Current UK market

We operate in both the furniture and flooring markets, and there are a number of factors influencing both markets that may impact the business. These factors range from general consumer confidence levels to momentum in the housing market, and can also include challenging weather conditions, which affect store footfall.

Both of our core markets are heavily influenced by similar key factors:

Both of our core markets are heavily influenced by similar key factors:

Consumer confidence:

Consumer confidence has a direct impact on the appetite for big-ticket purchases. GfK monitor this through their Consumer Confidence Index, which shows that confidence recovered post-pandemic, peaking at -7 in July 2021, having been as low as -36 in June 2020, and having not been higher than -7 since May 2017. Through the remainder of 2021 it normalised at pre-pandemic levels until Russia’s invasion of Ukraine early in 2022 and the subsequent inflationary pressures on food and utilities. Confidence has fallen each month through 2022, until it reached a record low of -49 in September, 36 points lower than at the same point in the prior year.

Housing market

The purchase of new flooring and furniture is often triggered by a house move. 2021 saw the highest number of property transactions since 2007 as the pent up demand following the lockdowns of 2020 unwound and purchasers benefitted from a temporarily reduced stamp duty. Although 2022 levels to August are currently down 18.9% as at the same point in 2021, the total number of housing transactions is currently on track to be the second highest since 2007.

Consumer credit

The availability of consumer credit helps facilitate sales, and provide opportunities for upselling, with nearly half of our customers choosing to utilise this option as a way to pay for their products. We noticed a decline in the use of finance during the pandemic, and although this trend appears to be reversing, it has still not returned to the levels seen in 2019. This change appears to be consumer led, potentially as a result of increased savings over the period of the COVID-19 pandemic, and is supported by a further fall in net consumer credit lending of 3.5% in 2021, following the 1.9% fall in 2020. 2022 has begun to reverse this trend, with a 4.9% rise in lending to date. The approval percentage of those requesting finance to purchase with us continues to remain in line with prior years.

Our advantages in the market

We have a differentiated value-focused positioning in our markets and a continued reputation for providing our customers with products at a leading range of entry to middle price points. We have a clear view of our core customer demographic, which consists of a broad population of aspiring homemakers, families and retired couples.

We continue to grow our online business significantly, and our new growth plan includes increased digital investment to improve our omnichannel offering. Our core model has had continued success and we will continue to expand and modernise our ranges and brands. As the economic recovery continues, we will also invest in improving our brand perception, awareness and consideration to broaden our customer base.