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Household Furniture Market Report 2008
Key Note Publications Ltd, June 2008, Pages: 109
The household furniture market in the UK was worth an estimated £10.32bn in 2007, having shown strong growth over the past 5 years (2003 to 2007). This reflects the strength of the economy, the housing market and consumer spending over this period. However, growth slowed markedly in the final quarter of 2007, reflecting the impact of the `credit crunch' and heightened consumer concern about the outlook for the industry.
The market can be split into five main sectors: living room furniture; bedroom furniture; kitchen furniture; dining room furniture; and other furniture. The other furniture sector includes home-office; conservatory; and bathroom furniture.
Living room furniture accounts for the largest sector of the market in terms of sales value, although its overall share has fallen as people increase spending on bedroom and other furniture. Consumers are spending more on beds, reflecting the growing awareness of the importance of a good night's sleep to overall health, while the increasing number of people who work from home is driving sales in the other furniture sector.
The UK furniture manufacturing industry is a large and mature sector of the UK economy. Government ministries, offices and hotel chains are significant contract end-users of furniture. However, the vast majority of furniture sold in the UK is destined for the retail market. Retailers have enjoyed boom conditions over the past 5 years, with strong economic growth and low unemployment supporting strong consumer spending. However, domestic manufacturers are coming under increasing pressure from low-cost imports, as retailers and wholesalers increasingly source products on a global basis.
The multiple furniture chains have an increasing grip on the retail market for furniture, and most homes in the UK are now within 10 miles of at least one of these outlets. However, small shops continue to prosper, with growing interest in furniture and design — stimulated by the plethora of home makeover and property shows on television — apparently boosting demand for bespoke products (notably kitchens and bathrooms, which tend to be supplied by small, independent outlets).
The value of the household furniture market is likely to fall in 2008, with the impact of the economic slowdown, a slump in property sales and the `credit crunch' affecting consumer confidence and spending. Furthermore, Key Note anticipates that sales will only grow marginally in 2009 as economic growth and property sales remain sluggish.
It will take some time before confidence in credit markets and the housing market are fully restored, while the poor state of government finances suggest that significant increases in public spending and/or tax cuts can be ruled out for some time. In addition, consumer spending will remain under pressure from a relatively high tax burden and rapid increases in living costs as fuel and food prices come under further upward pressure. These pressures, combined with the intensively competitive nature of the market, also suggest that retailers will have little pricing power, a factor that will also undermine sales growth.
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