UK Furniture & Flooring Sector Report summary
May 2024
Period covered: Period covered: 31 March – 27 April 2024
3 minute read
Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Become a member to access this data or take out a free 30 day membership trial now.
Furniture & Flooring sales
Furniture & Flooring sales fell xx% YoY in April, according to the Retail Economics Retail Sales Index (value, non-seasonally adjusted).
Key factors impacted this performance:
Big-ticket caution: Persistent, elevated borrowing costs as the Bank of England's base rate remains at a xxxx high of xx% continued to affect spending on big-ticket items such as furniture.
Adverse weather: Unsettled, wet, and windy weather resulted in the wettest April since 2012, reducing footfall, alongside national rail strikes.
Deflation: Data shows prices across Households Goods stores declined xx% YoY in April, as retailers focus on promotional activity to attract shoppers, passing on savings from lower input costs.
Housing market focus
UK house prices rose on both a monthly (0.1%) and an annual basis (1.1%) in April (Halifax).
These figures point to a more stable market as buyers and sellers acclimatise to a period of higher interest rates.
Although rates are at a 16-year high, they have remained unchanged since August 2023. This has improved market confidence, with mortgage approvals rising to an 18-month high in April (Halifax).
However, as market expectations for the next cut to interest rates shift into the second half of the year, mortgage rates are also increasing to price this in.
Average rates on a two-year fixed mortgage rose to 5.9% in May, from 5.8% in April, reflecting volatility in the expected timing of rate cuts.
Additionally, higher mortgage rates are now feeding through to rents. Landlords are exiting the rental market or passing on costs, seeing rents increase at a record 9.2% in March (ONS).
While housing market activity has stabilised, those who are able to move home generally have less discretionary spending power.
This points to the prioritisation of essential and affordable household goods products over big-ticket furniture items.
Basket abandonment rates rising
Our research shows £34 billion is left at the point of checkout, up 9% YoY, as consumer expectations around delivery and returns are not being met.
One in four attempted online purchases are now left abandoned by consumers, reflecting heightened caution among core spenders amid financial pressures and increased expectations around delivery.
Furniture has the second highest basket abandonment rate in retail, with an average abandonment rate of 26.5%.
For Furniture, basket abandonment is often caused by consumers discovering potentially long delivery times at checkout, concerns over damage during delivery if trusted providers are lacking, as well as stringent delivery stipulations for bulky items.
‘Aspirational millennials’ (affluent under 45s, who typically have the largest amount of debt as a proportion of their expenditure) that have recently remortgaged and those expecting to remortgage in the coming months are seeing some of the toughest headwinds.
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Younger shoppers are drivers of online basket abandonment
Source: Retail Economics, GFS
