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Furniture Retailing - UK - July 2017

“The furniture sector has enjoyed a number of good years, but the market looks set to become much more challenging. It is therefore more important than ever for furniture retailers to ensure they have a clear position in the market, highlighting how they are delivering value for money while ensuring they avoid falling into the discounting trap.”
– Thomas Slide, Retail Analyst

This Report discusses the following key topics:

  • Challenging times ahead for the furniture sector
  • Could Amazon ever make significant inroads into the furniture sector?

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Growth has slowed and challenges lie ahead
              • Figure 1: Consumer spend on furniture and furnishings, 2012-22
            • Living and dining room furniture accounts for 40% of all furniture spending
              • Figure 2: Estimated consumer spending on furniture and furnishings, by segment, 2016
            • A sector dominated by specialists
              • Figure 3: Estimated channels of distribution for furniture and furnishings, 2016
            • Economic indicators signal a tougher year ahead
              • Companies and brands
                • IKEA continues to experience strong growth
                  • Figure 4: Leading retailers of furniture, estimated share of all consumer spending on furniture, 2016
                • Mini-stores bring furniture closer to consumers
                  • Advertising spend increases 3.9%
                    • IKEA enjoys highest levels of trust and differentiation
                      • Figure 5: Attitudes towards and usage of selected brands, May 2017
                    • The consumer
                      • 62% of consumers bought furniture in the past year
                        • Figure 6: What they spent on furniture in the last 12 months, May 2017
                      • Living rooms the most popular to buy for
                        • Figure 7: Rooms they bought furniture for in the past 12 months, May 2017
                      • In-store purchasing still most popular
                        • Figure 8: How they bought furniture in the past year, May 2017
                      • Argos is the most popular for furniture purchases
                        • Figure 9: Where they shopped for furniture in the past year, May 2017
                      • IKEA shoppers love the in-store displays
                        • Figure 10: Satisfaction with furniture retailers, May 2017
                      • 60% visit stores to carry out research
                        • Figure 11: Sources used to research furniture ideas, May 2017
                      • Two thirds interested in space-saving solutions
                        • Figure 12: Attitudes towards shopping for furniture, May 2017
                      • What we think
                      • Issues and Insights

                        • Challenging times ahead for the furniture sector
                          • The facts
                            • The implications
                              • Could Amazon ever make significant inroads into the furniture sector?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Growth has slowed and challenges lie ahead
                                      • Living/dining room accounts for 40% of all furniture spending
                                        • A sector dominated by specialists
                                          • Mixed blessings in the wider economy
                                          • Market Size and Forecast

                                            • Growth has slowed since peaking in 2014
                                              • Challenging times ahead
                                                • Inflation pushing up value sales
                                                  • Figure 13: Consumer spend on furniture and furnishings, 2012-22
                                                  • Figure 14: Consumer spending on furniture and furnishings, 2012-22
                                                • Retail sales growth slows in 2016
                                                  • Figure 15: Retail sales of furniture specialists, 2012-2017
                                                • Forecast methodology
                                                • Market Segmentation

                                                  • Living and dining room spending dominates
                                                    • Demand for beds and mattresses more stable
                                                      • Figure 16: Consumer spending on furniture, by segment, 2012-17
                                                  • Channels to Market

                                                    • A sector dominated by the specialists
                                                      • Online specialists still small
                                                        • Figure 17: Estimated channels of distribution for furniture, 2016
                                                    • Market Drivers

                                                      • Number of households on the increase
                                                        • Figure 18: UK households, by size, 2011-21
                                                      • Housing transactions remain strong
                                                        • Figure 19: UK residential property transactions with a value over £40,000, 2012-16
                                                        • Figure 20: Percentage change in residential property transactions over £40,000 in first four months of the year, 2012-17
                                                        • Figure 21: Mortgage approvals for new home purchases, May 2015-April 2017
                                                      • Consumer confidence
                                                        • Figure 22: Trends in how consumers describe their financial situation, December 2015-June 2017
                                                        • Figure 23: Trends in current financial situation compared to a year ago, index, January 2014-June 2017
                                                      • Consumer credit increases steadily
                                                        • Figure 24: Consumer credit excluding student loans, May 2015-April 2017
                                                      • But availability of unsecured household credit looks set to fall
                                                        • Figure 25: Availability of consumer credit to households, Q1 2009-Q1 2017
                                                      • Deflation on furniture in 2016
                                                        • Figure 26: Inflation: annual rate of change, 2007-16
                                                        • Figure 27: Inflation, percentage change over 12 months, April 2016-April 2017
                                                    • Companies and Brands – What You Need to Know

                                                      • IKEA leads a fragmented sector
                                                        • IKEA continues to experience strong growth
                                                          • Mini-stores bring furniture closer to consumers
                                                            • Advertising spend increases 3.9%
                                                              • IKEA enjoys highest levels of trust and differentiation
                                                              • Market Share

                                                                  • IKEA leads in a fragmented sector
                                                                    • Leading non-specialists look well-placed
                                                                      • Figure 28: Leading retailers of furniture, estimated share of all consumer spending on furniture 2016
                                                                  • Competitive Strategies

                                                                    • Reaching urbanites
                                                                      • Still a space for the megastore
                                                                        • Faster delivery options
                                                                          • Digitising the in-store experience
                                                                            • Online bed-in-a-box brands partner with physical retailers
                                                                            • Leading Specialist Retailers

                                                                              • IKEA continues to see strong growth
                                                                                • DFS benefits from co-located stores
                                                                                  • Online sales
                                                                                    • Figure 29: Leading furniture specialists’ sales, 2011/12-2016/17
                                                                                  • Operating profits and margins
                                                                                    • Figure 30: Leading furniture specialists’ operating profits, 2011/12-2016/17
                                                                                    • Figure 31: Leading furniture specialists’ operating margins, 2011/12-2016/17
                                                                                  • Stores and outlet data
                                                                                    • IKEA expansion begins again
                                                                                      • Shrinking to demand
                                                                                          • Figure 32: Leading furniture specialists’ store numbers, 2011/12-2016/17
                                                                                          • Figure 33: Leading furniture specialists’ sales per outlet, 2011/12-2016/17
                                                                                      • Space Allocation Summary

                                                                                          • Furniture – Instore space allocation
                                                                                            • Figure 34: Furniture retailers: summary of estimated in-store space allocation, June 2017
                                                                                          • Detailed space allocation estimates
                                                                                              • Figure 35: Furniture retailers: detailed space allocation estimates, June 2017
                                                                                          • Innovation and Launch Activity

                                                                                            • Mini-stores shows emergence of showroom
                                                                                              • Figure 36: Mini-Habitat
                                                                                            • Urban appeal
                                                                                              • Figure 37: Mini-DFS
                                                                                            • Compact furniture
                                                                                              • Figure 38: Burrow sofa delivery, June 2017
                                                                                            • Connected furniture
                                                                                              • Figure 39: IKEA’s TRÅDFRI range, June 2017
                                                                                            • Visual search tool
                                                                                              • Figure 40: Sofasizer search engine
                                                                                            • Augmented and virtual reality
                                                                                              • Hangover café
                                                                                                • Figure 41: Matt Sleeps’ hangover café
                                                                                            • Advertising and Marketing Activity

                                                                                              • Advertising slightly increases since last year
                                                                                                • Figure 42: Total above-the line, online display and direct mail advertising expenditure on furniture, 2013-16
                                                                                              • DFS continues to lead advertising spend
                                                                                                • Figure 43: Above-the line, online display and direct mail advertising expenditure on furniture, by retailer, 2013-16
                                                                                                • Figure 44: Share of total above-the line, online display and direct mail advertising expenditure on furniture, by retailer, 2016
                                                                                              • Television dominates advertising expenditure
                                                                                                • Figure 45: Above-the line, online display and direct mail advertising expenditure on furniture, by media type, 2016
                                                                                              • Leading advertisers even more focused on TV
                                                                                                • Figure 46: Above-the line, online display and direct mail advertising expenditure on furniture, by leading retailer and media type, 2016
                                                                                              • Campaign highlights
                                                                                                • IKEA’s Wonderful Everynight
                                                                                                  • Dreams emphasises customer service
                                                                                                    • DFS reflects on quality
                                                                                                      • Sofology appeals to those in smaller dwellings
                                                                                                        • Nielsen Ad Intel coverage
                                                                                                        • Brand Research

                                                                                                            • Brand map
                                                                                                              • Figure 47: Attitudes towards and usage of selected brands, May 2017
                                                                                                            • Key brand metrics
                                                                                                              • Figure 48: Key metrics for selected brands, May 2017
                                                                                                            • Brand attitudes: IKEA seen as most innovative
                                                                                                              • Figure 49: Attitudes, by brand, May 2017
                                                                                                            • Brand personality: ScS considered unappealing and boring
                                                                                                              • Figure 50: Brand personality – Macro image, May 2017
                                                                                                            • Dreams and DFS regarded as reliable and authoritative
                                                                                                              • Figure 51: Brand personality – Micro image, May 2017
                                                                                                            • Brand analysis
                                                                                                              • IKEA stands out from the crowd
                                                                                                                • Figure 52: User profile of IKEA, May 2017
                                                                                                              • Dreams is relied upon to deliver a great experience
                                                                                                                • Figure 53: User profile of Dreams, May 2017
                                                                                                              • Oak Furniture Land enjoys a strong brand image
                                                                                                                • Figure 54: User profile of Oak Furniture Land, May 2017
                                                                                                              • DFS appeals to a broader demographic
                                                                                                                • Figure 55: User profile of DFS, May 2017
                                                                                                              • ScS struggles to define itself
                                                                                                                • Figure 56: User profile of ScS, May 2017
                                                                                                            • The Consumer – What You Need to Know

                                                                                                              • 62% of consumers bought furniture in the past year
                                                                                                                • Living rooms the most popular to buy for
                                                                                                                  • In-store purchasing still most popular
                                                                                                                    • Argos the most popular for furniture purchases
                                                                                                                      • IKEA shoppers love the in-store displays
                                                                                                                        • 60% visit stores to carry out research
                                                                                                                          • Two thirds interested in space-saving solutions
                                                                                                                          • Expenditure on Furniture

                                                                                                                            • 62% of consumers bought furniture in the past year
                                                                                                                              • Figure 57: What they spent on furniture in the last 12 months, May 2017
                                                                                                                            • Highest spending by 25-34-year-olds
                                                                                                                              • Figure 58: What they spent on furniture in the past year, by age group, May 2017
                                                                                                                            • Highest spend reserved for homeowners
                                                                                                                              • Figure 59: What they spent on furniture in the last year, by housing tenure, May 2017
                                                                                                                            • Highest spenders prefer to order in-store
                                                                                                                              • Figure 60: What they spent on furniture in the last year, by how they shopped for furniture in the last year, May 2017
                                                                                                                          • Rooms They Buy For

                                                                                                                            • Living room the most popular to buy for
                                                                                                                              • Figure 61: Rooms they bought furniture for in the past 12 months, May 2017
                                                                                                                            • 57% of homeowners buy for more than one room in first three years
                                                                                                                              • Figure 62: Repertoire analysis of rooms that homeowners bought furniture for in the last 12 months, by how long they have lived in their current home, May 2017
                                                                                                                          • How They Buy Furniture

                                                                                                                            • In-store purchasing still most popular
                                                                                                                                • Figure 63: How they bought furniture in the past year, May 2017
                                                                                                                              • In-store preferred for larger purchases
                                                                                                                                • Figure 64: How they shopped for furniture, by how much they spent, May 2017
                                                                                                                              • Online purchasing helps reach rural customers
                                                                                                                                • Figure 65: How they shopped for furniture in the past year, by where they live, May 2017
                                                                                                                              • Londoners most likely to visit stores
                                                                                                                                • Figure 66: Furniture shoppers making a purchase in-store, by where they live, May 2017
                                                                                                                            • Where They Buy Furniture

                                                                                                                              • Argos is the most popular furniture retailer
                                                                                                                                • Amazon’s dominance makes it popular for small purchases
                                                                                                                                  • Long tail of furniture retailers
                                                                                                                                    • Figure 67: Where they shopped for furniture in the past year, May 2017
                                                                                                                                  • Amazon and Argos appeal to the less affluent
                                                                                                                                    • Figure 68: Where they shop for furniture, by age and affluence, May 2017
                                                                                                                                  • Furniture Village appeals to financially comfortable consumers
                                                                                                                                    • Figure 69: Where they shopped, by financial confidence index, May 2017
                                                                                                                                  • Majority of consumers stick to a single retailer
                                                                                                                                    • Figure 70: Repertoire of retailers used to shop for furniture in the past year, May 2017
                                                                                                                                  • The young are most likely to shop around
                                                                                                                                    • Figure 71: Repertoire of retailers used to shop for furniture in the past year, by age group, May 2017
                                                                                                                                  • B&Q and John Lewis used alongside others
                                                                                                                                    • Figure 72: Repertoire of retailers used to shop for furniture in the past year, by where they shopped for furniture, May 2017
                                                                                                                                  • IKEA and Argos attract majority of spend
                                                                                                                                    • Figure 73: Where they spent the most on furniture in the past 12 months, May 2017
                                                                                                                                  • Two thirds of IKEA shoppers spent the most with the retailer
                                                                                                                                    • Figure 74: Proportion of those that shopped at each retailer for furniture who said it was the retailer they spent the most with, May 2017
                                                                                                                                • Satisfaction with Furniture Retailers

                                                                                                                                    • Overall satisfaction is high
                                                                                                                                      • Figure 75: Satisfaction with furniture retailers, May 2017
                                                                                                                                    • IKEA shoppers enjoy the range and displays
                                                                                                                                      • Figure 76: Satisfaction of IKEA furniture shoppers compared to the average, May 2017
                                                                                                                                    • Argos strong for ease of returns
                                                                                                                                      • Figure 77: Satisfaction of Argos furniture shoppers compared to the average, May 2017
                                                                                                                                    • Cost and speed of delivery helps Amazon stand out
                                                                                                                                      • Figure 78: Satisfaction of Amazon furniture shoppers compared to the average, May 2017
                                                                                                                                    • DFS shoppers love personalisation options
                                                                                                                                      • Figure 79: Satisfaction of DFS furniture shoppers compared to the average, May 2017
                                                                                                                                  • Key Driver Analysis

                                                                                                                                    • Quality has the greatest correlation with overall satisfaction
                                                                                                                                        • Figure 80: Correlation (R) values with overall satisfaction key driver output, May 2017
                                                                                                                                    • Sources Used to Research Furniture Ideas

                                                                                                                                      • Furniture stores as showrooms
                                                                                                                                        • Figure 81: Sources used to research furniture ideas, May 2017
                                                                                                                                      • Blogs and social media preferred by the young
                                                                                                                                          • Figure 82: Sources used to research furniture ideas, by age and socio-economic group, May 2017
                                                                                                                                        • Offline sources still slightly more popular
                                                                                                                                          • Figure 83: Offline and online sources used to research furniture ideas, by where they purchased furniture in the last 12 months, May 2017
                                                                                                                                        • Over half of Amazon shoppers research in-store
                                                                                                                                          • John Lewis shoppers love magazines and exhibitions
                                                                                                                                            • Figure 84: In-store sources used to research furniture ideas, by where they bought furniture in the last 12 months, May 2017
                                                                                                                                          • Retailer websites most popular online source
                                                                                                                                            • John Lewis and DFS shoppers most engaged on social media
                                                                                                                                              • Figure 85: Online sources used to research furniture ideas, by where they bought furniture in the last 12 months, May 2017
                                                                                                                                            • John Lewis shoppers draw on the highest number of sources
                                                                                                                                              • Figure 86: Repertoire of sources used to research furniture ideas, by where they shopped for furniture in the last 12 months, May 2017
                                                                                                                                          • Attitudes towards Shopping for Furniture

                                                                                                                                            • Quality is crucial for furniture shoppers
                                                                                                                                              • Two thirds interested in space-saving solutions
                                                                                                                                                • Influentials guide choice
                                                                                                                                                  • Alternative realities
                                                                                                                                                    • Figure 87: Attitudes towards shopping for furniture, May 2017
                                                                                                                                                  • The young and affluent expect faster delivery
                                                                                                                                                    • Figure 88: Attitudes towards shopping for furniture, by age and affluence, May 2017
                                                                                                                                                  • DFS shoppers think British-made is important
                                                                                                                                                    • Figure 89: Attitudes of DFS shoppers, May 2017
                                                                                                                                                  • Space-saving appeals to IKEA shoppers
                                                                                                                                                    • Figure 90: Attitudes of IKEA shoppers, May 2017
                                                                                                                                                  • John Lewis shoppers are passionate about furniture
                                                                                                                                                    • Figure 91: Attitudes of John Lewis shoppers, May 2017
                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                    • Abbreviations
                                                                                                                                                      • Consumer research methodology
                                                                                                                                                      • Appendix – Key Driver Analysis

                                                                                                                                                          • Methodology
                                                                                                                                                              • Figure 92: Overall satisfaction with furniture retailers – Key driver output, July 2017
                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                            • Forecast methodology
                                                                                                                                                                • Figure 93: Best and worst case table for market forecast, 2017-22

                                                                                                                                                            Companies Covered

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

                                                                                                                                                            Furniture Retailing - UK - July 2017

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