Retail: Furniture
Insights
March 2011
Contents
Home Furniture Summary
•
Total furniture sales are estimated to have declined by 3% in 2008 and 5% in 2009
to a value of just under £11.1 million.
•
Sales were hit badly by the economic downturn over the last few years and
slump in the housing market.
•
There have been some major casualties in the sector, including MFI, Land of
Leather and The Pier, which left a sizable market share for other retailers to pick up.
•
Furniture is an infrequent purchase, with the biggest reasons for buying furniture
being to replace worn out items (38%) or following the redecoration of a room
(33%).
•
IKEA is the most popular choice for furniture over the last three years (31%),
followed by the DIY stores collectively (20%) and Argos (18%).
•
Furniture retailers have big advertising budgets, with £384 million being spent on
advertising in 2009 alone, some 26% of it by DFS.
•
Special offers and discounts influence the choice of stores of just over a third of
adults (35%) and 28% wait for the sales before buying.
•
•
Just under half of adults (49%) say their choice of store is influenced by it having
good quality ranges that will last and 38% want knowledgeable and helpful staff.
A considered approach is taken to purchasing, with 38% visiting a number of stores
in person before buying and big use of the internet as part of the buying process.
Source: Mintel, Furniture Retailing Report, 2011
Furniture Market Size and Forecast
•
Mintel predicts the market will continue to grow YoY, however not reaching levels of
2007 in the next 4 years
•
Late 2009 saw a recovery in furniture sales, but confidence remains fragile and the
incomes squeeze is likely to have a further impact on furniture spending in late 2010
and 2011, although the VAT increase will mean some growth in value in 2011.
UK retail sales of furniture*, 2005-15 Mintel forecast
12,200
12,000
11,800
11,600
£m 11,400
11,200
11,000
10,800
10,600
2005
2006
2007
2008
2009
2010
(est)
2011
(fore)
* Includes living, dining, bedroom, kitchen, bathroom and home office furniture
Source: Mintel, Furniture Retailing Report, 2011
2012
(fore)
2013
(proj)
2014
(proj)
2015
(proj)
Home & Garden Furnishing Search Traffic KPIs
Traffic
• Searches for home & garden generics increased
by +37% between 2009 and 2010
•
Searches for home & garden generic increased by
+15% Oct to Dec 2010 v Oct to Dec 2009.
Insights:
• Sales by DIY retailers in 2010 were £10.9 billion,
down 2% on 2009 (Mintel)
•
Over the last five years there has been a fall of 4
percentage points to about 56% of the adult
population, that's 2 million fewer people
undertaking DIY projects (Mintel)
1. Microsoft Advertising Intelligence Tool
Home & Garden Demographics and Daily Trends
•
Sunday has been the largest traffic driving
day over the last 2 months, followed by
Monday (Boxing Day fell on a Monday)
•
Potential incremental targeting opportunities
would include up-weighting between Sunday
to Wednesday
•
The 35-49 age brackets are the main age
groups for traffic with 32% . 25-34 year olds
are slightly higher than the 50-64 age
bracket with 24% of Search traffic coming
from this age group
•
Gender breakdown slightly favors females
(52%), however 2% of searches the gender
is unknown.
1.Microsoft Advertising Intelligence Tool – December 2010 to Feb 2011 data
Display Advertisement Publisher Location: Reach
and Frequency (Retail – Home Furnishings)
• Microsoft sites delivered the second highest number of unique visitors for Home Furnishing retailers
despite having significantly less ad impressions compared to eBay!
• Microsoft sites delivered 7m+ unique users, more than Glam Media and Facebook combined
Source: ComScore adMetrix ‘Home Furnishing’ : January 2011
Display Advertisement Publisher Location: Reach
and Frequency (Retail – Home Furnishings)
• Microsoft sites also had a very competitive share of Home Furnishing retailers’ ad
impressions in January
• Average frequency is less than eBay, Yahoo! and Glam Media.
Source: ComScore adMetrix ‘Home Furnishing’ : January 2011
Top Advertiser by Impressions and Unique Users ComScore AdMetrix
Advertiser classification is based off comScore adMetrix category classification
Source: ComScore AdMetrix – January 2011
Industry Insights
Furniture Market – it’s piece of the retail puzzle
•
There has been a decline in the number of people buying new furniture over the last five years, largely
due to replacement purchases being delayed.
•
Prices have increased as retailers have moved to protect margins from rising raw material costs,
increased shipping costs and the impact of exchange rate fluctuations.
•
There is a lot of volatility in consumer prices throughout the year due to furniture sales.
•
Late 2008 and early 2009 was the worst period for company failures in the sector, with MFI being the
biggest casualty in November 2008.
•
Retail sales through furniture retailers fared much worse than overall retail sales, as consumer
confidence was hit by the economic downturn and subsequent recession.
•
Although house prices have recovered considerably, which
will help confidence, the number of housing transactions
remains a long way short of volumes seen in 2006 and 2007.
•
The incomes squeeze and threat of higher interest rates to
deal with inflation mean the trading environment will remain
challenging.
•
Margins remain vulnerable to the rising cost of imports as a
result of currency fluctuations.
•
The projected increase in the number of households will help
to expand the customer base for furniture retailers to target.
Source: Mintel, Furniture Retailing Report, 2011
Strengths and Weaknesses
Strengths
Weaknesses
• Need for replacement – This assures a
certain level of furniture buying.
• Housing market – The number of transactions
remains low, impacting on furniture sales.
• Number of households – Growth over the
next five years means more demand.
• Incomes squeeze – Inflation exceeding wage
rises and austerity measures on the way.
• Home formation group – More 25-34s
setting up home should benefit the market.
• Interest rates – With inflation above target
interest rates may have to rise.
• Growing affluence – Should help increase
spending on big-ticket furniture items.
• Cost of imports – Currency fluctuations and
rising raw production and shipping costs.
• Fashion and style – Interest in improving the
look/style of the home helps to drive sales.
• Ageing population – Over-65s growing in
numbers but less likely to buy furniture.
• Home as venue – More focus on the home
should help stimulate furniture sales.
• Focus on the sales – The heavy emphasis on
price does not help the image of furniture
retailers.
• Desire for quality – A recognition that finding
quality furniture that will last is important.
• Infrequency of purchasing – Furniture not
bought very often, so less scope to build loyalty.
Furniture Channels of Distribution
•
Large furniture multiples account for a third of the market in 2009 (not shown), but there is also a
large share accounted for by smaller chains and independents.
•
DIY stores and supermarkets have both increased sales, while online purchasing has grown in
importance.
UK retail sales of furniture*, by channel of distribution, 2005-15
Home shopping
(including online)
7%
Other
6%
DIY stores
9%
Department and
variety stores
Furniture
11%
specialists
61%
Argos
6%
* Includes living, dining, bedroom, kitchen, bathroom and home office furniture
Source: Mintel, Furniture Retailing Report, 2011
Sources of Purchasing for Furniture
Outlets used to buy any furniture in the last three years (2007 – 2010), May 2010
Base: 1,497 adults aged 15+
31
IKEA
20
DIY chain
•
IKEA has retained its position
as the most popular choice for
furniture.
•
DFS is the next most visited
individual specialist retailer.
•
DIY chains and Argos have
the biggest presence after
IKEA in the overall furniture
market.
•
Other non-specialists such as
John Lewis, Next, M&S and
supermarkets are also
important.
18
Argos
13
Small/regional furniture chain/independent
11
Bed specialist
9
DFS
Supermarket (for example, Tesco, Asda)
8
Other large furniture chain
8
Other home furnishings store
6
Mail order/internet
6
John Lewis
6
Next
5
Other sofa specialist
5
Kitchen specialist
4
M&S
4
4
Other department store
0
5
10
15
20
%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
25
30
35
Factors Influencing Choice of Store – Price and Product
Ranges
Influence of price and product ranges on choice of store, May 2010
Base: 1,497 adults aged 15+
Good quality ranges
that will last
49
Special
offers/discounts
•
For half of adults the choice of
retailer is influenced by the outlet
offering good quality ranges that
will last, showing recognition that
better quality furniture can be an
investment.
•
Special offers and discounts are
more important than just finding
the cheapest priced furniture, as
consumers look for retailers that
give them more for their budget.
35
Large range to
choose from
32
28
Cheap/low prices
Something a little
more unusual
12
Can buy other home
furnishings there
7
0
10
20
30
%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
40
50
60
Factors Influencing Choice of Store – Service and
Other Factors
Influence of service and other factors on choice of store, May 2010
Base: 1,497 adults aged 15+
Knowledgeable and
helpful staff
38
Available immediately
•
Customer service is
important to furniture
shoppers, with the choice of
retailer of nearly four in ten
adults being influenced by
the store having
knowledgeable and helpful
staff.
•
Items being available
immediately and having
bought there before are
other important factors
influencing choice of store.
26
Have bought goods
there before
23
Not too far to travel
20
Company won't go bust
before delivery
16
Delivered ready
assembled
16
Interest-free credit
10
Available flat packed
6
0
5
10
15
20
%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
25
30
35
40
Shopping Behaviour When Buying Furniture
Agreement with statements on buying behaviour when purchasing furniture, May 2010
Base: 1,497 adults aged 15+
Visit a number of furniture outlets in person
before buying
38
Use the internet to compare prices and then
buy in a store
•
In common with most big-ticket
purchase items, shoppers for
furniture carry out a lot of research
before making their final purchase
decision.
•
Four in ten adults visit a number of
furniture outlets in person before
buying, emphasising the continued
importance of showrooms as part of
multichannel retailing offer.
•
The internet is a key part of the
buying process, mostly for
comparing products and prices, but
catalogues still also have their place
for getting ideas of what to buy.
36
Go back to a store I have used before
28
Look through catalogues before visiting
shops
21
Compare products and prices online and
then buy online
20
Look around the shops and then buy online
13
Be prepared to travel some distance to get
what I want
12
0
5
10
15
20
%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
25
30
35
40
Importance of Price, Advice and Ideas When Buying
Furniture
Agreement with statements relating to price, advice and ideas when buying furniture, May 2010
Base: 1,497 adults aged 15+
Look for value for money rather than cheapest
price
37
Wait for the sales before buying
•
The search for value for money
rather than cheapest price is
central to the process of
browsing and comparing
various items of furniture.
•
Although shoppers have
already been shown to want
knowledgeable and helpful
staff available, only one in five
are likely to discuss products
with sales staff before buying.
28
Talk to sales staff about the products before
buying
19
Like to see room sets to give me ideas
17
Pay more for furniture for certain rooms than
others
12
Like advice from style advisors for a complete
room look
3
Like a home assembly service for selfassembly furniture
3
0
5
10
15
20
%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
25
30
35
40
Reasons for Buying Furniture
Reasons for buying furniture in the last three years, May 2010
Base: 1,051 adults aged 15+ who bought furniture in the last three months
Old furniture was
soiled/damaged/broken
•
Furniture is largely a replacement
purchase, with the biggest reason for
buying being to replace worn out items.
•
Redecorating a room is also a major
trigger for buying.
•
The desire for a new look or style is also
important, emphasising how changing
fashions in home furnishings can act as a
big driver of sales.
•
Practical considerations also come into
play, including the need for more storage,
changing family needs or a move to a
different size or style of home.
38
Wanted new furniture for
a redecorated room
33
Wanted a new look/style
30
Needed more furniture
for storage
18
Moved to different
size/style of home
16
Saw a good
sale/special offer
15
Changing family needs
(for example, new baby)
15
Just saw something I
liked in store
14
Bought home for the first
time
8
Built extension
(including conservatory)
5
0
5
10
15
20
%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
25
30
35
40
Identifying Targets
Target buying groups for furniture, May 2010
Base: 1,497 adults aged 15+
• Furniture Enthusiasts – Highly engaged in the
furniture buying process and very interested in the
product, including visiting a lot of shops, looking
through catalogues and talking to sales staff about
products.
Online
Focused
Sales
21%
Shoppers
31%
• Sales Shoppers – Significantly more likely than
average to wait for the sales before buying and
more likely than average to visit a number of stores,
but do not have much interest in furniture.
• Online Focused –The overwhelming majority use
the internet to compare prices and then buy in a
store. They are also the most likely to browse and
buy online, and look around the shops and then buy
online.
Apasthetic
30%
Furniture
Enthusiasts
18%
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
• Apathetic – Very little interest in furniture buying
and show a lower than average response to every
statement.