MARKET DEFINITION

This report uses the definition of DIY ('do-it-yourself') which is used in the official publication Consumer Trends, produced by the Office for National Statistics (ONS):

"Decorators' and DIY supplies, including both self-assembly and ready-made kitchen units, sanitary equipment, sheet glass, paint and lighting, but excluding electrical fittings and accessories."

The category includes DIY tools but excludes garden tools, which are classed as hardware. Also excluded are plants and other garden products, carpets and hard floorcoverings, soft furnishings, bedlinen, bedroom furniture and houseware.

MARKET SIZE AND GROWTH

Consumers spent £7.81bn at retail selling prices (rsp) on DIY products in 1998, according to Consumer Trends. In the first half of 1999, the market showed 8 percent growth and at this growth rate the market would be worth £8.43bn for 1999 as a whole.

The effects of the last economic recession held back spending on DIY up to 1995 because the housing market was slow to recover and consumer confidence was fragile. 1996 saw the start of a period of vigorous market growth which has lasted through to 1999. The upturn in house sales is one of the main factors behind this. In volume terms, or constant prices, the market grew by a total of 56.8 percent over the 4 years from 1995 to 1999. Overall price rises have been modest but the value of the market grew slightly more steeply, by 64 percent.

The main reason for the modest level of price inflation over the past 4 years has been the price wars between the leading DIY superstores. In the first half of 1999, DIY prices actually fell overall and the growth in the value of the market, 8 percent, did not keep pace with the volume growth of 9.5 percent.

Table 1: Indices of Consumer Expenditure on DIY Goods by Value and Volume (1995=100), 1995-1999
Value	Volume
1995	100.0	100.0
1996	113.3	110.7
1997	132.5	126.5
1998	151.9	143.2
1999f	164.0	156.8
f — Key Note forecasts for the year, based on data for 6 months
Note: the value figures have been calculated using current retail prices, while the volume figures have been calculated using constant 1995 prices
Source:Consumer Trends, Quarter 2, 1999/Key Note

MARKET SECTORS

In 1998 and 1999, fast-growing sectors included paint, woodcare, power tools and hand tools, but wallcoverings and kitchens lost value.

Chapters 4 to 9 of this Market Review discuss the sectors of paint, woodcare, wallcoverings, glazed ceramic tiles, power tools, and hand tools and decorating tools, and Chapter 10 discusses more briefly recent developments in some other product sectors.

The DIY paint sector is showing vigorous growth. The manufacturers have brought in new, bolder colours and have encouraged consumers to try more adventurous colour schemes and special paint effects. Recent television programmes have helped to give inspiration and confidence. The value of the market has been helped by the move away from white to higher-value colours, and by strong advertising by the leading brands. The three top paint manufacturers supplying the UK DIY market are ICI (with its Dulux brand), Akzo Nobel and Kalon, the last of which leads in own-label supply as well as offering branded ranges.

The woodcare sector is also showing strong growth and is estimated to have reached a value of £186m at rsp in 1999. The relatively new sector of wood effects has shown very strong growth. The leading woodcare brand is Ronseal and a close contender is Cuprinol, which was bought from Williams PLC by ICI in 1998.

Demand for wallcoverings has suffered a steep downturn since the peak year of 1996 as tastes have reacted against the highly decorative co-ordinated wallcoverings and have favoured the creative use of paint. However, the industry has invested heavily in advertising and promotion and has created new wallcovering designs to win back market share. There has been a renewed interest in coloured blown vinyl wallcoverings, which offer a texture unavailable with paint. The market is expected to fall again in the year 2000, but the decline has slowed.

The market for glazed ceramic tiles is thought to have considerably more potential in the UK, but it is not a traditional decorating style for this country and is more popular in warm Mediterranean countries. The launch of innovative new ranges by UK manufacturers and the increased emphasis given to tile display by the DIY superstores have helped to develop the market. However, 1999 appears to have seen a downturn in market value, which Key Note estimates at £275m at rsp.

Around 80 percent of glazed ceramic tiles sold in the UK are imported. The two leading UK tile manufacturers, H&R Johnson Tiles and Pilkington's Tiles, have invested in updating their manufacturing facilities to try to compete more effectively with the automated large-capacity factories which exist in competitor countries. A new venture by British Ceramic Tile (BCT) aims to establish a large British tile manufacturer which can compete in the world market.

The DIY sector showing the greatest growth in 1998 was that of power tools. One factor which has boosted sales has been the launch of multifunction tools by Black & Decker and Bosch, the two leading manufacturers. Heat guns, another fairly new product, are also showing strong sales. The DIY power tools market is estimated to have reached £312m in 1999, including accessories.

The hand tools sector, including non-powered decorating tools, remains healthy, with many product launches planned for the year 2000. There has been growth in volume sales of decorating tools, helped by the growth in paint sales, but cheap imports keep this growth down.

The market for kitchen furniture units suffered a sharp downturn in 1998/1999. Its value, including both flat-pack and rigid types, is estimated at £1.1bn. MFI remains the leading manufacturer and retailer. The DIY superstores have a substantial share in this market, although Homebase, which had a large market share, has found it unprofitable and has decided to withdraw from the sector.

CONSUMER RESEARCH

The results of original research carried out for Key Note by The Gallup Organization in November/December 1999 are shown in Chapter 2 of this Market Review, and relevant research by BMRB International is included under the various product sectors in Chapters 4 to 9.

The Gallup survey asked consumers about 13 different DIY activities. It found that 64 percent of the adult population of Great Britain had done some painting or woodcare indoors during the year, and 39 percent had tackled some exterior painting or woodcare.

The survey also asked people about the sources of DIY information and advice which they found helpful. 48 percent of consumers said that they had found television programmes helpful, compared with 33 percent obtaining help from manuals and 22 percent obtaining help from DIY magazines. Even more important than the television programmes are leaflets and advice from DIY stores and the instructions on packs of DIY products.

However, the best resource of all seems to be the advice of a family member. 63 percent of consumers said that they had found their family helpful when they needed DIY advice. Friends and neighbours had also been used by more than half the people surveyed. Less frequently, people had obtained helpful advice from specialist building or plumbing centres, from attending DIY classes or from the use of DIY helplines (telephone or Internet).

RETAILERS

The DIY superstores account for around 54 percent of the DIY market as defined in this report, as well as having substantial sales of garden products and other products not covered by this report. The five leading chains are B&Q, Homebase, Wickes, Focus Do It All and Great Mills. There have been major changes in the superstore sector recently.

In November 1998, B&Q merged with France's leading DIY retailer, Castorama. Kingfisher PLC now has a 54.6 percent stake in the merged business, with the option to buy the rest of the capital at the end of the year 2000. The merged business will have massive buying power and expects to be able to save £50m per year. It will also be able to compete more effectively in the world market and will be better able to fend off invasion of the British and French markets by the US chains. In April 1999, the company acquired the five outlets of Dickens and has converted four of these to the B&Q Warehouse format.

Focus Group Ltd acquired Britain's third-largest DIY superstore chain, Do It All, from The Boots Company PLC in 1998 and has merged it with Focus DIY to form the Focus Do It All chain.

Boots has also sold its decorating chains, Fads and Homestyle, to a furniture retailer. These stores will eventually be moved out of the DIY market entirely, to become furniture and furnishings outlets.

The other competitors in the DIY market are the specialist stores (decorating specialists, tile specialists, etc.), DIY independents, hardware chains and independents, catalogue stores, mixed retailers, mail order companies, and the builders' merchants and other trade outlets.

Online shopping for DIY products is now becoming quite significant and is expected to increase. B&Q runs an online advice service which has quickly become very popular.

FUTURE PROSPECTS

Most of the economic factors affecting the DIY market remain favourable to continued growth in the years 2000 and 2001. Key Note's forecast for the market in the year 2000 is £9.44bn at current prices, assuming that price inflation will be very modest or non-existent. Key Note expects market growth to slow but remain healthy to at least 2003, by which time the market could have reached a value of £11.46bn.