Living- and Dining-room Furniture - UK - November 2003

SUMMARY

This report examines developments in the retail living and dining room furniture sector, last investigated by Mintel in November 2001. Retail value sales of living and dining room furniture are sizeable, worth an estimated ?2.29 billion in 2003 and up by 4% on 1998. Despite its size, the sector has been subject to considerable price pressures in recent years, resulting from a combination of retailer price-cutting activity and the rising level of lower-cost imports.

Living room furniture is the larger of the two sectors, with the upholstered segment the larger of the living room sector and the one that has suffered most from price erosion. The non-upholstered segment, while much smaller, is one in which design and styling are currently benefiting value sales. Turning to the dining room furniture market, this remains under pressure from factors such as more infrequent formal dining, which has contributed to a slight decline in the sector's retail value.

'Living- and Dining-Room Furniture in the UK, 2003' is the latest report from Mintel Market Intelligence, providing a unique investigation into the market's trends, sectors and consumers. Offering you a fresh and extensive insight into:

• The extent to which the buoyant housing market is acting as a major driver
• The dangers posed to the market by the trend towards smaller house and flats without a separate dining room
• How modest growth in retail value reflects price competition
• The increasing popularity of leather and self-assembly furniture
• How relatively low penetration of self-assembly furniture in this sector in assisting value sales
• A fragmented supply structure
• Robust adspend despite sluggish sales
• The growing market share of furniture multiples
• The strength of consumer interest in furniture purchases
• How the market's future remains full of challenges
• Why the pressure on prices and margins is not expected to disappear
• settees, sofa beds and easy chairs
• modular seating, designed to be positioned together to form a variety of seating arrangements.
• dining room tables and chairs, sold separately or in sets
• wall storage and divider units
• sideboards and dressers
• coffee and other occasional tables
• bookcases
• home entertainment storage units.

TABLE OF CONTENTS

Introduction and Abbreviations

• Definitions
• Consumer research
• ACORN

Abbreviations

Executive Summary

• Buoyant housing market acts as a major driver
• Modest growth in retail value reflects price competition
• Increasing popularity of leather and self-assembly furniture
• Dining room furniture proving a challenge
• Supply remains fragmented
• Adspend remains robust despite sluggish sales
• Furniture multiples increasingly capture market share
• Consumer interest in furniture purchases remains generally strong
• Future for the market remains a challenge

Market Drivers

• The greater the number of households, the greater the potential for sales
• Figure 1: UK housing stock, by tenure, 1998-2007
• Household size and the importance of families
• Figure 2: Indexed trends in UK household size, 1998-2007
• Buoyant housing market also helpful
• Figure 3: Number of UK household transactions, 1998-2007
• Growth in discretionary income encourages purchase
• Figure 4: Trends and projections in PDI, consumer expenditure and savings ratio, 1998-2007
• Middle-aged buyers - an emerging sector within the market
• Figure 5: Trends and projections in the UK population, by age group 15+, 1998-2007
• Consumer interest in home improvement remains strong
• Warm summers can depress demand
• Lifestyle changes - creating ripples within the market
• Effects of competition within the market

Market Size and Trends

• Living and dining room furniture dominate expenditure in the sector
• Figure 6: UK retail sales of furniture, by type and value, 2000 and 2002
• Limited growth of living and dining room furniture
• Figure 7: UK retail sales of living and dining room furniture, by value, 1998-2003
• Upholstered and dining room furniture: a fall in value
• Figure 8: UK retail sales of living and dining room furniture, by type and value, 2000 and 2002

Market Segmentation

Living room furniture

• Sales performance remains sluggish in face of competitive pressures
• Figure 9: UK retail sales of living room furniture, by value, 1998-2003
• Non-upholstered posts stronger growth in sales
• Figure 10: UK retail sales of upholstered and non-upholstered living room furniture, by value, 2000 and 2002
• Price competition hits value of upholstered
• Fabric sales suffer from rising affordability of leather
• Figure 11: UK retail sales of living room upholstered furniture, by type and value, 2000 and 2002

Dining room furniture

• Dining room furniture sales in decline
• Figure 12: UK retail sales of dining room furniture, by value, 1998-2003
• Method of assembly
• Figure 13: UK retail sales of living and dining room furniture, by method of assembly and value, 2000 and 2002

The Supply Structure

Production and trade

• A highly fragmented market
• Figure 14: UK retail sales of living and dining room furniture, by manufacturer and value, 2000 and 2002

Companies and brands

• Christie-Tyler Furniture Group
• DFS
• Ercol Furniture
• IKEA
• MFI Furniture Group
• Silentnight Holdings
• Others

Advertising and Promotion

• Use of above-the-line advertising remains strong
• Figure 15: Main monitored media advertising expenditure on living and dining room furniture, 1998-2003
• Major retailers dominate advertising expenditure
• Figure 16: Main monitored media advertising expenditure on living and dining room furniture, by five highest-spending suppliers, 2000-02
• Adspend according to media channel
• Figure 17: Main monitored media advertising expenditure on living and dining room furniture, by media channel, 1998-2002

Distribution

• Multiples increasingly steal share
• Figure 18: UK retail sales of living and dining room furniture, by type of outlet and value, 2000 and 2002

Selected leading multiples

• IKEA
• MFI Group
• DFS Furniture Company
• Courts
• SCS Upholstery
• Heal's
• Furnitureland
• Land of Leather
• Furniture Village
• Multiyork
• Kingdom of Leather
• Reid Furniture
• House of Fraser
• Selected other outlets

The Consumer Ownership and Future Purchase

• Ownership of living and dining room furniture
• Figure 19: Ownership of living and dining room furniture, 1998-2003
• Figure 20: Ownership of living and dining room furniture, by gender, age and socio-economic group, 2003
• Figure 21: Ownership of living and dining room furniture, by region, 2003
• Figure 22: Ownership of living and dining room furniture, by lifestage and presence of children, 2003
• Figure 23: Ownership of living and dining room furniture, by household size, ownership and length of tenure, 2003
• Purchase in last 12 months skewed towards under-35s
• Figure 24: Living and dining room furniture bought new in the last 12 months, 1998-2003
• Figure 25: Living and dining room furniture bought new in the last 12 months, by gender, age and socio-economic group, 2003
• Figure 26: Living and dining room furniture bought new in the last 12 months, by region, 2003
• Figure 27: Living and dining room furniture bought new in the last 12 months, by lifestage and presence of children, 2003
• Figure 28: Living and dining room furniture bought new in the last 12 months, by household size, ownership and length of tenure, 2003
• Expenditure on living and dining room furniture
• Figure 29: Expenditure on lounge/living room furniture purchased in the last 12 months, 1998-2003
• Figure 30: Expenditure on dining room tables and chairs purchased in the last 12 months, 1998-2003
• Figure 31: Expenditure on other dining room furniture purchased in the last 12 months, 1998-2003
• Living and dining room furniture is a relatively high priority
• Figure 32: Furniture purchasing plans for the next 12 months, June 2001 and April 2003
• Abs and dining room furniture
• Figure 33: Purchasing of living and dining room furniture in the next 12 months, by gender, age and socio-economic group, April 2003
• The importance of families
• Figure 34: Purchasing of living and dining room furniture in the next 12 months, by presence of children, lifestage and Mintel's Special Groups, April 2003
• Tenants as purchasers
• Figure 35: Purchasing of living and dining room furniture in the next 12 months, by home ownership, household size and length of tenure, April 2003
• Storage space a factor in London
• Figure 36: Purchasing of living and dining room furniture in the next 12 months, by region and ACORN category, April 2003
• Figure 37: Purchasing of living or dining room furniture in the next 12 months, by media usage, April 2003

The Future

• Market drivers remain generally positive...
• ...despite market's fixation with price
• Greater role for design
• Multi-functionality set to proliferate
• Retail consolidation at a pace

Forecast

• Limited growth in retail value forecast to 2007
• Figure 38: Forecast of the UK living and dining room furniture market, by value, 2003-07
• Living room furniture will remain dominant
• Space to become more of an issue
• Dining room furniture set to struggle
• Factors used in the forecast

Appendix: Research Methodology