行业IBIS-G4211 Furniture Retailing in Australia Industry Report PDF

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I N DUS T RY R EP O RT G4 2 1 1

Furniture Retailing in Australia Feeling chipper: Revenue has grown despite limited discretionary income growth Liam Harrison | May 2019

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Furniture Retailing in Australia

May 2019

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Contents ABOUT THIS INDUSTRY...............................4 Industry Definition.......................................................4 Supply Chain.................................................................4 Major Players................................................................4 Main Activities..............................................................4 Similar Industries.........................................................4 Related International Reports...................................5

AT A GLANCE................................................6 Key Statistics Snapshot..............................................6 Key Trends.....................................................................6 SWOT in the Industry..................................................6 Executive Summary....................................................6 Industry Structure.......................................................7 Key Industry Data........................................................7 Major Players................................................................7 Products & Services Segmentation.........................7

INDUSTRY PERFORMANCE..........................8 Key External Drivers...................................................8 Current Performance...................................................9

INDUSTRY OUTLOOK..................................10 Industry Life Cycle.....................................................12

PRODUCTS & MARKETS............................12 Products & Services Segmentation.......................12 Demand Determinants.............................................14 Major Markets.............................................................14 International Trade....................................................15 Business Locations....................................................16

COMPETITIVE LANDSCAPE.......................16 Market Share Concentration...................................16 Key Success Factors..................................................17 Cost Structure Benchmarks....................................17 Basis of Competition.................................................19 Barriers to Entry.........................................................20 Industry Globalization..............................................20

MAJOR COMPANIES....................................21 Major Players..............................................................21

Furniture Retailing in Australia

OPERATING CONDITIONS..........................24 Capital Intensity.........................................................24 Potential Disruption...................................................25 Technology & Systems.............................................26 Revenue Volatility......................................................27 Regulation & Policy...................................................27 Industry Assistance...................................................28

KEY STATISTICS..........................................29 Industry Data..............................................................29 Annual Change...........................................................29 Key Ratios....................................................................29 Additional Resources................................................30 Industry Jargon...........................................................30 Glossary.......................................................................30

Legend Icons are used throughout the report to indicate impact on the industry. Negative impact Neutral impact Positive impact

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Furniture Retailing in Australia

About This Industry Industry Definition

Supply Chain

Industry firms retail household furniture, blinds, awnings and mattresses. Company-owned and franchised stores and online sales generated by industry operators are included in the industry. The industry excludes department stores, online-only retailers and auction websites. Supply Industries Wooden Furniture and Upholstered Seat Manufacturing

Demand Industries -

Consumers

Metal Furniture Manufacturing Mattress Manufacturing Wicker and Fibreglass Furniture Manufacturing Furniture and Floor Covering Wholesaling

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Furniture Retailing in Australia

Major Players

Harvey Norman IKEA Greenlit Brands BBQSAM

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Main Activities

The primary activities of this industry: Bedroom furniture retailing Lounge and dining room furniture retailing Blind and awnings retailing Outdoor and garden furniture retailing Other furniture retailing The major products and services in this industry: Bedroom furniture Lounge and dining room furniture Outdoor and garden furniture Other furniture Blinds and awnings

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Similar Industries

G4260 - Department Stores in Australia Businesses in this industry sell a range of general merchandise include furniture and bedding products. G4214 - Manchester Retailing in Australia Operators in this industry retail fabrics, linen, curtains and household textiles. G4273 - Antique and Used Goods Retailing in Australia Establishments in this industry retail antiques and second-hand furniture. X0004 - Online Shopping in Australia Players in this industry operate websites that enable consumers to purchase a range of products, including furniture.

Related International Reports

OD5076 - Online Household Furniture Sales This industry includes companies that retail a range of indoor and outdoor home furniture, such as sofas, beds, tables and chairs, via the internet. Home decor is not included in this industry. Industry goods are typically purchased from manufacturers and wholesalers and then sold to the public online. OD5462 - Bed & Mattress Stores This industry sells sleep equipment, including mattresses, box springs, cots, bedding, pillows and waterbeds. The industry excludes wholesale furniture distributors, such as department stores or direct non-store retailers, as well as sales of other bedroom furniture. Revenue from sales of sleep sofas, daybeds, futons and other dual-purpose furniture is not included in industry revenue. 6582 - Furniture Stores in China The Furniture Store industry is part of China's retail trade sector. Furniture stores retail a broad range of furniture goods for dining rooms, bedrooms, kitchens, home offices, and other indoor and outdoor areas. These furniture goods are purchased from domestic and international manufacturers and wholesalers. G47.599 - Furniture, Lighting & Homeware Retailers in the UK Operators in the industry sell household, outdoor and office furniture, and other household goods such as light fixtures, utensils, cutlery, crockery, glassware and non-electrical household appliances. Online-only retailers are excluded from the industry. 44211CA - Furniture Stores in Canada This industry sells household, outdoor and office furniture, except those sold in combination with office supplies and equipment. This includes living room, dining room and bedroom furniture, upholstered furniture, desks and home office goods, lamps, recliners, rugs and outdoor pieces. G4211NZ - Furniture Retailing in New Zealand Industry operators primarily retail household furniture, blinds, awnings and mattresses through brick-and-mortar stores. The industry includes operators that retail antique reproduction furniture, but excludes retailing second-hand or antique furniture. Curtain retailing, and manufacturing and installing blinds or awnings are not included in the industry. Online-only retailers and auction websites are also excluded. 4421 - Furniture Stores in the US

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At a Glance Key Statistics Snapshot

Total Revenue 2019

Annual Growth 2014-2019

Annual Growth 2019-2024

$7.8bn

1.4%

2.1%

Profit Margin 2019

Wages as a share of Revenue 2019

Number of Businesses 2014-2019

1.7%

Key Trends

13.1%

-3.9%

Rising discretionary incomes have consumer total available funds to spend on industry goods Industry profitability has declined due to greater competition from online-only retailers The low price of imported goods available on the domestic market has intensified competition A projected rise in household numbers will revive demand for essential furniture Strong competition will continue to hinder profit growth over the next five years Some retailers will differentiate themselves by offering premium and luxury product lines

SWOT in the Industry Strengths

Weaknesses

Opportunities

Threats

Low Customer Concentration

Low Profit

High Short-term Growth

Low Long-term Growth

High Outlook Growth

Outlier Growth

High Labor Efficiency

High Product Concentration

Low Capital Intensity

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Executive Summary

Operators in the Furniture Retailing industry have faced a volatile market over the past five years.

Rising discretionary income has boosted industry demand over the period, but periods of negative consumer sentiment have limited revenue growth. Difficult trading conditions have been intensified by declining demand from residential property construction over the past three years, due to growing fears of an oversupply of apartments in the market. As a result, industry revenue is only expected to grow at an annualised 1.4% over the five years through 2018-19, to reach $7.8 billion. This includes a decline of 3.9% in the current year, largely due to a decline in residential building construction. While the industry has benefited from periods of positive consumer sentiment over the past five years, limited growth in wages, declines in residential property construction and declines in renovations to existing dwellings over the past three years have reduced demand for furniture. Industry firms have been heavily discounting to clear inventory, inciting fierce price-based competition that has further hindered revenue growth. Furniture retailers have also faced intensifying competition from external players, such as department stores and online-only retailers, which have expanded their furniture product lines over the past five years. The Furniture Retailing industry has become increasingly concentrated over the period, with many small, unprofitable furniture retailers exiting the industry. This trend has increased the market shares of several major players. Trading conditions are forecast to improve over the next five years, as demand for residential construction rises. Industry revenue is projected to grow at an annualised 2.1% over the five years through 2023-24, to reach $8.7 billion. Discretionary income growth and positive consumer sentiment is forecast to boost spending on furniture products and drive industry revenue growth. However, continued external competition is anticipated to hinder retail spending, prompting many industry players, such as IKEA, to enhance their online sales channels to widen their customer reach.

Industry Structure

Level

Trend

Level

Life Cycle

Matur e

Regulation Level

Revenue Volatility

Mediu m

Technology Change

Low

Barriers to Entry

Low

Increasin g

Industry Globalization

Low

Increasin g

Mediu m

Increasin g

Capital Intensity

Low

Industry Assistance

Low

Concentration Level

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Mediu m

Stead y

Competition Level

Mediu m

Trend Steady

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Key Industry Data

Major Players

Products & Services Segmentation

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Industry Performance Key External Drivers

o Real household discretionary income Real household discretionary income reflects the income of consumers after accounting for essential expenses. Rising discretionary income broadens the type, quality and range of furniture that consumers can afford. However, falling household income makes it harder for consumers to purchase industry goods, which can threaten industry demand. Discretionary income is expected to rise in 2018-19.

实际家庭可支配收入反映了扣除基本费用后的消费者收入。可支配收入的增长扩大了 消费者可以买得起的家具的类型，质量和范围。但是，家庭收入下降使消费者更难以 购买工业产品，这可能会威胁到工业需求。预计家庭可支配收入将在 2018-19 年增 加。 o Consumer sentiment index The consumer sentiment index measures people's attitude towards their current financial situation and the overall economy. Fluctuations in consumer sentiment can influence the amount that consumers spend on furniture. When consumer sentiment is positive, households are more likely to spend on discretionary products, boosting furniture sales. Negative consumer sentiment is generally associated with reduced expenditure, as consumers become more pessimistic about their financial situation. In 2018-19, the consumer sentiment index is expected to decline but remain positive.

消费者信心指数衡量了人们对当前财务状况和整体经济的态度。消费者情绪的波动会 影响消费者在家具上的消费金额。当消费者情绪乐观时，家庭更有可能在可随意购买 的产品上花费，从而促进了家具销售。消极的消费者情绪通常与支出减少有关，因为 消费者对其财务状况变得更加悲观。在 2018-19 年度，消费者信心指数预计将下降 但仍保持正值。 o Demand from residential building construction Trends in the residential property construction market influence demand for furniture at the retail level. Owners and tenants of newly erected properties often furnish their homes with new items, including mattresses and bedroom furniture. As a result, growth in housing construction provides the industry with an opportunity to expand. Demand from residential property construction markets is expected to decline in 2018-19.

住宅物业建筑市场的趋势影响着零售层面对家具的需求。新近建房的房主和房客经常 为自己的房屋提供新物品，包括床垫和卧室家具。结果，住房建设的增长为该行业提 供了扩展的机会。预计住宅物业建筑市场的需求将在 2018-19 年下降。

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Furniture Retailing in Australia o 10-year bond rate The interest rates that consumers pay on their mortgage are broadly reflected in the 10year bond rate. Interest rate variations influence discretionary income, which in turn affects demand for furniture. Falling interest rates allow consumers to spend more due to reduced debt repayments, and can encourage spending on furniture even during periods of lower discretionary income. The 10-year bond rate is expected to remain stable in 2018-19.

消费者支付的抵押贷款利率大致反映在 10 年期债券利率中。利率变动影响可支配收 入，进而影响对家具的需求。利率下降使消费者由于减少了债务偿还而增加了支出， 甚至在可支配收入较低的时期也可能鼓励购买家具。预计 10 年期债券利率将在 2018-19 年保持稳定。

Current Performance

Operators in the Furniture Retailing industry have faced a volatile trading environment over the past five years.

Trends in household discretionary income, consumer sentiment and household formation drive demand for industry products. Intensifying price-based competition from external players, such as department stores and online retailers, has put significant pressure on industry operators and eroded profitability. As such, industry revenue is only expected to grow at an annualised 1.4% over the five years through 2018-19, to total $7.8 billion. This includes a fall of 3.9% in the current year, largely due to a projected decline in residential building construction. Operating landscape Discretionary income trends have driven demand for furniture over the past five years. Rising incomes have increased the funds available for consumers to spend on industry goods, such as lounge and dining room furniture, blinds, awnings and mattresses. However, negative consumer sentiment in 2014-15 through 2016-17 curbed spending on furniture. Falling mortgage affordability and poor wage growth have made Australian consumers pessimistic about their financial positions, constraining growth in retail spending. Consumer sentiment fell to its lowest level over the period in 2014-15, with value-conscious consumers curtailing spending on big-ticket furniture items. Negative consumer sentiment has boosted demand for furniture from cheaper non-industry channels, such as department stores and online-only retailers, as their lower overheads allow them to offer industry goods at lower prices. Interest rates in Australia have trended downwards over the past five years. This decline

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Furniture Retailing in Australia has worked in the industry's favour, as lower household debt repayments leave consumers with more discretionary income for furniture purchases. Residential construction activity has fluctuated over the past five years, strongly influencing industry revenue. Between 2013-14 and 2016-17, a surge in residential property development boosted industry sales volumes. Furniture retailers also benefited from rising capital expenditure on private dwellings. Consumers typically purchase new industry products to match the decor of their new or renovated living spaces. However, residential property construction activity is expected to decline in 2018-19, largely due to a downturn in multi-unit apartment construction amid growing fears of an oversupply. This decline is expected to contribute to industry revenue contracting over the current year. The emergence of 'buy now pay later' providers such as Afterpay and Zip Pay has also been a boon to the industry. These services allow consumers to more easily smooth their expenditure, making them more likely to bring forward small and medium expenditure items, rather than saving up and waiting. Although most furniture retailers offer loan services for payments, and can offer services such as long interest-free periods, these are typically only used for larger items. As a result, 'buy now pay later' services have significantly expanded the number of industry goods consumers can easily purchase on credit. Profit and competition Industry profitability is expected to decrease over the five years through 2018-19, due to intensifying competition across the industry. Given the homogenous nature of mo...