Executive Summary
The household furniture market in the UK was worth an estimated £4.6bn in 2010, a decline of nearly 40% over the last 5 years and nearly half the value of 2007 levels. This dramatic decline follows a period of unprecedented growth within the industry and is a reflection of the industry’s close ties with the health of the economy and consumer spending. Its fate, as such, closely mirrors that of the real estate market.
Although highly fragmented and comprising many small manufacturers and independent retailers, the UK household furniture market is dominated by a small number of large multi-chain retailers, the result of considerable merger and acquisition activity in recent years. The barrier to entry into the industry is relatively low, as witnessed by a considerable number of department stores and supermarkets which have penetrated the market in recent years and, as a result, competition is fierce.
The UK furniture manufacturing industry is a large and mature sector of UK industry. In 2010, there were an estimated 6,370 furniture manufacturing businesses based within the UK. The vast majority of furniture sold in the UK is destined for the retail market, although government ministries, offices and hotel chains are also significant contract end-users.
Many furniture companies experienced financial difficulties and/or were forced to close as a result of the downturn in the economy which began in 2008 in the UK. Domestic manufacturers are also increasingly coming under pressure due to the popularity of low-cost imports, with many retailers and wholesalers now preferring to source products from overseas.
Continued under-par economic growth and uncertainty in the housing market is likely to undermine sales growth for the furniture industry during the 5-year forecast period. Consumer spending is expected to remain subdued, as household budgets shrink as a result of rising inflation, increased tax burdens and rising costs of food and petrol. This, compounded by uncertainty surrounding job prospects, means that in the foreseeable future, the household furniture market is unlikely to attain levels of turnover comparable to those seen prior to the recession.
Despite this gloomy outlook, there are also a number of opportunities which may help the industry to buck this trend. For example, the growing trend towards single-person households will increase demand for different types of furniture, specifically smaller, multifunctional and space-saving items; while the demand for occasional furniture may also increase, as dining becomes more of a casual affair; and finally, the growing trend towards working from home is expected to continue to increase demand for home-office furniture.
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