15 April 2024, 19:36
By Dr Peter Beele Jan 27, 2015

A statistical analysis of the UK furniture industry

FIRA’s new statistical digest provides an invaluable summary of how the UK furniture industry is performing, pulling relevant data from Government bodies such as the Office for National Statistics, HM Customs and Revenue and Communities and Local Government, plus the Bank of England to identify and analyse the manufacturing and spending trends of previous years.

As a media partner of the FIRA association, Furniture News was among the first to receive the latest edition of the digest. Published in November last year, the report is limited in detail to figures from 2010 to 2013 – yet it provides one of the clearest pictures of the industry available today.

Covering areas such as national economic trends, the structure of the UK furniture manufacturing industry and trading relationships with the rest of the world, the report delivers trade figures regarding various industry sub-sectors across a range of contract, office and domestic product groups.

Key findings of the latest report include:

National economic trends

* There was a significant increase in total unsecured lending from 2012 to 2013 (4.4%), although the value remains much lower than the relatively recent peak of £238b in September 2008. Latest data show that this increasing trend in net lending continued into 2014, reaching £222b in March of that year.

* Historically, the number of dwellings starts in the UK almost halved between 2007/8 and 2008/9. Since then housing starts had continued to increase, although the latest figures show a small reduction in starts from 2010/11 to 2012/13.

* There was a sharp increase in numbers and values of “property transactions above £40,000” from 2012 to 2013. Numbers and values increased by 15% and 17% respectively, with the total transaction market being valued at almost £340b in 2013.

* Total consumer expenditure increased between 2010 and 2013 to over £1017b – an increase of just over 3%. The most significant growth in expenditure over this period occurred in clothing and footwear, which increased by 12.6%. This was followed by recreation and culture at 6.5%.

* Expenditure on furnishings, household goods and house maintenance remained relatively static from 2010 to 2013, although there was a 2.7% growth recovery between 2012 and 2013. Within this sector, consumer expenditure on furniture and furnishings reached £12.6b, which was a 6.4% increase on 2012.

“This recovery is fairly significant in terms of value – an increase in consumer expenditure on furniture and furnishings between 2012 and 2013 of around around £800m – and, mirrored by an increase in consumer lending, indicates increasing consumer confidence compared with recent years,” comments Peter.

“Consumers are willing to borrow a little more – some of this is credit, but much more is increased lending on dwellings, reflecting growing confidence in moving house and taking out mortgages.”

* Furniture and furnishings repair spend, having reached £58m in 2012 – which represented a significant recovery after tough previous years – dropped to only £31m.

“This was surprising, as there was a huge increase reported last year,” says Peter. “I hear that repair services have actually been very busy – perhaps this is a statistical blip, it’s a small area of the market, so the results could have been skewed fairly easily. That, or people are spending more on household furniture and furnishings, so perhaps they’re happier to buy new products rather than carry out repairs.”

“Consumers are willing to borrow a little more – some of this is credit, but much more is increased lending on dwellings, reflecting growing confidence in moving house and taking out mortgages”

* There was gradual overall rise in internet sales within the household goods sector from 2011 to 2013. In December 2013 the internet accounted for almost 11.7% of all retail sales, although the comparable value in the household goods sector was only 6.2%.

Comments Peter: “These figures are new to the report, and cover all household goods, as there’s no breakdown available yet. Interestingly, from 2011 to 2013 sales rose to represent 6% of all retail expenditure  in the sector, whereas total internet retail sales rose at a greater rate, reaching 12% of all sales in 2013. This indicates that whilst people will buy household goods on the internet, they are less inclined to do so than in other product areas. That said, I think it’s a fait accompli that sales will continue to grow as people become increasingly familiar with the internet.”

Furniture industry trends

* Total furniture manufacturing turnover in 2013 was just over £7b, which is similar to the 2010 figure and 6.7% higher than 2012. This represents a significant recovery from 2011 and 2012 when turnovers were £6.4 and £6.5b respectively.

Peter says: “After following an upward trend, UK manufacturing levelled out in 2012 – but now it’s recovered to 2010’s level (there was an apparent delay before furniture manufacturing was hit by the effects of the recession). There’s been a significant recovery, and anecdotal evidence supplied to the British Furniture Confederation suggests further recovery throughout 2014. Consumer demand, imports and, to a degree, export, have increased.”

* The office and shop, mattress and kitchen sub-sectors all contributed to the increase in turnover from 2012 to 2013. “Other furniture” experienced a small decrease in turnover over that period. “Looking at the market breakdown, the mattress sector seems to have done particularly well, albeit on a smaller scale,” says Peter.

* Furniture manufacturing in 2013 equated to 1.3% of the UK’s total manufacturing turnover. Despite that, the furniture sector employed 83,000 people, which equates to just 3.3% of all UK manufacturing personnel.

“There’s actually more people employed in the furniture sector per pound turnover than in many other manufacturing industries,” says Peter. “It’s something we should be proud of when talking to the Government about employment, but it makes us less competitive globally, and also our turnover in terms of gross value added per worker tends to be lower than that of other sectors.

“Over the next six to nine months, FIRA is teaming up with the Worshipful Company of Furniture Makers to conduct a training and skills survey. The aim is to identify the nature and location of skills gaps across the whole furniture sector. We’ve got to make manufacturing jobs more attractive, and there are plenty of ways to do that.”

* The total number of furniture manufacturers in 2013 was 6016. This number has gradually declined since 2010.

* Looking at the wider furniture sector, and incorporating furnishings, it is estimated that in 2013: total manufacturing turnover was £9.4b; there were 8114 companies; and 115,000 individuals were employed.

* 2013 data confirms that furniture manufacturing was dominated by micro- and small- to medium-size businesses, with only 260 companies (4.3%) operating at turnovers in excess of £5m. 83.6% of companies turn over less than £1m.

* Manufacturing is generally evenly spread around the UK with no single, significant geographical hub, although: the South-east had proportionately more companies than any other region and, combined with London, accounted for 24.7% of all UK furniture manufacturers; 28% of office furniture manufacturers were in London and the South-east; and the mattress sector is more regionalised than other sub sectors, with 41.7% of mattress manufacturers being based in Yorkshire and the Humber.

* Imports of furniture into the UK in 2013 increased compared with the previous year to £4.6b. The majority of 2013 imports originated from China – almost £1.5b – although its share of the market dropped slightly. Italy remained the second largest exporter to the UK, with its market share increasing over the same period from 10% to 11%. The value of imports from the European Community was almost £2b in 2013. Initial indications are that there will be a significant increase in imports in 2014 – total imports could reach £4.9b.

* Furniture exports remained relatively static over the period of 2010 to 2013, although with a slight improvement from 2012 to 2013. Predictions suggest that the recent improvement in export performance will continue into 2014, with the possibility that total exports will exceed £1b.

* The main furniture export markets in 2013 were the Irish Republic and the US – 17% and 10%, respectively. However, whilst the value of exports to the Irish Republic increased by £14m, the value of exports to the US fell significantly from £120m in 2012 to £100m in 2013.

* The 2011 pattern of slightly falling imports and increasing exports saw the first decrease in the furniture sector trade gap for many years. However, normality appears to have been resumed, with the negative trade gap rising to £3.7b in 2013. The negative trade gap with China – the largest for the sector – decreased to £1.36b in 2011, but since then, despite China losing 1% share of the export market to the UK in 2013, this figure has increased to £1.45b. The main positive trade gap in 2013, as in previous years, was with the Irish Republic, at £122m – £15m more than in 2012.

“It’s slightly disappointing that imports have gone up and exports are not tracking that increase,” comments Peter. “Also, there’s a negative trade gap with the US for the first time, due to growing US imports.

“While the numbers hint that there’s room for optimism, it’s probably best to be cautious while our biggest export markets continue to struggle”

“Also, it was clear in last month’s Autumn Statement that many areas of Europe, our biggest traditional export market, continue to struggle, and are recovering more slowly than predicted. In addition, the fact that China is not doing as well as previously, and Russia is fairly unstable makes for a less optimistic vision of future trading than would have otherwise been expected.

“Statistics suggest that export levels will continue to rise, as they have throughout the first half of 2014. But there’s got to be some caution – if the world markets are generally unstable, it’s not going to be easy. That said, UK furniture manufacturing’s small reliance on exports could be another reason why it is holding its place in the market.

“I think these figures are positive overall, particularly when taking into account the things I’ve heard from the industry over the last 12 months. What looks like being three years of increasing manufacturing levels is impressive given our overseas competition – but, while the numbers hint that there’s room for optimism, it’s probably best to be cautious while our biggest export markets continue to struggle.”

Author Dr Peter Beele is the technical development manager at FIRA, a company that delivers independent services dedicated to the furniture supply chain and consumers, as well as research and standards advice for members of the association. The full report is available free to FIRA members, and for £300 otherwise – find it here. This article was published in the January issue of Furniture News magazine.

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