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In 1997 the market for Office Furniture was worth over £850m at MSP. The market began to show recovery from the early 1990s recession, during the course of 1993. However value increase was modest resulting in the market remaining static in real terms. 1994 and 1995 experienced greater growth, reflecting improving commercial construction trends - particularly in London and the South East.
The short to medium term future is likely to be more difficult, with business confidence declining as a result of the strong Pound Sterling, the Asian crisis and higher levels of UK interest rates. Office furniture purchases are easy to defer, when confidence is low, and there is some evidence of this happening in the market during 1998.
Longer term prospects are mixed, with many technological developments, industry concentration and reduced public sector administration, leading to an underlying reduction in demand for office furniture. However, growth of certain sectors such as call centres, the SOHO market and increasing market fragmentation, will create added value opportunities.
Key influences in the market include technological developments such as the expanding use of the internet, the use of ISDN lines in business internet applications, the development of voice-interactive software, the growth of flat screen technology, the use of high volume data storage equipment and the integration of telecommunications and data communications technologies. Developments of these and other technologies has facilitated growth of call centres and looks likely to lead to other changes in working practices. Some of these changes have already occurred, such as increased levels of 'hot desking' or hoteling, the growth of touch down sites etc.
Both Imports and Exports are significant in the market with imports rising to around £165m in 1997, while exports rose by nearly 20 percent to £137m. Imports of desking products grew by over 5 percent, while imports of seating showed a more dramatic 27 percent rise.
Key importing countries for desking included Germany, the US, France, Italy and Sweden, while for seating, the key importing countries were Italy, Germany, Canada and Belgium.
The market consists of four sectors, desking (the largest accounting for 42 percent), seating, storage and 'others'. In 1997 the desking market was worth around £359 million at manufacturers prices. The sector is comprised of 3 sub-sectors - executive, systems and economy stand-alone desking.
There remains a steady trend towards systems furniture supporting value growth of the desking market. Other factors benefiting this market include, centralisation of businesses resulting in reorganisation (and in many cases the requirement for alternative furniture), a marginal shift to better quality furniture and an increase in the SOHO market. Mobile pedestals are taking share from fixed, as job sharing, 'hot desking' and in turn furniture mobility and flexibility, become increasingly significant.
In terms of seating, there is a general trend to providing additional features in the seating market, with adjustability the key motivating factor. In 1997 over 75 percent of seats, in value terms, were adjustable, (many with additional features) as a result of a combined need to satisfy EC Regulations and the increased awareness that the quality of seating can improve an employee's attitude and performance.
Storage has seen recent growth, in line with the market. The storage sector remains under threat from technological developments such as DVD or CD Rom storage. However, there remain a number of obstacles to these technologies and in the medium term, the storage sector is likely to continue to follow the market. Within this sector, there is a shift towards personal storage and away from shared storage, with information relating to the latter more widely stored on the computer system, in most businesses.
Metal storage continues to dominate and has increased share, to around 70 percent of the sector. Filing cabinets account for the largest share of the storage sector, followed by cupboards, shelving and archive systems.
The 'others' sector includes both computer trolleys and screening. This sector has experienced growth below the market average, mainly resulting from the poor performance of computer trolleys, which are estimated to account for 45 percent of the 'others' sector.
The office furniture market remains highly competitive. While there has been an element of concentration, with Bullough acquiring Greenwood & Wood and Flexiform, there remain a large number of suppliers in almost every sector of the market. Bullough are the overall market leaders, followed by Steelcase Strafor and Herman Miller.
The Arenson group are significant, followed by Samas Roneo and Bisley. From the top six, only Bullough and Bisley are UK owned concerns, while Steelcase are French owned, Herman Miller are American, Arenson are Danish and Samas Roneo are Dutch. This illustrates the increasingly international nature of the office furniture market.
Other major suppliers include Kinnarps, Matthews, Paragon, Senator, Verco, Black Arrow, Carleton, OEP, Wassall, Ahrend, Dauphin and Wallis.
Office furniture is distributed in one of a number of ways. The major sectors are dealers which account for 57 percent of sales, direct from manufacturers, superstores and mail-order. It is the latter two channels which are experiencing growth reflecting the development of the SOHO sector, driven by the growth of home PCs, the internet and home working.
Dealers have lost share slightly to the direct channel and the niche sectors of mail order and superstores. In addition, dealers have increasingly joined buying groups to enhance their buying power.
This comprehensive report represents a detailed assessment of the market, reviewing major trends, key factors influencing developments and future prospects for the sector. Analysis is both quantitative and qualitative, based on our substantial experience of the building and home improvement markets.
Text © 1998 AMA Research
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Last updated by Duncan Nottage 1st February 1999