Furniture Retailing - UK - August 2012

“When retailers start discounting they get a rush of new business, but continued use of the same tactics quickly becomes tired and less effective. Today’s best furniture retailers are using a more innovative range of techniques to inspire customers buy through understanding their lifestyles, style aspirations and having a clear grasp of how different consumers perceive value for money.”

– Jane Westgarth, Senior Market Analyst

Some questions answered in this report include:

How important is online retailing in furniture?
What impact will online shopping have on conventional shops?
How will furniture specialists compete against the major non-specialists?
Is online discounting stripping the profit out of retailing?
Are efforts to improve environmental credentials providing a competitive advantage?

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Executive Summary
Furniture Retailing: At a Glance
Infographic Overview
Issues in the Market
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Consumer Attitudes and Behaviour
Market data
Competitive analysis
Risks and Opportunities
What’s Next
Market Trends

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Introduction
- Definitions
- Abbreviations
Executive Summary
- The market
  - Figure 1: UK consumer spending on furniture, by category, 2011
  - Figure 2: Consumer expenditure on furniture, 2007-17
- Market factors
  - Figure 3: Number of residential UK property transactions with a value of £40,000 or above – seasonally adjusted, Q1 2006-Q1 2012
- Companies, brands and innovation
  - Figure 4: UK retail sales of furniture, by channel of distribution, 2011
  - Figure 5: Market shares by value, major retailers, 2011
- The consumer
  - Figure 6: Furniture purchases made in the last three years, June 2012
- - Figure 7: Intention to purchase furniture in the next 12 months, June 2012
- - Figure 8: Retailers (top ten responses) used for furniture purchases, in-store and online, June 2012
  - Figure 9: Attitudes towards shopping online for furniture, June 2012
- - Figure 10: Factors influencing choice of retailer (top seven responses) used for furniture purchases, June 2012
  - Figure 11: Customer target groups, by factors influencing choice of retailer, June 2012
- What we think
Issues in the Market
- How important is online retailing in furniture?
- What impact will online shopping have on conventional shops?
- How will furniture specialists compete against the major non-specialists?
- Is online discounting stripping the profit out of retailing?
- Are efforts to improve environmental credentials providing a competitive advantage?
Trend Applications
- Trend: Sense of the Intense
- Trend: Collective Intelligence
- 2015 trend: Old Gold
Economic and Demographic Context
- Key points
- Downturn in purchasing activity
  - Figure 12: Purchasing activity for furniture by category, 2007 and 2011
- Purchasing activity by category
  - Figure 13: Purchasing activity, percentage of household buying furniture in the last 12 months by category, 2011
- What’s happening to prices?
  - Figure 14: Furniture and furnishings, CPI, percentage annual change, April 2011-April 2012
- Sustainability
- Furniture re-use network
Broader Market Environment
- Key points
- Slow housing market
  - Figure 15: Number of residential UK property transactions with a value of £40,000 or above – seasonally adjusted, Q1 2006-Q1 2012
- The feelgood factor
  - Figure 16: Annual change in UK house prices, January 2005-July 2012
  - Figure 17: housing equity withdrawal, 2005 Q1-2011 Q4
- Exchange rates
  - Figure 18: Trends in exchange rates between the US Dollar and euro and Sterling, monthly average – Jan 2009-May 2012
- More homes will help boost demand
  - Figure 19: UK households, by size, 2007-17
- More homes but fewer rooms
  - Figure 20: Number of different types of room in the home, 2007-11
- More families positive news for furniture retailers
  - Figure 21: Trends in the age structure of the UK population, 2007-17
- Growth in ABs positive for furniture
  - Figure 22: Forecast adult population trends, by socio-economic group, 2007-17
- Interest in the home
  - Figure 23: Agreement with selected lifestyle statements, 2007-11
- 25-34s are home-centric
- Putting a price on the environment
  - Figure 24: Trends in agreement with attitudinal statements relating to the home, 2007-12
Consumer Spending on Furniture for the Home
- Key points
- Flat sales of furniture over five years
  - Figure 25: UK consumer spending on furniture, 2007-17
- How the market breaks down
  - Figure 26: UK consumer spending on furniture, by category, 2011
- How spending has changed over 2007-11
  - Figure 27: UK consumer spending on furniture, by category, 2007-11
- Shift to smaller homes
- Home office
- Kitchen refits
- Bathrooms bottom of the priorities
- Outlook more depressed conditions
- - Figure 28: Consumer expenditure on furniture, 2007-17
Sector Size
- Key points
  - Figure 29: Furniture and lighting specialists’ sales, 2007-11
- Falling share of retail sales
  - Figure 30: Furniture and lighting specialists as a percentage of all retail sales, 2007-11
- Outlook
Strengths and Weaknesses in the Market
- Strengths
- Weaknesses
Competitive Context
- Key points
- Consumer spending on products for the home
  - Figure 31: UK consumer spending on selected home products, 2007-11
- Spending priorities
  - Figure 32: What extra money is spent on, May 2010-May 2012
Who’s Innovating?
- Key points
- Popular votes for furniture
- Tie ups with re-use networks
- Designer ranges for M&S
- Laura Ashley – try before you buy
Channels of Distribution
- Key points
- Furniture specialists lose share of all retailing
  - Figure 33: Furniture retailer sales as a percentage of all retail sales, 2007-11
  - Figure 34: UK retail sales of furniture, by channel of distribution, 2007-11
- Shock to the market when MFI closed
- DIY stores grow kitchen and bathroom sales
- Online furniture sales
- How much furniture is bought online?
  - Figure 35: Shopping patterns for major appliances and furniture – ABs vs all, November 2011
- - Figure 36: Retailers used for online purchases (top ten responses), June 2012
- Visits to websites of selected furniture specialists
  - Figure 37: Leading furniture store retail websites, three-month average to April 2012
- Online shopping for goods for the home
  - Figure 38: Consumer spending on home goods and home goods online, 2007-11
Space Allocation Analysis
- - Figure 39: Major furniture retailers: summary space allocation, June 2012
  - Figure 40: Furniture retailers: detailed space allocations, June 2012
Retail Product Mix
- - Figure 41: Furniture retailers: estimated sales breakdown, 2011
  - Figure 42: Furniture retailers: Summary sales breakdown, 2012
Retail Competitor Analysis
- Key points
- Leading furniture specialists
- IKEA dominates
- Upholstery wars
- Steinhoff streamlines fascia
- Expansion too stretching for Dreams?
- Who has picked up MFI’s business?
- Bathstore struggling in tight market conditions
- Furniture Village
  - Figure 43: Leading UK furniture retailers, 2011/12
- Leading non-specialist and non-store retailers
- John Lewis
- Next UK
- Marks & Spencer
- Argos
- - Figure 44: Argos: Space allocation, June 2012
  - Figure 45: Argos: Space allocation, June 2012
  - Figure 46: Argos: Estimated furniture sales breakdown, 2011
- Homebase
- - Figure 47: Homebase: Space allocation, June 2012
  - Figure 48: Homebase: Detailed space allocation, June 2012
- - Figure 49: Homebase: Estimated furniture sales breakdown, 2011
- B&Q
- Laura Ashley
- Other retailers
- Difficult trading conditions prove devastating for some
- Furniture retail failures from mid-2011-12
- Major company casualties
- Another chain in trouble in 2011:
- Pre-pack deal for World of Sofas
- Troubled year for independents
  - Figure 50: Selected furniture retail administrations and closures, mid 2011-12
- Companies closing stores (2011-12)
- Positive furniture retail news
- New retailers entering the market/growing
Market Shares
- Key points
- Market shares by retailer
  - Figure 51: Market shares by value, major retailers, 2007-11
Advertising and Promotion
- Key points
- Advertising spend on furniture
  - Figure 52: Main media advertising expenditure on furniture and furnishings, 2007-11
- Who are the largest advertisers?
  - Figure 53: Main media advertising expenditure on furniture and furnishings, 2011
- Advertising spend by the top ten
  - Figure 54: Main media advertising expenditure on furniture and furnishings, by top 10 advertisers, 2007-11
  - Figure 55: Selected retailers’ advertising as a percentage of turnover, 2011
- Advertising expenditure by media
  - Figure 56: Main media advertising expenditure on furniture and furnishings, by media type, 2007-11
- How the year shapes up
  - Figure 57: Main media advertising expenditure on furniture and furnishings, by month, 2011
Brand Research
- Brand map
- - Figure 58: Attitudes towards and usage of brands in the furniture retailing sector, May 2012
- Correspondence analysis
- Brand attitudes
  - Figure 59: Attitudes by furniture retailing brand, May 2012
- Brand personality
  - Figure 60: Furniture retailing brand personality – macro image, May 2012
  - Figure 61: Furniture retailing brand personality – micro image, May 2012
- Brand experience
  - Figure 62: Furniture retailing brand usage, May 2012
  - Figure 63: Satisfaction with various furniture retailing brands, May 2012
- - Figure 64: Consideration of furniture retailing brands, May 2012
  - Figure 65: Consumer perceptions of current furniture retailing brand performance, May 2012
- - Figure 66: Furniture retailing brand recommendation – Net Promoter Score, May 2012
- Brand index
  - Figure 67: Furniture retailing brand index, May 2012
  - Figure 68: Furniture retailing brand index vs. recommendation, May 2012
- Target group analysis
  - Figure 69: Target groups, May 2012
- - Figure 70: Furniture retailing brand usage, by target groups, May 2012
- Group One – Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – Individualists
The Consumer – Purchasing Patterns for Furniture
- Key points
- How the socio-economic groups vary
  - Figure 71: Purchasers of furniture by category, by socio-economic group, 2011
- How buying furniture changes with age group
  - Figure 72: Purchasers of furniture by category, by age group, 2011
- The new baby effect
  - Figure 73: Purchasers of furniture by category, by age of children, 2011
- Three in ten adults have not bought furniture
- What consumers bought
  - Figure 74: Repertoire of furniture purchases or intentions to buy, June 2012
- - Figure 75: Furniture purchases made in the last three years, June 2012
- What they plan to buy
  - Figure 76: Intention to purchase furniture in the next 12 months, June 2012
The Consumer – Where They Shopped
- Key points
- Where consumers shopped for furniture
- Which retailers have the highest percentage of online shoppers?
  - Figure 77: Retailers used for furniture purchases, in-store and online, June 2012
- Argos is an online leader
- IKEA captures 85% of purchases via its shops
- John Lewis forges ahead online
- General retailers using online to expand reach
- Demographic profiles of big named groups
  - Figure 78: Shopper profile for furniture, selected retailers, by age and socio-economic group, June 2012
- Does the online profile differ?
  - Figure 79: Argos, in-store vs online shoppers for furniture, June 2012
- - Figure 80: Shopper profile for furniture, Argos and IKEA, by age and socio-economic group, June 2012
- People who shopped in-store
  - Figure 81: Retailers used by those who bought in-store (top ten responses), June 2012
- IKEA and Argos shops out in front
- DIY shops high up the ranking
- The march of the grocery multiples
- How the specialists fare
- John Lewis in the top ten
- Argos leads the way online
  - Figure 82: Retailers used for online purchases (top ten responses), June 2012
The Consumer – Attitudes Towards Shopping Online
- Key points
- Attitudes towards shopping online
  - Figure 83: Attitudes towards shopping online for furniture, June 2012
- They turn to the internet first
- Convenience is king
- Learning from the experience of others
- Easier to search out a better deal
- What are the negatives about shopping online?
- What the qualitative survey reveals
The Consumer – Factors Influencing Choice of Retailer
- Key points
- What influences their choice of retailer?
  - Figure 84: Factors influencing choice of retailer, June 2012
- 86% want a generous discount
- A complex decision process
- How attitudes shape choice of retailer
The Consumer – Target Groups
- - Figure 85: Customer target groups, by factors influencing choice of retailer, June 2012
- Take-home Furnishers (22%)
- - Figure 86: Factors influencing choice of retailer, Take-home Furnishers, June 2012
- - Figure 87: Retailers used, top ten, in-store and online, Take-home Furnishers, June 2012
- - Figure 88: Attitudes towards shopping online for furniture, Take-home Furnishers, June 2012
- Furniture Fans (29%)
- - Figure 89: Factors influencing choice of retailer, Furniture Fans, June 2012
- - Figure 90: Retailers used, top ten, in-store and online, Furniture Fans, June 2012
- - Figure 91: Attitudes towards shopping online for furniture, Furniture Fans, June 2012
- Underwhelmed Furnishers (21%)
- - Figure 92: Factors influencing choice of retailer, Underwhelmed Furnishers, June 2012
- - Figure 93: Retailers used, top ten, in-store and online, Underwhelmed Furnishers, June 2012
- - Figure 94: Attitudes towards shopping online for furniture, Underwhelmed Furnishers, June 2012
- Comfortably settled (28%)
- - Figure 95: Factors influencing choice of retailer, Comfortably Settled, June 2012
- - Figure 96: Retailers used, top ten, in-store and online, Comfortably Settled, June 2012
- - Figure 97: Attitudes towards shopping online for furniture, Comfortably Settled, June 2012
Retailer Profiles
- DFS
- - Figure 98: DFS financial performance, 2007-11
- - Figure 99: DFS outlet data, 2007-11
- Dreams
- - Figure 100: Dreams financial performance, 2006-10
- - Figure 101: Dreams outlet data, 2007-11
- Sharps
- Dwell
- - Figure 102: Dwell financial performance, 2007-11
- - Figure 103: Dwell outlet data, 2007-11
- IKEA
- - Figure 104: IKEA financial performance, 2007-11
- - Figure 105: IKEA UK outlet data, 2007-11
- - Figure 106: IKEA: Space allocation, June 2012
  - Figure 107: IKEA: Space allocation, June 2012
- - Figure 108: IKEA: Estimated sales breakdown, 2011
- Nobia (UK) (inc Magnet)
- - Figure 109: Nobia (UK) group financial performance, 2007-11
- - Figure 110: Nobia (UK) outlet data, 2007-11
- Furniture Village
- - Figure 111: Furniture Village, financial performance, 2007-11
- - Figure 112: Furniture Village, store numbers, 2007-11
- - Figure 113: Furniture Village: Space allocation, June 2012
  - Figure 114: Furniture Village: Detailed space allocation, June 2012
- - Figure 115: Furniture Village: Estimated sales breakdown, 2011
- ScS
- - Figure 116: ScS, financial performance, 2007-11
  - Figure 117: ScS outlet data, 2007-11
- - Figure 118: ScS typical store exterior, 2012
- - Figure 119: ScS: Space allocation, June 2012
  - Figure 120: ScS: Estimated sales breakdown, 2011
- Steinhoff UK
- - Figure 121: Steinhoff UK holdings ltd financial performance, 2007-11
- - Figure 122: Steinhoff business summary, 2012
  - Figure 123: Steinhoff UK holdings ltd outlet data, 2007-11
- - Figure 124: Retail offering and store portfolio of Steinhoff in the UK, May 2011
- Oak Furniture Land
- MFI
Appendix – Internal Market Environment
- - Figure 125: Penetration and purchasing of furniture, by major furniture categories, 2007-11
  - Figure 126: Penetration and purchasing of furniture, by lounge/living room furniture categories, by demographics, 2011
- - Figure 127: Penetration and purchasing of furniture, by dining room furniture categories, by demographics, 2011
  - Figure 128: Penetration and purchasing of furniture, by kitchen furniture (including fitted kitchens) categories, by demographics, 2011
- - Figure 129: Penetration and purchasing of furniture, by bedroom furniture (excluding beds) categories, by demographics, 2011
  - Figure 130: Penetration and purchasing of furniture, by beds furniture categories, by demographics, 2011
Appendix – Broader Market Environment
- - Figure 131: Number of different living rooms including dining rooms in the home, by demographics, 2011
  - Figure 132: Number of different bedrooms in the home, by demographics, 2011
- - Figure 133: Number of different bathrooms in the home, by demographics, 2011
  - Figure 134: Number of different kitchen in the home, by demographics, 2011
- - Figure 135: Selected lifestyle statements, by demographics, 2011
  - Figure 136: Retailers used for furniture purchases, in-store and online, June 2012
Appendix – Market Size and Forecast
- - Figure 137: Value sales of furniture by segment, 2007-17
Appendix – Brand Research
- - Figure 138: Brand usage, May 2012
  - Figure 139: Brand commitment, May 2012
- - Figure 140: Brand momentum, May 2012
  - Figure 141: Brand diversity, May 2012
- - Figure 142: Brand satisfaction, May 2012
  - Figure 143: Brand recommendation, May 2012
- - Figure 144: Brand attitude, May 2012
  - Figure 145: Brand image – macro image, May 2012
- - Figure 146: Brand image – micro image, May 2012
  - Figure 147: Profile of target groups, by demographic, May 2012
- - Figure 148: Psychographic segmentation, by target group, May 2012
  - Figure 149: Brand usage, by target group, May 2012
- Brand index
  - Figure 150: Brand index, May 2012
Appendix – The Consumer
- - Figure 151: Penetration and purchasing of furniture, by major furniture categories, 2007-11
Appendix – The Consumer – Purchasing Patterns for Furniture
- - Figure 152: Most popular furniture purchases and purchasing intentions in the last three years, by demographics, June 2012
- - Figure 153: Next most popular furniture purchases and purchasing intentions in the last three years, by demographics, June 2012
- - Figure 154: Most popular furniture purchases and purchasing intend in the next twelve months, by demographics, June 2012
- - Figure 155: Next most popular furniture purchases and purchasing intend in the next twelve months, by demographics, June 2012
Appendix – The Consumer – Where They Shopped
- - Figure 156: Most popular retailers used to buy furniture in the last three years, by demographics, June 2012
- - Figure 157: Next most popular retailers used to buy furniture in the last three years, by demographics, June 2012
- - Figure 158: Other retailers used to buy furniture in the last three years, by demographics, June 2012
- - Figure 159: Least popular retailers used to buy furniture in the last three years, by demographics, June 2012
- - Figure 160: Most popular retailers used to buy furniture in store in the last three years, by demographics, June 2012
- - Figure 161: Next most popular retailers used to buy furniture in in store in the last three years, by demographics, June 2012
- - Figure 162: Other retailers used to buy furniture in in store in the last three years, by demographics, June 2012
- - Figure 163: Retailers used to buy furniture online in the last three years, by demographics, June 2012
Appendix – The Consumer – Attitudes towards Shopping Online
- - Figure 164: Most popular attitudes to shopping for furniture online, by demographics, June 2012
- - Figure 165: Next most popular attitudes to shopping for furniture online, by demographics, June 2012
Appendix – The Consumer – Factors Influencing Choice of Retailer
- - Figure 166: Factors influencing on generous discounts, sales or promotions of retailer, by demographics, June 2012
- - Figure 167: Factors influencing on quick furniture availability of retailer, by demographics, June 2012
- - Figure 168: Factors influencing on helpful, knowledgeable staff of retailer, by demographics, June 2012
- - Figure 169: Factors influencing on interest free credit of retailer, by demographics, June 2012
- - Figure 170: Factors influencing on wide choice of styles, fabrics or finishes of retailer, by demographics, June 2012
- - Figure 171: Factors influencing on self-assembly of retailer, by demographics, June 2012
- - Figure 172: Factors influencing on store displays that give me ideas/inspiration of retailer, by demographics, June 2012
- - Figure 173: Factors influencing on help to visualise the item in my home of retailer, by demographics, June 2012
- - Figure 174: Factors influencing on British-made furniture of retailer, by demographics, June 2012
- - Figure 175: Factors influencing on furniture made in an environmentally friendly way of retailer, by demographics, June 2012
- - Figure 176: Factors influencing on brand names of retailer, by demographics, June 2012
- - Figure 177: Factors influencing on options to choose delivery times of retailer, by demographics, June 2012
Appendix –Target Groups
- - Figure 178: Target groups, by demographics, June 2012