The £11.3b homewares market may be one of retail’s smaller sectors, but it has become an intense battleground, concludes Verdict’s new UK Homewares Retailers 2008 report.
Homewares remains a very open and fragmented sector with few barriers to entry, says the report, and is therefore an obvious area in which retailers can try to broaden their offer beyond core categories. This, combined with high levels of consumer interest in home decoration, has encouraged retailers to expand the depth and breadth of their homewares offers.
The report reveals that over the last five years the 10 leading retailers collectively boosted their share at a faster pace than in any other major retail sector. Between 2002 and 2007 that share grew from 32.1 to 40.1%, with those retailers taking almost all homewares market growth. Their sales increased by £1.5b (48.1%) while the collective homewares sales of all other retailers rose by just £51m, or just 0.8%.
The report believes that most leading players will gain share, particularly those that open new and larger stores. Over the next five years the big four grocers along with Dunelm, Debenhams, IKEA and John Lewis plan to open a total of 2.6m sq ft of new space, intensifying pressure on lower order retailers.
Argos retains its position as homewares market leader, maintaining a 0.4 percentage point lead over nearest challenger John Lewis and now claiming 5.4% of all homewares spending. In 2007 John Lewis increased its homewares market share to 5.3%. In third place, IKEA closed the gap on John Lewis, boosted by new stores in Manchester, Coventry and Belfast, and by the rollout of its Shop Online! Service, while Debenhams takes fourth position.
Ranked fifth, Tesco emerges as the leading grocer in homewares, non-food taking centre stage in the retailer’s UK growth ambitions over the past decade, while the only homewares specialist, Dunelm Mill, achieved the biggest gain in market share in 2007 with a 0.3 percentage point advance.
Marks & Spencer takes seventh slot, while sharing eighth place are Asda, Next and Wilkinson, each with a 3.2% share. The report notes that Wilkinson has overtaken Woolworths as the leading variety store retailer of homewares, Woolworth’s stores being in desperate need of refurbishment and improved standards, according to the report.
The report says the homewares market grew by 3.4% in 2007. That was the fastest rate for five years, but owed more to reduced deflation than stronger demand. Prices fell by just 0.1% as retailers offset higher import costs.