Views on the smaller retailers
Ikea’s chief executive Anders Dahlvig says the UK furniture market is suffering more than any other across the world and that independent retailers will find it increasingly tough to survive, predicting many will go the way of large chains like MFI and disappear from the UK retail scene.
As the leader of a global retail chain he is the perfect person to pass judgement on the state of the worldwide furniture market, and if he says the furniture industry in the UK is on its knees, it’s hard to argue with this assertion.
But we believe he is spectacularly wrong when it comes to predicting a doomsday scenario for the independent furniture retail sector in Britain. Furniture sales in the UK are undoubtedly suffering, but like so many retail analysts, he is wide of the market when describing the true picture of furniture retail on these shores.
Over the years, we’ve been privy to some of the most authoritative market outlook reports covering the UK home furnishings sector. Almost universally, market consolidation and the demise of independent retail are the predicted outcomes in the medium to long term, as smaller firms see their market eroded by larger chains with more marketing clout and greater buying power.
You only need look outside the furniture industry, to other consumer goods sectors, to see why it is easy to come to this conclusion. Independent electrical retail, for example, has been decimated by the introduction into the market of general retailers and supermarket chains, along with established specialist groups like Comet and Dixons.
But where do the brands lie in this sector and what is the product offer? The breadth of supply is so limited, with dominant manufacturers such as Sony, Hitachi, Toshiba or Panasonic.
Only at the very top of the market, where national chains can’t sell in the required volume, are independent players able to sufficiently differentiate from the groups. But even then, they have to work with a limited number of branded products, such as Bose or Loewe or Bang & Olufsen.
The furniture industry is a world away from this scenario. No single manufacturer brand is strong enough to shape the retail sector.
Any nationwide consumer survey would tell you that Ikea, or perhaps John Lewis, is the biggest brand in the furniture industry.
But performing any such survey in smaller towns and cities would tell you something quite different. Is Ikea really a bigger brand in Macclesfield than Arighi Bianchi, or in Colchester than Hatfields, or across swathes of East Anglia than Glasswells?
I think not, and these are far from isolated examples. Britain has hundreds of £10m+ independent furniture retailers – each more powerful in their own catchment area than any national chain could hope to be.
Many of these independents will be suffering along with the chains as the market has nosedived. But in many cases they are sitting on property owned outright worth millions of pounds, and often a cash reserve built up over two or more family generations. Which is why we are reporting on so many independents currently splashing out on refurbs or extensions, preparing for better days to come.
There are no more than half a dozen brands in the furniture supply sector, yet there are thousands of manufacturers across the world supplying UK retailers. No independent can say they are unable to differentiate their product from national chains.
Unless that scenario changes markedly, the true brands of the UK furniture industry will continue to thrive. And non-industry or non-local observers will continue to be oblivious to them.
Tags: Furniture advice