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Latest report released on DIY Multiples Market - UK 2010-2014

Following a 4% decline in market value in 2008, the UK DIY multiples market was worth just over £7bn in 2009, a rise of just under 1% since 2008, and 3% less than it was in 2003.

Factors such as falling house prices, low consumer confidence and a low level of house moves have particularly affected ‘big ticket’ items such as kitchen and bathroom installations. Consumer spending has fallen with many focusing on saving or repaying debts and mortgages while interest rates have been at historically low levels.

Lower levels of equity withdrawal have impacted the sector, following tighter mortgage restrictions, which funded a large proportion of major home improvement projects prior to the economic downturn.

The market for DIY and Home Improvement products has become increasingly competitive, with greater competition from rival retailers such as grocery multiples. Performance has varied significantly between product sectors, with some such as Lighting & Electrical performing relatively well, while others such as kitchens and bathrooms have been weak, though the collapse of MFI has softened the impact of the kitchens downturn on the DIY multiples.

The preference for smaller scale, lower cost home improvement projects such as decorating; upgrading home furnishings and garden projects are expected to remain popular throughout 2010. In the short term, consumers are likely to undertake DIY tasks themselves rather than ‘Get Someone In’. This will continue to benefit the DIY companies and particularly those with a greater emphasis on the consumer, rather than the trade.

In terms of their retail operations, it is likely that the DIY Multiples will attempt to reduce operating costs and take measures aimed at reducing debt. This will probably include a reduction in capital expenditure and greater efficiency in terms of store layout, store running costs and distribution networks.

The range of products available on-line is likely to increase as a means of broadening the customer base and expanding a more cost efficient sales channel. In terms of products, the focus on promotions and value for money products is likely to continue throughout 2010.

Housebuilding is showing some signs of recovery, with the level of starts increasing in H2 2009. This recovery is unlikely to impact the DIY sector until late 2010, or early 2011 when completions begin to increase.

The existing housing market currently remains subdued, with a low level of transactions, which has been further restricted by limited mortgage availability. This is likely to continue but should support the ‘don’t move, improve’ trend, which in turn should boost sales of decorating and home furnishing products in the short to medium term.
Current expectations are that the market will remain fairly static during 2010, but will begin to recover in 2011, and experience growth of 3-5% per annum to 2013.

Performance is largely dependent on the rate of economic recovery and recovery of consumer confidence. Consumers are likely to remain cautious until there are signs of sustained recovery along with an avoidance of significant interest rate rises.

E: sales@amaresearch.co.uk
T: 01242 235724
W: www.amaresearch.co.uk

26th February 2010