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Home Furnishings Market Report Plus 2009
Key Note Publications Ltd, Jan 2010, Pages: 99
This Market Report examines the home furnishings market, which is divided into the sectors of window dressings; bedding; bathroom and kitchen textiles; cushions and covers; and table linen. Household penetration levels are high, particularly in the largest sectors of curtains and bedding; as such, the industry benefits from growing demand as the number of households in the UK increases. However, as most purchases are made for replacement purposes, they can often be deferred in times of economic slowdown. The global recession sparked by the US sub-prime market has decimated consumer confidence, adversely affected retail spending, caused a slump in the housing market and given rise to high unemployment rates and job insecurity.
Sales of the companies looked at in the 2009 Business Ratio report on Home Furnishing Retailers increased by 18.9% in the 3 years to 7th March 2008, but pre-tax profit fell by 16.4%, and this was before the worst of the recession took a grip on the British high street. A high-profile casualty has been Rosebys Ltd. Once the UK's largest multiple specialist retailer of home furnishings with more than 300 stores, the Indian-owned chain went into administration in September 2008. However, one retailer's misfortune is another's gain, and its competitor Dunelm is benefiting from the demise of Rosebys, as well as that of Woolworths. In September 2009, Dunelm disclosed that sales at stores that had been open at least a year jumped by 16.1% in the 10 weeks to 12th September 2009, compared with a 0.5% fall in the year ending 4th July. The company also said that it planned to create up to 1,000 jobs in its current financial year
In fact, a procession of British retailers have posted better-than-expected sales in recent weeks, while official data have also pointed to a recovery from recession. Meanwhile, the Council of Mortgage Lenders (CML) published figures in July 2009 showing the first material annual growth in the number of loans granted for house purchases since early 2007. This bodes well for the home furnishings market, since moving house is often the catalyst for buying new items. Having said that, Marks & Spencer's `Improve, Don't Move' campaign, instigated in 2009 to encourage people to spruce up their homes, resulted in strong sales of items such as crockery, cushions and soft furnishings. In another concerted effort to improve retail sales of home furnishings, John Lewis has introduced its own bargain Value range as it struggles to keep up with the likes of Tesco, ASDA and IKEA.
Although `green shoots' are perhaps appearing in the UK economy, a full recovery on the high street will be a lengthy process, while unemployment is high and consumer confidence is shaky. Latest figures from National Statistics show a continuing decline in the value of sales of household textiles, and the fact that value-added tax (VAT) is reverting to 17.5% in January 2010, pushing prices up again, may prove an obstacle to growth. Consequently, the authors anticipate a marginal fall of 0.2% in the value of the market for home furnishings over the coming year, as householders continue to rein in their spending on non-essential items and struggling retailers discount heavily.
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