Report Summary

Period covered: 27 October – 23 November 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 – Retail Economics Index

Furniture and Flooring experienced a xx% year-on-year  decline, marking its 15th consecutive month of contraction, according to Retail Economics data. This poor performance places the sector among the worst-performing categories in the retail industry.

Several factors contributed to this decline:

Experiences take priority: Consumers increasingly spent on experiences like dining, travel, and entertainment, with travel and hospitality spending rising by xx% and xx% respectively, diverting funds away from big-ticket retail purchases like furniture (Barclays).

Consumer spend directed towards Christmas prep: Despite rising house prices and increased consumer confidence, spending shifted towards seasonal home improvements, with garden centre sales up xx%, while furniture store sales dropped by xx% (HTA, Barclays).

Black Friday Timing and Delayed Purchases: The delayed timing of Black Friday pushed Christmas-related spend into December, negatively affecting November sales.

Weather Disruptions Impacting Footfall: Severe weather in mid-November, including Storm Bert, disrupted foot traffic, leading to a xx% YoY decline in retail park footfall and minimal growth of xx% in high streets, impacting outdoor product categories.

Economic Pressures: Inflation at xx% and rising energy costs continued to constrain consumer spending. Modest wage growth was insufficient to offset increased living costs, leading to more cautious purchasing behaviour in the furniture sector.

Looking ahead

Looking ahead to 2025, Furniture and Flooring is expected to see modest growth, supported by a xx% rise in house prices (OBR) and regional housing strength, particularly in the North and Scotland (Savills).

Additionally, the reintroduction of lower stamp duty thresholds from April 2025 is expected to boost housing transaction volumes, particularly among first-time buyers. This could lead to increased demand for home improvements and related purchases, as homeowners settle into new homes and begin upgrading their properties.

However, the sector faces challenges due to ongoing economic pressures. Inflation is forecast to reach xx% in 2025, driven by energy prices and fiscal measures (OBR). While mortgage rates are expected to fall slightly, the market now expects the Bank of England to make just two quarter-point reductions in 2025, putting pressure on discretionary income (OBR). Wage growth is forecast at xx%, and real household disposable income is projected to increase by just xx% annually, limiting consumer spending power (OBR).

While regional housing activity could drive demand for home improvements, ongoing economic pressures, including high energy costs and limited wage growth, will constrain substantial growth in the sector.

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Projected Real household disposable income per person expected to decline in 2024-25