, 2009 and 2014
                                                                                                                                                                                                                                                          • Appendix – Purchasing of Products for the Home Online

                                                                                                                                                                                                                                                              • Figure 28: Browsing and buying furniture using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 29: Browsing and buying lighting using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 30: Browsing and buying carpets/other flooring using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 31: Browsing and buying china/glassware/cutlery using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 32: Browsing and buying kitchenware/cookware using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 33: Browsing and buying household textiles using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 34: Browsing and buying decorative items using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 35: Browsing and buying DIY materials using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 36: Browsing and buying DIY tools and equipment using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 37: Browsing and buying garden products using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 38: Browsing and buying large domestic appliances using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 39: Browsing and buying small domestic appliances using the internet, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 40: Websites used for buying products for the home, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 41: Websites used for buying products for the home, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 42: Websites used for buying products for the home, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 43: Websites used for buying products for the home, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 44: Repertoire of any browsing online, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 45: Repertoire of any buying online, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 46: Websites used for buying online, by repertoire of any browsing online, February 2009
                                                                                                                                                                                                                                                              • Figure 47: Websites used for buying online, by repertoire of any buying online, February 2009
                                                                                                                                                                                                                                                              • Figure 48: Repertoire of number of websites used, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 49: Repertoire of any browsing online, by repertoire of number of websites used, February 2009
                                                                                                                                                                                                                                                              • Figure 50: Repertoire of any buying online, by repertoire of number of websites used, February 2009
                                                                                                                                                                                                                                                          • Appendix – Buying Behaviour and Preferences

                                                                                                                                                                                                                                                              • Figure 51: Buying behaviour and preferences when buying products for the home online, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 52: Buying behaviour and preferences when buying products for the home online, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 53: Buying behaviour and preferences when buying products for the home online, by websites used for buying, February 2009
                                                                                                                                                                                                                                                              • Figure 54: Buying behaviour and preferences when buying products for the home online, by websites used for buying, February 2009
                                                                                                                                                                                                                                                              • Figure 55: Buying behaviour and preferences when buying products for the home online, by websites used for buying, February 2009
                                                                                                                                                                                                                                                          • Appendix – Attitudes

                                                                                                                                                                                                                                                              • Figure 56: Attitudes towards buying for the home online, by detailed demographics, February 2009
                                                                                                                                                                                                                                                              • Figure 57: Attitudes towards buying for the home online, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 58: Attitudes towards buying for the home online, by websites used for buying, February 2009
                                                                                                                                                                                                                                                              • Figure 59: Attitudes towards buying for the home online, by websites used for buying, February 2009
                                                                                                                                                                                                                                                              • Figure 60: Attitudes towards buying for the home online, by websites used for buying, February 2009
                                                                                                                                                                                                                                                              • Figure 61: Buying behaviour and preferences when buying products for the home online, by consumer typologies, February 2009
                                                                                                                                                                                                                                                              • Figure 62: Attitudes towards buying for the home online, by consumer typologies, February 2009
                                                                                                                                                                                                                                                          • Appendix – Typologies

                                                                                                                                                                                                                                                              • Figure 63: Consumer typologies for buying goods for the home online, by detailed demographics**, February 2009
                                                                                                                                                                                                                                                              • Figure 64: Repertoire of any browsing online, by consumer typologies, February 2009
                                                                                                                                                                                                                                                              • Figure 65: Repertoire of any buying online, by consumer typologies, February 2009
                                                                                                                                                                                                                                                              • Figure 66: Websites used for buying online, by consumer typologies, February 2009
                                                                                                                                                                                                                                                              • Figure 67: Repertoire of websites used for buying online, by consumer typologies, February 2009

                                                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                                                          • Amazon.co.uk
                                                                                                                                                                                                                                                          • Argos
                                                                                                                                                                                                                                                          • Asda Group Ltd
                                                                                                                                                                                                                                                          • ASOS
                                                                                                                                                                                                                                                          • Bank of England
                                                                                                                                                                                                                                                          • Co-operative Group
                                                                                                                                                                                                                                                          • Currys
                                                                                                                                                                                                                                                          • Darty Group
                                                                                                                                                                                                                                                          • Debenhams Total (GTV)
                                                                                                                                                                                                                                                          • Dixons Retail Plc
                                                                                                                                                                                                                                                          • Dunelm (Soft Furnishings) Ltd
                                                                                                                                                                                                                                                          • Dunlopillo
                                                                                                                                                                                                                                                          • Habitat
                                                                                                                                                                                                                                                          • Home Retail Group
                                                                                                                                                                                                                                                          • Homebase Ltd
                                                                                                                                                                                                                                                          • IKEA
                                                                                                                                                                                                                                                          • J. Sainsbury
                                                                                                                                                                                                                                                          • John Lewis Plc (department store)
                                                                                                                                                                                                                                                          • Kingfisher UK & Ireland
                                                                                                                                                                                                                                                          • Lakeland Ltd
                                                                                                                                                                                                                                                          • Laura Ashley Group
                                                                                                                                                                                                                                                          • Marks & Spencer
                                                                                                                                                                                                                                                          • Morphy Richards Ltd
                                                                                                                                                                                                                                                          • Next Group
                                                                                                                                                                                                                                                          • PriceRunner UK
                                                                                                                                                                                                                                                          • Screwfix UK
                                                                                                                                                                                                                                                          • Siemens plc
                                                                                                                                                                                                                                                          • Tesco Plc
                                                                                                                                                                                                                                                          • Travis Perkins Retail
                                                                                                                                                                                                                                                          • Vodafone Group Plc (UK)
                                                                                                                                                                                                                                                          • Waitrose
                                                                                                                                                                                                                                                          • Wm Morrison Supermarkets

                                                                                                                                                                                                                                                          Buying for the Home Online - UK - May 2009

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