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This report covers: furniture, office furniture,

Companies covered include: Arenson, Bullough, Steelcase Strafor, Herman Miller,

Table of Contents

Executive Summary

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KEY AREAS

AMA Research have published the second edition of the "UK Office Furniture Dealers Market Report 2001". The report incorporates original research, providing an up-to-date review of the dealer market and represents excellent value for money.

This report is a practical review of the office furniture dealer channel, analysing market size, structure, recent and future trends. In addition to the report there is a database containing a list of around 800 leading dealers, and will be of particular interest to office furniture manufacturers.

Key Areas Covered include:-

• The Office Furniture Market
• Review of Dealer Channel
• Sourcing Criteria for Dealers
• Dealer Buying Process
• Customer Base

The dealer channel represents the major route for the distribution of office furniture, although competition has increased in recent years both from manufacturers who deal direct with end users and the growth of superstores / mail order companies.

This report is in addition to our range of reports covering the Office Furniture Markets in the UK, France, Germany and Italy.

Of particular interest:-

• Market performance of dealers in recent years.
• Key criteria for dealers influencing choice of office furniture suppliers.
• Key influencers on decision process.
• List of major dealers database.

Key areas of coverage in the report include:-

OVERALL OFFICE FURNITURE MARKET

• Total Office Furniture market, analysis of size by value, current situation, historical trends and forecasts to the year 2003. Factors currently affecting the market and reasons for current growth.
• International trade, analysis of imports and exports of office furniture by product and country.
• Mix of office furniture, sector by product type. Shares accounted for by desking, seating, storage and others. Size of each sector, current trends.
• Structure of overall distribution of office furniture, including distribution mix between the three major channels, dealers/contractors, direct and superstore/mail order.

DEALER CHARACTERISTICS

• Recent performance of the UK Office Furniture Dealer Channel - size, trends, factors influencing performance, future prospects etc.
• percentage of dealers holding stock, recent trends, characteristics of these dealers. Average mix of dealer sales of stock/non-stock products.
• percentage of dealers with warehousing and showroom facilities, major reasons for high ownership of warehousing and lower levels of showroom facilities.
• Review of customer base for dealers (public/private sector) and their current importance as a channel to dealers, possible reasons for trends and changes.
• Sales and marketing methods dealers use to obtain orders.

BUYING & SPECIFICATION PROCESS FOR DEALERS

• Major channels of sourcing office furniture - mix and current trends (manufacturers, importers, wholesalers).
• Leading manufacturing/importing companies of UK Office Furniture - market shares, market position, analysis of activities, financial information etc.
• Major office furniture wholesalers and dealer use of this sector.
• Level of significance of Buying Groups in the Office Furniture market, leading Buying Group organisations.
• Key factors influencing choice of office furniture suppliers - quality, range, price, delivery lead times, support etc.
• Key influencers within dealers on decision-making process for choice of suppliers.
• Major sources of information used when reviewing alternative suppliers, and the key factors considered when making that decision - sales staff, exhibitions, literature etc.
• Types of sales and marketing support which a dealer would expect from a supplier and their relative importance.

DEALER DATABASE

• Details on around 800 major UK office furniture dealers - database of names, addresses and in some cases showroom facilities etc.

TABLE OF CONTENTS

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EXECUTIVE SUMMARY

In 2000, the UK Office Furniture market was estimated to be worth around £860 million at MSP. The development of the market is shown in the chart below at current prices:-

Source: AMA Research/Trade Estimates

Following several very difficult years in the early 1990s, the Office Furniture market has experienced a strong recovery since 1994 due to improving commercial construction trends, and this continued through to 1996/97 which proved to be particularly buoyant years.

However, during the first half of 1998 growth levels began to subside due a number of factors negatively influencing the market, such as the strength of sterling, the Asian crisis and higher levels of interest rates. These factors combined generated a period of pessimism and low confidence that continued through to early 1999.

Anticipation of a recession resulted in a number of businesses deferring office furniture purchases during this time. The year 2000 was more optimistic for the office furniture market as business confidence improved and a backlog of demand emerged from the 2 years of hesitation by many companies.

The future for the office furniture sector currently looks modestly favourable as developments in technology and the subsequent changes in working practices begin to have a positive effect generating new opportunities for suppliers and as growth in the SOHO sector and call centres continues.

In terms of distribution, the dealer channel is estimated to account for 52 percent of the market, equivalent to around £451 million turnover in 2000. This figure has declined slightly in recent years due to growth in the SOHO sector and subsequent growth in superstores and furniture retailers. The above figure may underestimate the total turnover of dealers as this figure relates to office furniture only and excludes dealer sales in other products, additional services etc.

The vast majority of dealers are small companies and the dealer network is very fragmented, with an estimated 2500 furniture dealers in the UK. However, there are some larger dealers with multi-branch operations, the majority of which operate within their local environment only.

The majority of dealers are independent operations sourcing from several manufacturers, which enables them to offer a comprehensive range of products at different price points. As a result, many dealers will select and promote specific ranges from different manufacturers, within their overall market portfolio. However, in some cases dealers will have close links with individual office furniture manufacturers, notably the larger suppliers.

Analysis of dealers in terms of their facilities indicate around 66 percent held some stock, though only 25 percent of sales are met from stock, with the rest supplied direct from the manufacturer for a specific contract. Some 78 percent of dealers indicate they have showroom facilities, though the quality of these facilities can vary substantially between dealers.

Many of the leading manufacturers such as Steelcase, Senator, EFG Matthews and Verco supply through the dealer network. EFG Matthews are quite unique in that they are both a manufacturer of office furniture and also operate a network of distribution outlets. Project, part of Bullough Group, are the leading direct suppliers of office furniture, particularly into the public sector.

In terms of the buying process, most dealers are small and therefore the choice of supplier rests with the owners of the company, whereas the larger dealers tend to rely on their sales manager to make the decision. Quality of product, back-up services and competitive prices are key criteria influencing choice, which has changed in recent years as the market has become increasingly competitive.

Sales and marketing support from manufacturers is not usually expected from the dealer and brand exclusivity is not considered an important factor as most dealers are not sourcing from a single supplier and will choose appropriate ranges from different manufacturers.

Support with literature/brochures and showroom display models are considered important issues, but generally dealers do not expect a high level of marketing support from their supplier.

In the medium term, future prospect for the dealer network appear to be relatively optimistic with the overall office furniture market forecast to grow by around 3-4 percent per annum over the next 3 years. Share may continue to be eroded as the SOHO sector continues to grow and furniture retailers and superstores respond, but the range of services offered by the dealers is continuing to grow which should ensure that they retain a significant share of the market.

Text © 2001 AMA Research

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Last updated by Mandy Porteous October 2001