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AMA RESEARCH Market Report : UK Contract Furniture Market May 2004

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BRIEF DESCRIPTION

AMA Research have recently published the second edition of the "Contract Furniture Market - UK 2004" report. The report incorporates original research and provides a comprehensive review of the demand for a range of furniture products in non-domestic applications.

Product areas covered in the report include: -

Beds

Bedroom Furniture

Dining Furniture

Educational Furniture

Upholstered Furniture

Others - Storage/Occasional

The contract furniture market is estimated at over £700 million at manufacturers prices and has experienced relatively moderate growth over the past two years. Key end use applications include leisure, education and healthcare sectors.

EXECUTIVE SUMMARY

The contract furniture sector is primarily influenced by the level of commercial and construction activity within the economy and is subject to general levels of business and consumer confidence.

The contract furniture market is worth an estimated £658 million in 2001 and current forecasts indicate growth levels of 3-4% per annum, with the market expected to reach an estimated £759 million in 2005.

The sector tends not to be as volatile as the domestic furniture sector but is still susceptible to downturns in economic activity and overall levels of commercial and industrial growth.

Recent performance has been a little subdued compared to the buoyant performance during 1997/98. However, some sectors are performing better than others resulting in reasonable growth rates overall. The market was affected by the economic slowdown experienced in 1998, which resulted in a fall in the level of new construction orders and a significant reduction in refurbishment and new build activity in the leisure sector.

A wide range of Millennium projects helped boost the market during 2000. However, the leisure market has suffered from lower margins and postponement of refurbishment and new build developments during the second half of 2000 and 2001, due to the impact of the fuel crisis, severe flooding, foot and mouth epidemic, slowdown in tourism and the recent terrorist attacks in the US.

Prospects for 2002/03 are reasonably optimistic with pent-up demand and postponed refurbishment expected to feed through into the second half of 2002 and 2003. Medium term prospects indicate growth rates of 3-4% to reach an estimated £759 million by 2005. Expectations are that the market will benefit from a number of PFI projects within the healthcare sector, higher government expenditure in the education sector, and greater investment in image in many application areas.

Contract dining furniture dominates the market in terms of product mix and is estimated to account for 28% of the market in value terms in 2001. Key influences include substantial growth in the UK restaurant, pubs and clubs markets, and an emphasis on investment in image, new styles and designs.

Upholstered furniture is estimated to account for 21% of value share of the contract furniture market, due to the increased demand within hotel/leisure and entertainment sectors. Beds and bedroom furniture combined were estimated to account for 23% of value share of the contract furniture market. Growth is underpinned largely by the substantial rise in student accommodation.

The remainder of the market is comprised of educational furniture, which accounts for approximately 13% and 'other sectors' which includes MOD, prisons etc, and accounts for an estimated 15% of the market.

In terms of key suppliers, the structure tends to differ between the major product sectors. The contract market for beds and upholstered furniture is similar to that of the domestic market, with a number of manufacturers supplying both sectors. In the bedroom and dining furniture market, the supply structure is highly fragmented and educational furniture suppliers tend to be more specialised and, in many cases, also offer office furniture.

In terms of end-use application, the leisure sector is dominant accounting for approximately 45% of the market and is likely to remain the leading sector within the foreseeable future. Education accounts for approximately 30% of the market due to the substantial increases in student numbers and accommodation requirements, and growing competition experienced within the sector. The health sector is also significant, accounting for 15% of the market, with 'others' accounting for 10% of the market. The healthcare and education sectors are expected to benefit in the short to medium term from substantial increases in PFI projects and government funding, which should increase their importance as end-use applications over the next 5 years.

Overall, the distribution of furniture within the contract sector is dominated by direct supply to end-users. However, depending on the end-user, the distribution channel is likely to change accordingly. For example, the leisure industry are more likely to use architects, interior designers, contract furnishers and hotel buying groups. Conversely, the healthcare sector tend to use a central buying group as the market is highly fragmented and the education sector, such as state schools, will use central buying groups or specialist catalogue suppliers.

TABLE OF CONTENTS

Tables and Charts

Text © 2004 AMA Research

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Last updated by Amanda Porteous 2004