The UK furniture and floorcoverings market is set to return to growth in the fourth quarter (Q4) of 2024 after six quarters of decline as the October 2024 Budget should remove a dampener on consumer confidence, and the 10.9% uplift in housing transactions between April and August 2024 and real wage growth filter through. This presents an opportunity for retailers with shorter lead times, such as IKEA, Argos and John Lewis, and those who have invested in domestic manufacturing and new ranges.
The furniture and floorcoverings sectors had a challenging 2024 as shoppers prioritised essentials and consumer confidence was brittle. Future consumer sentiment has taken a sharp downturn recently, after a recovery in H1 2024, mainly due to concerns about how the Budget will affect shoppers’ finances. However, GlobalData’s consumer sentiment tracker saw an uptick in November by 3.8 percentage points (ppts) versus October 2024, and by 2.9ppts year-on-year. Shoppers expect both their personal financial position and the economic outlook to improve, providing a boost to the furniture market.
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An increase in housing transactions since April 2024 and a full year of real wage growth will also help release pent-up demand. There are signs of this release starting, with DFS reporting year-on-year order growth since July and figures from GlobalData’s consumer sentiment tracker showing that a greater proportion of shoppers will spend more on furniture and floorcoverings over the next six months on a year-on-year basis, with a particular uplift since July 2024. Weak consumer confidence had previously inhibited spend.
Now that the Budget has been announced and consumers are starting to feel better about their financial positions, we expect that the current pent-up demand will begin to be released. IKEA, Argos and John Lewis are among the retailers who will benefit from this. The Budget occurred after the deadline for Christmas delivery had passed for many furniture specialists, so retailers with shorter lead times will benefit initially from the recovery. Retailers who have invested in domestic manufacturing, such as DFS, Bensons for Beds and Dreams, will also benefit as they can circumnavigate the current Red Sea disruption.
Retailers with shorter lead times, such as John Lewis, will be among the main beneficiaries from improving conditions in Q4. John Lewis will also benefit from Marks & Spencer’s decision in mid-2024 to exit the “bulky furniture” sector, the return of its Never Knowingly Undersold promotion and the launch of new upholstery ranges.
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