More than 200 small furniture stores will shut down over the next five years, a leading retail consultancy warned today.
Verdict said the number of stores would drop by 1.3 per cent to just more than 17,000 between 2001 and 2006, resulting in 223 store closures.
Smaller independent furniture stores will be squeezed out, as the five leading companies, Ikea, MFI, DFS, ScS Upholstery and Furniture World, continue their aggressive expansion strategies, it said.
The larger firms have become successful by selling homewares along with furniture. Homewares is a huge market and the products have a much shorter replacement cycle which means sales increase quicker than larger ticket items.
The market, which is worth nearly £11m, was a key element behind the success of Ikea, the retailer founded by the Swede, Ingvar Kamprad, in 1943.
Verdict warned that independent flooring companies would be hit too, as DIY stores continued to move into the market for wooden floorings. Their market share is growing at a quicker rate than the smaller specialist companies, which are likely to suffer store closures on a similar scale to the small furniture outlets.
With tougher trading conditions ahead, growth for the furniture and floorcoverings sector is expected to fall from 3.3 per cent this year to 0.3 per cent in 2002.
Verdict advised retailers to find different ways of attracting customers, focusing on getting them away from the product replacement cycle, and getting them to buy things that they want rather than need.
To do this, retailers would have to concentrate more on the design of products, rather than using the traditional marketing ploys of offering interest-free credit and assorted discounting, it said.
Verdict said the sector had been expecting a bumper year in 2002 but that this had been delayed because of the economic impacts of the terrorist attacks on 11 September.
The recovery will now begin in 2003 and build up to a peak in 2006 when it is predicted to grow 5.3 per cent – the fastest rate of growth since 1997 when consumer expenditure was lifted by building society demutualisation windfall payments.Reuse content