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AM45157

AMA KITCHEN FURNITURE MARKET MARCH 1997

Table of Contents

Executive Summary

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TABLE OF CONTENTS

1. INTRODUCTION 5

2. SUMMARY 6

3. ECONOMIC ENVIRONMENT 10

3.1 GDP 10

3.2 INFLATION 10

3.3 INTEREST RATES 10

3.4 UNEMPLOYMENT 11

3.5 CONSUMER SPENDING 11

4. THE MARKET 12

4.1 THE MARKET 12

4.2 IMPORTS AND EXPORTS 25

4.3 HOUSEHOLD OWNERSHIP 28

4.4 KITCHEN APPLIANCES 34

5. PRODUCT ANALYSIS 36

5.1 INTRODUCTION 36

5.2 KITCHEN FURNITURE: FLAT-PACK/RIGID UNITS 36

5.3 DESIGN/MATERIALS 41

6. DISTRIBUTION CHANNELS 54

6.1 OVERALL SHARE 54

6.2 DIY MULTIPLES 56

6.3 KITCHEN SPECIALISTS 58

6.4 BUILDERS MERCHANTS/CONTRACT/HOUSEBUILDERS 59

6.5 OTHERS 60

6.6 DISTRIBUTORS 62

7. SUPPLIERS 65

7.1 OVERALL SHARE 65

7.2 KITCHEN FURNITURE 66

7.3 SINKS 75

7.4 WORKTOPS 78

8. KEY MARKET INFLUENCES 81

8.1 THE HOUSING MARKET 81

8.2 POPULATION PROFILE 84

8.3 PERSONAL DISPOSABLE INCOME AND SAVINGS RATIO 86

8.4 HOUSEHOLDS 87

8.5 HOUSEHOLD STRUCTURE 88

9. FUTURE PROSPECTS 90

TABLES AND CHARTS

CHART 1: KITCHEN FURNITURE AND WORKTOPS MARKET 1990-2000 BY VALUE (MSP £M)

CHART 2: PRODUCT MIX IN THE KITCHEN FURNITURE MARKET 1996 - BY VALUE

TABLE 3: UK KITCHEN FURNITURE AND WORKTOPS MARKET 1990-2000 - BY VALUE (MSP £M)

TABLE 4: UK KITCHEN SINK MARKET 1990-2000

CHART 5: UK DOMESTIC SINKS' MARKET - BREAKDOWN BY MATERIAL BY VOLUME

CHART 6: UK KITCHEN FURNITURE MARKET IMPORTS AND EXPORTS 1988-1995 (£M MSP)

CHART 7: HOUSEHOLD OWNERSHIP LEVEL FITTED KITCHEN FURNITURE 1981-1996

CHART 8: FITTED KITCHEN SALES BY PURCHASING SECTOR 1996 VOLUME percent

TABLE 9: OWNERSHIP LEVELS OF FITTED KITCHEN FURNITURE BY SOCIO-ECONOMIC GROUP

TABLE 10: UK BUILT-IN KITCHEN APPLIANCES' MARKET 1994 - BY VOLUME

CHART 11: UK FITTED KITCHEN FURNITURE MARKET 1996

CHART 12: ASSEMBLY METHODS OF FITTED KITCHEN FURNITURE

CHART 13: KITCHEN SINK DESIGNS: MARKET SHARE BY VOLUME 1996

TABLE 14: KITCHEN FURNITURE MARKET : DISTRIBUTION CHANNEL SHARE 1996 BY VALUE

TABLE 15: DISTRIBUTOR SHARE BY PRODUCT MARKET 1995

TABLE 16: KITCHEN FURNITURE MARKET SUPPLIER MARKET SHARE 1996 BY VALUE

TABLE 17 UK HOUSING COMPLETIONS 1990-1997 (THOUSANDS OF DWELLINGS)

TABLE 18: MORTGAGE LOANS 1990-1995 (THOUSANDS OF LOANS)

CHART 19: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION ('000)

CHART 20: PDI & SAVINGS RATIO

TABLE 21: STOCK OF DWELLINGS 1983-1995

CHART 22: NUMBER OF OCCUPANTS PER UK HOUSEHOLD 1981 AND 1994 ( percent)

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EXECUTIVE SUMMARY

The Kitchen Furniture market was estimated at around £800m in 1997, having experienced reasonable growth in the last 2 years, though prospects are less optimistic in the short term.

During much of the past decade, the value of kitchen imports into the UK has been in decline. Imports have been affected by factors such as exchange rates and the suitability of product for the UK market, in terms of design. Germany's share of the imported kitchen furniture market has experienced the most significant decline during the period, while both France and Italy have strengthened their positions.

Parallel to the decline in imports, UK manufacturers have been increasing their export levels, particularly to markets with currency advantages. The overall level of exports is low, however, relative to total UK production.

Household ownership levels of fitted kitchen furniture are estimated at 60 percent and have been gradually increasing in recent years. Replacement purchases account for the greater proportion of sales, partially attributable to demographic factors. The volume of sales going into new build has fallen, due to the decline in new house-building.

The volume of total market sales represented by flat-pack products has still been increasing in recent years, and now stands at an estimated 75 percent. However, it is questionable whether flat-packs have much scope for increasing their market share significantly beyond the existing level. Future growth in flat-pack sales will be influenced by factors such as the changing age structure of the population and the success of the individual distribution channels in gaining market share.

Solid oak or oak effect kitchens continue to account for the greatest individual proportion of overall kitchen sales, specifically light-and mid-oaks. However, woods such as pine, in particular, as well as ash, alder, maple and accacia have been taking share from oak. There is a current trend towards blond woods, such as maple, beech and pear, as well as towards simpler, plainer door styles such as Shaker.

Within the worktops market, laminates are estimated to account for 75 percent-85 percent of the market by value. However, other worktop materials, such as solid surfaces, wood and marble, are overcoming trade resistance and beginning to make some impact on the market.

Stainless steel sinks' continue to dominate the market, currently accounting for over 60 percent of sales. However, composite/synthetic sinks' have been growing their market share, which can be attributed to factors such as improved product quality and greater consumer awareness.

While the discount/furniture warehouses have increased their share of the market in recent years, the share held by the DIY multiples is now considered to be 'levelling off'. This can be explained by demographic factors as well as others such as the changes in product mix resulting from the acquisition of Texas by Homebase. The DIY multiples are also experiencing increased competition from other distribution channels.

Following a difficult trading period in the early-mid 1990s, the kitchen specialists are now considered to be strengthening their market position. Builders merchants have been improving their kitchens' offer and some are now beginning to target retail as well as trade customers.

The top five suppliers: MFI, Spring Ram, Bernstein, Magnet and Symphony account for over 60 percent market share. The share held by imports has been in decline and now accounts for an estimated 6 percent only.

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 © 1997 AMA Research

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