Table of Contents

Executive Summary

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TABLE OF CONTENTS

1. INTRODUCTION 6

2. SUMMARY 7

2.1 OVERALL MARKET 7

2.2 KEY DISTRIBUTORS 8

2.3 PRODUCT MIX 9

2.4 CUSTOMERS 10

3. ECONOMIC ENVIRONMENT 11

3.1 INTRODUCTION 11

3.2 CONSUMER CONFIDENCE 11

3.3 HOUSING 11

3.4 INDUSTRIAL AND COMMERCIAL CONSTRUCTION 12

3.5 GROWTH AND INTEREST RATES 12

3.6 CONCLUSION 13

4. THE MARKET 14

4.1 DEFINITION 14

4.2 STRUCTURE 15

4.3 MARKET SIZE 17

4.4 PRODUCT GROUPS 23

4.5 DISTRIBUTOR SHARE BY PRODUCT MARKET 27

5. DISTRIBUTORS 29

5.1 ANALYSIS BY SECTOR 29

5.2 MARKET SHARE 30

5.3 THE DISTRIBUTORS 38

5.4 CHARACTERISTICS OF KITCHEN & BATHROOM DISTRIBUTORS 46

5.5 BUYING CRITERIA 50

5.6 THE ROLE OF THE DISTRIBUTOR 51

5.7 STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS 54

6. DISTRIBUTORS CUSTOMERS 60

6.1 GENERAL 60

6.2 CUSTOMER MIX 60

6.3 KITCHEN & BATHROOM SPECIALISTS 61

6.4 BUILDERS & PLUMBERS MERCHANTS 62

6.5 ELECTRICAL INDEPENDENTS 63

6.6 DIY OUTLETS 64

6.7 OTHER RETAIL 64

6.8 OTHERS 65

7. PRODUCTS 66

7.1 KITCHEN FURNITURE, WORKTOPS & SINKS 66

7.2 KITCHEN APPLIANCES 78

7.3 BATHROOM PRODUCTS 86

7.4 SHOWER PRODUCTS 96

8. KEY MARKET INFLUENCES 104

8.1 THE HOUSING MARKET 104

8.2 POPULATION PROFILE 106

8.3 EMPLOYMENT/UNEMPLOYMENT 108

8.4 INTEREST RATES 109

8.5 CONSUMERS DISPOSABLE INCOME LEVELS AND SAVINGS 110

8.6 HOUSEHOLDS 111

9. FUTURE PROSPECTS 113

9.1 OVERALL 113

9.2 THE DISTRIBUTORS 113

LIST OF TABLES AND CHARTS

TABLE 1: THE UK KITCHEN & BATHROOM DISTRIBUTOR MARKET 1990-2002 £M DSP

TABLE 2: DISTRIBUTOR SHARE BY PRODUCT 1997

CHART 3: KITCHEN & BATHROOM DISTRIBUTORS MARKET INFRASTRUCTURE

TABLE 4: KITCHEN & BATHROOM DISTRIBUTORS MARKET 1990-1998 £M AT DISTRIBUTOR SELLING PRICES

TABLE 5: KITCHEN & BATHROOM DISTRIBUTORS MARKET 1997-2002 £M AT DISTRIBUTOR SELLING PRICES

CHART 6: KITCHEN & BATHROOM DISTRIBUTORS MARKET AT CONSTANT PRICES 1990-2002 £M AT DSP @ 1990 PRICES

TABLE 7: MIX OF DISTRIBUTOR SALES BY PRODUCT 1997

CHART 8: MIX OF BATHROOM PRODUCTS

TABLE 9: MIX OF DISTRIBUTORS SALES OF SHOWER PRODUCTS

TABLE 10: DISTRIBUTOR SHARE BY PRODUCT MARKET 1997

CHART 11: MIX OF DISTRIBUTOR SALES 1997 BY VALUE

TABLE 12: MARKET SHARES IN THE KITCHEN & BATHROOM DISTRIBUTORS MARKET 1997

TABLE 13: LEADING DISTRIBUTORS BY PRODUCT SECTOR

TABLE 14: DISTRIBUTORS PROFITABILITY 1987-1997

TABLE 15: DISTRIBUTORS PROFITABILITY 1987-1997

TABLE 16: DISTRIBUTOR TURNOVER PER EMPLOYEE 1991-1997

TABLE 17: DISTRIBUTORS TURNOVER PER EMPLOYEE 1991-1997

TABLE 18: MIX OF KITCHEN & BATHROOM DISTRIBUTOR SALES 1997

TABLE 19: UK DOMESTIC KITCHEN FURNITURE, WORKTOPS & SINKS BY VALUE (£M DSP)

CHART 20: UK DOMESTIC KITCHEN FURNITURE, WORKTOPS AND SINKS MIX BY VALUE

CHART 21: KITCHEN FURNITURE SALES BY VOLUME 1997

TABLE 22: UK KITCHEN SINK MARKET BY VOLUME

CHART 23: KITCHEN SINK DESIGN BY VOLUME 1997

TABLE 24: MAJOR KITCHEN FURNITURE SUPPLIERS 1997 BY VALUE

TABLE 25: DISTRIBUTION OF KITCHEN FURNITURE 1997 BY VALUE

TABLE 26: UK DOMESTIC APPLIANCE MARKET SIZE £M DSP

TABLE 27: DISTRIBUTION OF KITCHEN FURNITURE 1997 BY VALUE

TABLE 28: UK COOKING APPLIANCE MARKET BY VOLUME

TABLE 29: UK LAUNDRY AND DISHWASHER MARKET 1997 BY VOLUME

TABLE 30: UK REFRIGERATION MARKET BY VOLUME

CHART 31: DISTRIBUTION OF KITCHEN APPLIANCES BY CHANNEL 1997

TABLE 32: TOTAL MARKET FOR BATHROOM PRODUCTS BY VALUE £M DSP

CHART 33: BATH SALES BY MATERIAL 1997 BY VOLUME

TABLE 34: UK SANITARYWARE MARKET BY VOLUME 1997

TABLE 35: UK BRASSWARE MARKET BY VOLUME 1997

TABLE 36: UK BATHROOM ACCESSORIES MARKET BY PRODUCT £M DSP

TABLE 37: UK BATHROOM PRODUCT MAJOR SUPPLIERS 1997

TABLE 38: DISTRIBUTION OF BATHROOM PRODUCTS 1997

TABLE 39: THE UK SHOWER EQUIPMENT MARKET £M DSP

CHART 40: PRODUCT MIX OF SINGLE POINT SHOWER CONTROLS 1997

TABLE 41: THE UK MARKET FOR ENCLOSURES, SCREENS AND TRAYS BY VOLUME 1997

TABLE 42: THE UK SHOWER CONTROL MARKET BRAND SHARES 1997

TABLE 43: MARKET SHARES FOR ENCLOSURES AND SCREENS BY VOLUME 1997

TABLE 44: DISTRIBUTION OF SHOWER PRODUCTS BY VALUE 1997

TABLE 45: HOUSING COMPLETIONS 1990-1997 GREAT BRITAIN ('000)

TABLE 46: NUMBER OF PROPERTY TRANSACTIONS IN ENGLAND AND WALES 1990-1997

CHART 47: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION 1996 ('000)

CHART 48: NUMBER OF EMPLOYEES IN EMPLOYMENT GB - JUNE 1981-97 (MILLIONS)

CHART 49: INTEREST RATES AND INFLATION (RPI) FROM 1990-2000

CHART 50: PDI & SAVINGS RATIO

TABLE 51: STOCK OF DWELLINGS GREAT BRITAIN - 1983-1997

TABLE 52: AVERAGE HOUSEHOLD SIZE FOR GREAT BRITAIN 1971-1996

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EXECUTIVE SUMMARY

After a number of years of relatively benign trading conditions, the kitchen and bathroom distributors' market grew significantly in 1996 and 1997, stimulated by a buoyant economy, a much improved housing market and an increased level of consumer confidence.

From 1990 through to the end of 1995, the kitchen and bathroom distributors market saw little growth in absolute terms, and declined by 12 percent in real terms.

Obviously, the market is strongly influenced by the fortune of the product markets - kitchen furniture, kitchen appliances, bathrooms and showers. Kitchen furniture has provided this market with few growth opportunities in recent years, with intense pressure on prices resulting in limited growth in sales in 1996 and 1997. Products contributing to the buoyant performance of the distributors in 1996 and 1997 were kitchen appliances, worktops, brassware, showers and bathroom accessories.

1998 and 1999 are predicted to see a substantial change in the fortunes of this market in line with many of the relevant product markets. However, the outlook for distributors in 2000 and beyond is reasonably optimistic with the potential for overall share growth of these markets, reflecting increasing fragmentation of the supply structures for many product sectors.

The distributor market is relatively fragmented, as local suppliers can offer a competitive edge by creating loyalty through fast, efficient service and knowledge of the customer requirements. However, there are a number of national operations and large regionals, many of which have grown share through a combination of organic growth and acquisitions.

The leading company are The PJH Group, which through Hopkinsons Fourways continues to lead the market. They are traditionally strong in the kitchen appliance and furniture sectors and now, are also leaders in the bathroom market.

The national distributors now account for 45 percent of the market, led by PJH, followed by Crangrove, BDC and Mark Two. Other major nationals are Allied, AHED, Tricom, Broughtons, Maurice Lay, Galley Matrix, BSS Zenith and Stearn.

The key distributors in the kitchen sector include PJH, Allied, BDC, Crangrove, Mark Two, Stearn, William Ball, Galley Matrix and Waterline. In the bathroom and shower sector the key companies are PJH, Mark Two, Ideal Bathrooms, Broughtons, AHED and Crangrove.

The larger regional distributors and local distributors account for the balance though their share is on a declining trend.

Although currently fragmented, ongoing consolidation is a feature of this market. This trend is likely to continue in the future, particularly if a greater number of manufacturers choose a more selective distribution policy, an approach which has recently been adopted by some kitchen furniture manufacturers.

Bathroom products account for the greatest share of distributors' business followed by kitchen furniture, kitchen appliances, shower products and others. Within bathroom products, baths and sanitaryware take the largest share followed by accessories and brassware.

Kitchen appliances have also been a growth sector for distributors' due to product proliferation, particularly in terms of styles, designs, colours and technical features.

Distributors' still only account for a small share of the kitchen appliance market at 7 percent, due to the dominance of the electrical multiples. However, their presence is more significant in the bathrooms and showers markets.

The kitchen and bathroom distributors have two major customer groups, the kitchen and bathroom retail specialists which account for 40 percent of the distributors sales and the builders merchants with 33 percent. Others include DIY outlets, other retailers such as department stores, electrical independents and contractors.

After a long period of gradual decline in numbers, the specialists are beginning to experience some growth, as demand increases for quality products and higher levels of service, which are key characteristics of the specialist sector.

In common with the kitchen and bathroom distributors, builders merchants are comprised of nationals, large regionals and local merchants with consolidation also a characteristic of this market. It is the smaller and medium sized merchants who tend to purchase from kitchen and bathroom distributors. However, this sector of the merchant industry is declining as the major regionals and nationals take share, and this could be something of a threat to the distributors.

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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