Home truths

Among the many headlines about a slowdown in retail sales, we shouldn't lose sight that household goods was the only retail sector that did not see a decline in sales in the last three months of 2019.

However, when you look closer at the sector, there are some clear winners and losers.

Despite an extensive programme of housing developments across the UK, economic uncertainty means that consumers continue to hold back on big ticket items such as furniture and appliances, which is being reflected in sales performance. The losers generally have two things in common; with some notable exceptions, they are older more established businesses who have a legacy in bricks and mortar and have been slower to adapt to the reality of multichannel retailing and evolving consumer trends.

Major players
In contrast, Dunelm reported strong growth, assisted by having invested heavily in its online proposition and adapting to changing consumer trends. Its customer profile has shifted towards a more digitally focussed customer segment, referred to within its annual report as 'savvy home lovers'.

On the back of this they recognise that they need to meet a wider range of customer expectations, fulfilling some key requirements; everyday necessities, rewarding essentials and decorative enhancements – all focussed on fulfilling the immediate needs of their customers.

Dunelm have also benefited from the `lipstick effect' whereby consumers want to make smaller, low cost purchases to refresh a room rather than a full-scale update. This is reflected in the continued popularity of Zara Home and H&M Home, both of whom provide a `fast furniture' offer, tapping into the latest trends, while allowing confident consumers to purchase reasonably priced items that reflect their personal style.

Alongside improvements to online platforms, some of the major players are investing in new concepts and services in their stores. As well opening its first UK city centre store in Hammersmith in 2021, Ikea is expanding its home assembly service, in partnership with online marketplace TaskRabbit, to encourage purchases from those less willing or able to transform flatpacks into furniture.

To counter a decline in homeware sales, John Lewis is placing a greater emphasis on own brand items and services, having increased the size of its Home design team by 50% and through the launch of c.3000 new own-brand products.

Plants and gardens
Elsewhere, garden centre sales grew by 4.5% in 2019, assisted by strong growth in catering and houseplant sales.  Our changing climate has influenced the pattern of sales; the hottest Easter Monday on record resulted in a 76% increase in lawnmowers sales over the Easter weekend last year.

Overall the houseplant market grew by 60% in the second half of 2019. This growth has been largely attributed to eco-friendly, health-conscious millennials who want to bring something from the outdoors into their homes and nurture something "real" in an increasingly virtual world. This has not only benefited physical stores, but has also aided the rise in specialist online retailers such as Patch.

Online players
These continue to increase market share in the homeware market. Made.com recorded full year sales of £173m in its last annual accounts, a 37% year on year increase. However, Made.com recognises that seeing and touching home furnishings is an important part of the consumer journey: average order values are 50% higher in its three UK showrooms than online.

As with all retail sectors, it is the operators that have a clear understanding of where they are positioned in the consumer journey and what the needs and wants of their customer groups are, that will flourish.

Sam Fox