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Furniture Retailing - UK - July 2016

“There are many retail multiples, including Oak Furniture Land, DFS and ScS, which are growing sales of furniture, helped by a combination of new store openings and online developments. And many that began as online pureplays are discovering the value of opening shops as well. The lessons of the recent past illustrate that there is a ceiling on the number of stores a multiple can sustain. Also, retailers must continually focus their branding and price/value proposition in order to remain relevant to consumers. 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.

Online shopping has grown share of furniture retailing and has plenty of scope to grow. But shoppers want to complete the journey by judging items for themselves at a store. Today and in the future shoppers will spend less time in the shops and visit fewer stores, but will go shopping with a view to finalising the choices they have already screened out. To succeed in tomorrow’s furniture market retailers must create a compelling mix of great retail experiences which seamlessly work together to build a multichannel shopping experience.”
– Jane Westgarth, Senior Market Analyst, Mintel

This report answers the following questions:

  • How is the rise of private renting influencing people’s purchasing patterns?
  • How are consumer expectations of digital technology being catered for by retailers?
  • What is the right balance of online vs in-store retailing?

This Report covers the retailing of the following types of furniture:

  • Living and dining room furniture
  • Bedroom furniture, including beds and mattresses
  • Home office furniture.

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Table of contents

  1. Overview

      • Products covered in this Report
      • Executive Summary

          • The market
            • Growth of 8.8% by 2021
              • Figure 1: Consumer spend on furniture, 2011-21
            • Living and dining is 41% of consumer spending on furniture
              • Figure 2: Consumer spend on furniture, by broad segment, 2015
            • 2015 was a boom year for furniture retailers
              • Figure 3: Annual percentage change in retail sales, furniture retailers, 2007-16
            • Companies, brands and innovations
              • Specialists account for 71% of the market
                • Figure 4: Distribution of furniture, 2014-15
              • IKEA is the largest furniture retailer
                • Figure 5: Leading retailers of furniture, estimated share of all consumer spending on furniture, 2013 and 2015
              • Reaching more customers
                • Realistic images of rooms and layouts
                  • More brand building and less focus on price
                    • Vertical integration – Better margins
                      • Deliveries getting more responsive
                        • The consumer
                          • IKEA stands out among furniture retailers
                            • Figure 6: Attitudes towards and usage of selected retailers, May 2016
                          • 67% bought any furniture in the last year
                            • Figure 7: Amount spent on furniture in the last 12 months, June 2016
                          • Most purchases are for living rooms and bedrooms
                            • Figure 8: Furniture purchases, by room, last three years, June 2016
                          • Sofas are 63% of living room purchases
                            • Figure 9: Consumer purchases, by volume, living room furniture, June 2016
                          • Tables and chairs dominate dining room
                            • Figure 10: Consumer spending, by volume, dining room furniture, June 2016
                          • Mattresses bought by 37% of bedroom purchasers
                            • Figure 11: Consumer spending, by volume, bedroom furniture, June 2016
                          • 22% bought in an IKEA store
                            • Figure 12: Retailers used for furniture purchases, last three years, June 2016
                          • Websites are a key factor in store choice
                            • Figure 13: Factors influencing choice of furniture store, June 2016
                          • Removal of the old item is a popular additional service
                            • Figure 14: Interest in additional services from furniture retailers, June 2016
                          • Tipping points in the decision process
                            • Figure 15: Factors that would influence choice of retailer, June 2016
                          • 60% of purchasers enjoy shopping for furniture
                            • Figure 16: Attitudes towards replacing furniture, June 2016
                          • Four main target groups
                            • Figure 17: Attitudes towards replacing furniture, target groups, June 2016
                          • Target groups – Key characteristics
                            • What we think
                            • Issues and Insights

                              • How is the rise of private renting influencing people’s purchasing patterns?
                                • The facts
                                  • The implications
                                    • How are consumer expectations of digital technology being catered for by retailers?
                                      • The facts
                                        • The implications
                                          • What is the right balance of online vs in-store retailing?
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Growth of 8.8% by 2021
                                                  • 11% sales growth in furniture stores in 2015
                                                    • Diverse market with many elements
                                                      • Furniture specialists gaining share
                                                        • Specialists capture 71% of the market
                                                          • House moves stimulate growth
                                                            • 25% say they have healthy finances
                                                            • Market Size and Forecast

                                                              • Growth of 8.8% by 2021
                                                                • Figure 18: Consumer spend on furniture, 2011-21
                                                                • Figure 19: Consumer spending on furniture and furnishings, 2011-21
                                                              • 11% sales growth in furniture stores in 2015
                                                                • Figure 20: Retail sales through furniture stores, April 2016
                                                              • Forecast methodology
                                                              • Market Segmentation

                                                                • Diverse market with many elements
                                                                  • Figure 21: Consumer spending on furniture, by segment, 2010-15
                                                                • Sofas – Key items in the living room
                                                                  • Home offices vary widely
                                                                    • Dining spaces
                                                                      • Figure 22: Consumer spending, by value, living and dining room furniture, 2010-15
                                                                    • Upholstery accounts for 63% of living and dining room spending
                                                                      • Figure 23: Consumer spending, by value, living/dining room furniture, segmentation, 2015
                                                                    • Spending on beds and mattresses dominates bedroom
                                                                      • Figure 24: Consumer spending, by value, bedroom furniture and beds, segmentation, 2015
                                                                  • Market Drivers

                                                                    • Buoyancy in the housing market stimulated furniture sales
                                                                      • Figure 25: Housing transactions, 2013-15
                                                                    • 25% say their finances are healthy
                                                                      • Figure 26: Trends in how respondents would describe their financial situation, March 2010-March 2016
                                                                    • People feel better off
                                                                      • Figure 27: Trends in current financial situation compared to a year ago, January 2011-March 2016
                                                                    • Committing to big ticket purchases
                                                                      • Figure 28: Trends in activities done in the last three months and planned to do in the next three months, spend money on my home (new kitchen, redecorate, new furniture etc.), 2013-16
                                                                    • Rising numbers of private renters
                                                                      • Figure 29: Housing tenure, UK, 2012-16
                                                                  • Channels to Market

                                                                    • Specialists edge ahead in competitive market conditions
                                                                      • Home shopping specialists relatively small
                                                                        • Online selling has reached 25% by value
                                                                          • Multichannel retail models for the future
                                                                            • Figure 30: Distribution of furniture, 2014-15
                                                                        • Key Players – What You Need to Know

                                                                          • IKEA is the largest furniture retailer
                                                                            • IKEA expands geographical coverage
                                                                              • Many internet retailers are opening stores
                                                                                • Realistic images of rooms and layouts
                                                                                  • More brand building and less focus on price
                                                                                    • Specialists add related categories
                                                                                      • Vertical integration – Better margins
                                                                                        • Expansion of ‘home’ shops
                                                                                          • Speedier and cheaper deliveries
                                                                                            • Advertising +2% in 2015
                                                                                              • IKEA has the strongest brand
                                                                                                • DFS is stylish and reliable
                                                                                                  • Oak Furniture Land is worth paying more for
                                                                                                  • Innovation and Launch Activity

                                                                                                    • IKEA opens order-and-collect stores
                                                                                                      • Internet retailers open stores
                                                                                                        • In-town formats for multiples
                                                                                                          • 3D reality
                                                                                                            • Figure 31: IKEA, Virtual Reality kitchen, 2016
                                                                                                          • Peek & Pop from Home 24
                                                                                                            • John Lewis’ new collaboration with Loaf
                                                                                                              • Figure 32: Modsy, render of a client’s room, 2016
                                                                                                            • Images that spin
                                                                                                            • Competitive Strategies

                                                                                                              • Promotional strategies
                                                                                                                • Shortening the replacement lifecycle
                                                                                                                  • CSL then Sofaworks, now Sofology
                                                                                                                    • Specialists adding to their ranges
                                                                                                                      • Concessions add to branded presence
                                                                                                                        • Vertical integration
                                                                                                                          • Digital activity is high priority
                                                                                                                            • Heading back into town with smaller shops
                                                                                                                              • Expansion of ‘home’ shops
                                                                                                                                • Speedier and cheaper deliveries
                                                                                                                                • Leading Specialist Retailers

                                                                                                                                  • Sales and profit margins
                                                                                                                                    • Why category specialists work
                                                                                                                                      • Figure 33: Leading furniture specialists’ sales, 2010/11-2015/16
                                                                                                                                    • Ones to watch
                                                                                                                                      • Independents
                                                                                                                                        • Operating profits and margins
                                                                                                                                          • Figure 34: Leading furniture specialists’ operating profits, 2010/11-2015/16
                                                                                                                                          • Figure 35: Leading furniture specialists’ operating margins, 2010/11-2015/16
                                                                                                                                        • Stores
                                                                                                                                          • Figure 36: Leading furniture specialists’ store numbers, 2010/11-2015/16
                                                                                                                                        • IKEA has the highest sales per outlet
                                                                                                                                          • Figure 37: Leading furniture specialists’ sales per outlet, 2010/11-2015/16
                                                                                                                                        • Leading online pureplays
                                                                                                                                        • Leading Non-specialist Retailers

                                                                                                                                          • More ‘home’ shops open
                                                                                                                                            • Argos taken over by Sainsbury’s
                                                                                                                                              • Aldi beginning to sell more non-foods online
                                                                                                                                                • DIY sector changes
                                                                                                                                                • Market Shares

                                                                                                                                                    • Figure 38: Leading retailers of furniture, estimated share of all consumer spending on furniture, 2013 and 2015
                                                                                                                                                  • Blurring of online and in-store selling
                                                                                                                                                    • Stores remain highly relevant to shoppers
                                                                                                                                                      • Retailers grow online sales
                                                                                                                                                        • Leading online sellers
                                                                                                                                                          • Internet browsing features in most shopping journeys
                                                                                                                                                            • Figure 39: Preferred methods in the buying process for furniture, August 2015
                                                                                                                                                        • Space Allocation Summary

                                                                                                                                                          • Space allocation overview
                                                                                                                                                            • Figure 40: Furniture retailers: Summary of estimated in-store space allocation, June 2016
                                                                                                                                                          • Detailed space analysis
                                                                                                                                                              • Figure 41: Furniture retailers – Detailed space allocation estimates, June 2016
                                                                                                                                                            • Retail product mix
                                                                                                                                                              • Figure 42: Leading furniture retailers: Estimated furniture sales, by product, exc VAT, 2014/15
                                                                                                                                                              • Figure 43: Leading furniture retailers: Implied sales density, exc VAT, 2014/15
                                                                                                                                                          • Brand Research

                                                                                                                                                              • Brand map
                                                                                                                                                                • Figure 44: Attitudes towards and usage of selected retailers, May 2016
                                                                                                                                                              • Key brand metrics
                                                                                                                                                                • Figure 45: Key metrics for selected retailers, May 2016
                                                                                                                                                              • IKEA has outstanding ratings for value and innovation
                                                                                                                                                                • Figure 46: Attitudes, by brand, May 2016
                                                                                                                                                              • ScS in danger of looking unappealing
                                                                                                                                                                • Figure 47: Brand personality – Macro image, May 2016
                                                                                                                                                              • ScS has most to do to build its brand
                                                                                                                                                                • Figure 48: Brand personality – Micro image, May 2016
                                                                                                                                                              • IKEA has a strong identity
                                                                                                                                                                • Figure 49: User profile of IKEA, May 2016
                                                                                                                                                              • Oak Furniture Land is worth paying more for
                                                                                                                                                                • Figure 50: User profile of Oak Furniture Land, May 2016
                                                                                                                                                              • Dreams is authoritative and reliable
                                                                                                                                                                • Figure 51: User profile of Dreams, May 2016
                                                                                                                                                              • DFS – Reliable and stylish
                                                                                                                                                                • Figure 52: User profile of DFS, May 2016
                                                                                                                                                              • ScS is a brand that lags behind the competition
                                                                                                                                                                • Figure 53: User profile of ScS, May 2016
                                                                                                                                                            • Advertising and Marketing Activity

                                                                                                                                                              • Advertising up in buoyant market conditions
                                                                                                                                                                • Figure 54: Total above-the line, online display and direct mail advertising expenditure on furniture retail specialists, 2012-15
                                                                                                                                                              • DFS is the largest advertiser
                                                                                                                                                                • Figure 55: Total above-the line, online display and direct mail advertising expenditure on furniture retail specialists, 2012-15
                                                                                                                                                                • Figure 56: Share of above-the line, online display and direct mail advertising expenditure in the furniture retail specialists sector, 2015
                                                                                                                                                              • Television takes 60% of spending
                                                                                                                                                                • Figure 57: Share of above-the line, online display and direct mail advertising expenditure in the furniture retail specialists sector, by media type, 2015
                                                                                                                                                              • Campaign highlights
                                                                                                                                                                • What we have seen in 2016
                                                                                                                                                                  • Nielsen Ad Intel coverage
                                                                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                                                                    • Households with mortgages buy the most furniture
                                                                                                                                                                      • Most shopping is for living rooms and bedrooms
                                                                                                                                                                        • Online vs in-store purchasing
                                                                                                                                                                          • IKEA is the most used retailer
                                                                                                                                                                            • Low prices dominate reasons for purchase
                                                                                                                                                                              • Factors in store choice
                                                                                                                                                                                • Those with a mortgage most inclined to use IFC
                                                                                                                                                                                  • Four main target groups
                                                                                                                                                                                  • Expenditure on Furniture

                                                                                                                                                                                    • House moves stimulate purchases
                                                                                                                                                                                      • 9% of households had spent over £2,000
                                                                                                                                                                                        • Figure 58: Amount spent on furniture in the last 12 months, June 2016
                                                                                                                                                                                      • Private renters are buying furniture
                                                                                                                                                                                        • Figure 59: Spent on furniture in the last 12 months, any purchases, by tenure, June 2016
                                                                                                                                                                                      • Households with mortgages are most active in the furniture market
                                                                                                                                                                                        • Figure 60: Amount spent on furniture in the last 12 months, by tenure, June 2016
                                                                                                                                                                                      • Higher spenders shop in-store
                                                                                                                                                                                        • Figure 61: Amount spent on furniture in the last 12 months, by bought online or in-store, June 2016
                                                                                                                                                                                    • Furniture Purchases by Room and by Type of Furniture

                                                                                                                                                                                      • 39% buy for one room
                                                                                                                                                                                        • Figure 62: Furniture purchases by room, last three years, June 2016
                                                                                                                                                                                      • Living and bedroom purchases dominate shopping patterns
                                                                                                                                                                                        • Figure 63: Furniture purchases by room, last three years, June 2016
                                                                                                                                                                                      • Sofas – 63% of living room purchases
                                                                                                                                                                                        • Households with mortgages most likely to buy
                                                                                                                                                                                          • Figure 64: Consumer purchases, by volume, living room furniture, June 2016
                                                                                                                                                                                        • Tables and chairs dominate dining purchases
                                                                                                                                                                                          • Figure 65: Consumer spending, by volume, dining room furniture, June 2016
                                                                                                                                                                                        • Mattresses are the most frequently purchased bedroom furniture
                                                                                                                                                                                          • Figure 66: Consumer spending, by volume, bedroom furniture, June 2016
                                                                                                                                                                                      • Retailers Used for Furniture Purchases

                                                                                                                                                                                        • In-store online mix
                                                                                                                                                                                          • Argos outruns IKEA online
                                                                                                                                                                                            • IKEA has a young shopper profile
                                                                                                                                                                                              • Figure 67: Retailers used for furniture purchases, last three years, in-store and online, June 2016
                                                                                                                                                                                            • Shifting shopping patterns
                                                                                                                                                                                              • Figure 68: Retailers used for furniture purchases, in-store, October 2014 and June 2016
                                                                                                                                                                                            • Argos, Amazon and eBay dominate online
                                                                                                                                                                                              • Figure 69: Retailers used for furniture purchases, online, October 2014 and June 2016
                                                                                                                                                                                            • 51% use one store
                                                                                                                                                                                              • Figure 70: Repertoire of purchasing in-store, June 2016
                                                                                                                                                                                          • Reasons for Choice of Furniture Store

                                                                                                                                                                                            • Private renters most interested in low prices
                                                                                                                                                                                              • Older and wealthier customers want to judge in-store
                                                                                                                                                                                                • Showrooms appeal more to those with mortgages
                                                                                                                                                                                                  • Accessories appeal most to younger consumers and private renters
                                                                                                                                                                                                    • Interest-free credit appeals to households with mortgages
                                                                                                                                                                                                      • Figure 71: Factors influencing choice of furniture store, June 2016
                                                                                                                                                                                                  • Interest in Additional Store Services When Shopping for Furniture

                                                                                                                                                                                                    • 49% like removal of the old item
                                                                                                                                                                                                      • Assembly can be a hassle
                                                                                                                                                                                                        • Comfort ratings are popular
                                                                                                                                                                                                          • Apps please
                                                                                                                                                                                                            • Interior designers
                                                                                                                                                                                                              • Figure 72: Interest in additional services from furniture retailers, June 2016
                                                                                                                                                                                                            • People are interested in a range of services
                                                                                                                                                                                                              • Figure 73: Factors influencing choice of furniture store, repertoire, June 2016
                                                                                                                                                                                                          • Factors that Would Influence Choice of a Specific Retailer

                                                                                                                                                                                                            • The price/value equation
                                                                                                                                                                                                              • Quicker deliveries please
                                                                                                                                                                                                                • Loyalty rewards
                                                                                                                                                                                                                  • Faster fashions
                                                                                                                                                                                                                    • Apps giving additional information
                                                                                                                                                                                                                      • Figure 74: Factors that would influence choice of retailer, June 2016
                                                                                                                                                                                                                  • Attitudes towards Replacing Furniture

                                                                                                                                                                                                                      • Figure 75: Attitudes towards replacing furniture, June 2016
                                                                                                                                                                                                                    • Target groups
                                                                                                                                                                                                                      • Figure 76: Attitudes towards replacing furniture, target groups, June 2016
                                                                                                                                                                                                                    • Target groups – Key characteristics
                                                                                                                                                                                                                        • Figure 77: Attitudes towards replacing furniture, by target group, June 2016
                                                                                                                                                                                                                      • Which rooms the target groups buy for
                                                                                                                                                                                                                        • Figure 78: Rooms bought furniture for, by target group, June 2016
                                                                                                                                                                                                                      • Shopping in-store or online by target group
                                                                                                                                                                                                                        • Figure 79: Bought in-store or online, by target group, June 2016
                                                                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                                                                                            • Forecast methodology

                                                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                            Furniture Retailing - UK - July 2016

                                                                                                                                                                                                                            US $2,583.33 (Excl.Tax)