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Retail: FurnitureInsightsMarch 2011
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Contents
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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%) andArgos(18%).
Furniture retailers have big advertising budgets, with 384 millionbeing spent on
advertisingin 2009 alone, some 26%of it by DFS.
Special offers and discountsinfluence 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 havinggood 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.
Home Furniture Summary
Source: Mintel, Furniture Retailing Report, 2011
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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 2010and 2011, although the VAT increase will mean some growth in value in 2011.
UK retail sales of furniture*, 2005-15 Mintel forecast
* Includes living, dining, bedroom, kitchen, bathroom and home office furniture
10,600
10,800
11,000
11,200
11,400
11,600
11,800
12,000
12,200
2005 2006 2007 2008 2009 2010
(est)
2011
(fore)
2012
(fore)
2013
(proj)
2014
(proj)
2015
(proj)
m
Source: Mintel, Furniture Retailing Report, 2011
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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
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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 ToolDecember 2010 to Feb 2011 data
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Display Advertisement Publisher Location: Reach
and Frequency (RetailHome 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
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Display Advertisement Publisher Location: Reach
and Frequency (RetailHome 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
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Top Advertiser by Impressions and Unique Users -
ComScore AdMetrix
Advertiser classification is based off comScore adMetrix category classification
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Industry Insights
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Furniture Marketits 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 consumerconfidence 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 remainchallenging.
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
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Strengths and Weaknesses
Need for replacementThis assures acertain level of furniture buying.
Number of householdsGrowth over thenext five years means more demand.
Home formation group More 25-34ssetting up home should benefit the market.
Growing affluenceShould help increasespending on big-ticket furniture items.
Fashion and style Interest in improving thelook/style of the home helps to drive sales.
Home as venue More focus on the homeshould help stimulate furniture sales.
Desire for qualityA recognition that findingquality furniture that will last is important.
Housing marketThe number of transactionsremains low, impacting on furniture sales.
Incomes squeezeInflation exceeding wagerises and austerity measures on the way.
Interest ratesWith inflation above targetinterest rates may have to rise.
Cost of importsCurrency fluctuations andrising raw production and shipping costs.
Ageing population
Over-65s growing innumbers but less likely to buy furniture.
Focus on the salesThe heavy emphasis onprice does not help the image of furnitureretailers.
Infrequency of purchasingFurniture notbought very often, so less scope to build loyalty.
Strengths Weaknesses
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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
* Includes living, dining, bedroom, kitchen, bathroom and home office furniture
Furniture
specialists
61%
Argos
6%
Department and
variety stores
11%
DIY stores
9%
Home shopping
(including online)7%
Other
6%
Source: Mintel, Furniture Retailing Report, 2011
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Sources of Purchasing for FurnitureOutlets used to buy any furniture in the last three years (2007 2010), May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
IKEA has retained its positionas the most popular choice forfurniture.
DFS is the next most visitedindividual specialist retailer.
DIY chains and Argos havethe biggest presence afterIKEA in the overall furnituremarket.
Other non-specialists such asJohn Lewis, Next, M&S andsupermarkets are alsoimportant.
Base: 1,497 adults aged 15+
4
4
4
5
5
6
6
6
8
8
9
11
13
18
20
31
0 5 10 15 20 25 30 35
Other department store
M&S
Kitchen specialistOther sofa specialist
Next
John Lewis
Mail order/internet
Other home furnishings store
Other large furniture chain
Supermarket (for example, Tesco, Asda)
DFS
Bed specialist
Small/regional furniture chain/independent
Argos
DIY chain
IKEA
%
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Factors Influencing Choice of StorePrice and Product
Ranges
Influence of price and product ranges on choice of store, May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
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 aninvestment.
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.
Base: 1,497 adults aged 15+
7
12
28
32
35
49
0 10 20 30 40 50 60
Can buy other home
furnishings there
Something a little
more unusual
Cheap/low prices
Large range to
choose from
Special
offers/discounts
Good quality ranges
that will last
%
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Factors Influencing Choice of StoreService and
Other Factors
Influence of service and other factors on choice of store, May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
Customer service isimportant to furnitureshoppers, with the choice ofretailer of nearly four in tenadults being influenced by
the store havingknowledgeable and helpfulstaff.
Items being availableimmediately and havingbought there before areother important factors
influencing choice of store.
Base: 1,497 adults aged 15+
6
10
16
16
20
23
26
38
0 5 10 15 20 25 30 35 40
Available flat packed
Interest-free credit
Delivered ready
assembled
Company won't go bust
before delivery
Not too far to travel
Have bought goods
there before
Available immediately
Knowledgeable and
helpful staff
%
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Shopping Behaviour When Buying Furniture
Agreement with statements on buying behaviour when purchasing furniture, May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
In common with most big-ticketpurchase items, shoppers forfurniture carry out a lot of researchbefore making their final purchasedecision.
Four in ten adults visit a number offurniture outlets in person beforebuying, emphasising the continuedimportance of showrooms as part ofmultichannel retailing offer.
The internet is a key part of thebuying process, mostly forcomparing products and prices, butcatalogues still also have their placefor getting ideas of what to buy.
Base: 1,497 adults aged 15+
12
13
20
21
28
36
38
0 5 10 15 20 25 30 35 40
Be prepared to travel some distance to get
what I want
Look around the shops and then buy online
Compare products and prices online and
then buy online
Look through catalogues before visiting
shops
Go back to a store I have used before
Use the internet to compare prices and then
buy in a store
Visit a number of furniture outlets in person
before buying
%
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Importance of Price, Advice and Ideas When Buying
Furniture
Agreement with statements relating to price, advice and ideas when buying furniture, May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
The search for value for moneyrather than cheapest price iscentral to the process of
browsing and comparingvarious items of furniture.
Although shoppers havealready been shown to wantknowledgeable and helpfulstaff available, only one in fiveare likely to discuss products
with sales staff before buying.
Base: 1,497 adults aged 15+
3
3
12
17
19
28
37
0 5 10 15 20 25 30 35 40
Like a home assembly service for self-
assembly furniture
Like advice from style advisors for a complete
room look
Pay more for furniture for certain rooms than
others
Like to see room sets to give me ideas
Talk to sales staff about the products before
buying
Wait for the sales before buying
Look for value for money rather than cheapest
price
%
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Reasons for Buying FurnitureReasons for buying furniture in the last three years, May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
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.
Base: 1,051 adults aged 15+ who bought furniture in the last three months
5
8
14
15
15
16
18
30
33
38
0 5 10 15 20 25 30 35 40
Built extension
(including conservatory)
Bought home for the first
time
Just saw something I
liked in store
Changing family needs
(for example, new baby)
Saw a good
sale/special offer
Moved to different
size/style of home
Needed more furniturefor storage
Wanted a new look/style
Wanted new furniture for
a redecorated room
Old furniture was
soiled/damaged/broken
%
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Identifying TargetsTarget buying groups for furniture, May 2010
Source: BMRB-Omnibus, a division of TNS-RI/Mintel
Furniture EnthusiastsHighly engaged in thefurniture buying process and very interested in theproduct, including visiting a lot of shops, lookingthrough catalogues and talking to sales staff aboutproducts.
Sales ShoppersSignificantly more likely thanaverage to wait for the sales before buying andmore likely than average to visit a number of stores,but do not have much interest in furniture.
Online FocusedThe overwhelming majority usethe internet to compare prices and then buy in astore. They are also the most likely to browse andbuy online, and look around the shops and then buyonline.
Apathetic Very little interest in furniture buyingand show a lower than average response to everystatement.
Base: 1,497 adults aged 15+
Sales
Shoppers
31%
Furniture
Enthusiasts
18%
Apasthetic
30%
Online
Focused
21%
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