Table of Contents
Introduction
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- Definitions
- Abbreviations
Executive Summary
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- The market
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- Figure 1: UK retail sales of furniture, 2006-16
- Slow recovery in the furniture market
- Replacement furniture under pins the market
- Market factors
- Companies, brands and innovation
- More failures likely but profitable opportunities for strong brands
- Specialists under pressure
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- Figure 2: UK retail sales of furniture*, by channel of distribution, 2010
- Looking overseas
- The consumer
- Major brands strongly attractive to consumers
- Purchasing activity constrained by financial worries and limitations
- Consumers are promotionally driven
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- Figure 3: Factors considered important when choosing to buy furniture, June 2011
- Multi-channel research becoming widespread
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- Figure 4: Shopping behaviour for furniture, June 2011
- What we think
Issues in the Market
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- Who’s purchasing ‘big ticket’ furniture and what do they want?
- How should retailers adapt to changing demand?
- How can specialists survive encroachment from non-specialists?
- Is there a need to improve credibility of promotional activity?
- What’s the future for retail selling space?
Future Opportunities
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- Trend: Greeninfluencers
- Trend: Slow It All Down
Internal Market Environment
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- Key points
- Purchasing activity continuing to decline
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- Figure 5: Penetration and purchasing of furniture, by major furniture categories, 2006-10
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- Figure 6: Consumer Price Indices for furniture and furnishings, Jan 2009-May 2011
- Failures continue
- Company failures since mid-2010:
- Companies reporting losses in 2009/10:
- Companies closing stores since mid-2010:
- End of an era for several independents
- Plenty of evidence of profit recovery
- New opportunities and expansion
- Green shoots at grass roots
- Anyway back for MFI?
- Imports dominate UK wooden furniture market
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- Figure 7: Overseas trade in wooden furniture for the kitchen and bedroom, 2006-10
- Figure 8: Source of imports of wooden furniture for the kitchen and bedroom, by country, 2006-10
- Sustainability rising up consumers’ agenda
Broader Market Environment
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- Key points
- Furniture underperformed in 2010
- Sluggish housing market stifling demand
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- Figure 9: Housing Transactions – Q1 2008-Q1 2011
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- Figure 10: House Prices – Jan 2008-June 2011
- Smaller homes affecting demand
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- Figure 11: Number of different types of room in the home, 2006-10
- Debt reduction means no equity withdrawal
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- Figure 12: Housing equity withdrawal, 2008 Q1-2010 Q4
- Exposure to weak Pound
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- Figure 13: Trends in exchange rate between the US Dollar and euro and Sterling, Monthly Average – Jan 2008-May 2011
- Growth in household numbers a boost
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- Figure 14: UK households, by size, 2006-16
- Population trends favourable
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- Figure 15: Trends in the age structure of the UK population, 2006-16
- Aspirational ABs a prime market
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- Figure 16: Forecast adult population trends, by socio-economic group, 2006-16
- Stimulating demand through inspiring ideas
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- Figure 17: Agreement with selected lifestyle statements, 2006-10
Competitive Context
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- Key points
- Big ticket household purchases struggling
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- Figure 18: Comparison of sales of furniture with other household markets, 2006-11
- Furniture not a high spending priority
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- Figure 19: Expenditure priorities, 2007-11
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating?
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- Pop-up for profit
- Design credibility
- Aspirational products need aspirational selling space
- Laura Ashley looking to become a leader in home interior design
- Fold-out flexibility
- Cluster power
- Keep talking
- Looking overseas
Market Size and Segmentation
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- Key points
- Furniture badly affected in last two years
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- Figure 20: UK retail sales of furniture, 2006-11
- Living rooms a priority
- Consumers looking for greater flexibility
- Kitchens expected to grow
- Installed furniture is a potential growth area
- Home office declining
- Trends and forecast
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- Figure 21: UK retail sales of furniture* at current and constant prices, 2006-16
- No significant improvement forecast for 2011
- Period of sustained uncertainty
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- Figure 22: UK retail sales of furniture, 2006-16
Retail Competitor Analysis
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- Key points
- IKEA aims to extend its lead
- DFS and ScS both gaining share in upholstery
- Expanding multi-brand Steinhoff offers complete furnishing package
- Not all fitted furniture retailers benefited from the demise of MFI
- Bed specialist Dreams expanding range and stores
- Furniture Village growth based on improving its offer
- Bathstore restructuring pays off
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- Figure 23: Leading UK furniture retailers, 2010/11
- Non-specialists striving for better returns from furniture and homewares
- DIY stores share gains driven by sales of fitted kitchens
- Major specialist multiples gained share in a depressed market
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- Figure 24: Estimated market shares, by value of leading retailers in UK furniture market, 2006-10
- Mixed performance among smaller specialists
Channels of Distribution
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- Key points
- Specialists losing share
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- Figure 25: UK Retail sales of furniture, by channel of distribution, 2006-10
- Non-specialists gaining share
- DIY stores kitchen business driving share growth
- Home shopping of growing importance
- ‘Others’ benefiting from weakness among specialists
Retailer Profiles
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- DFS
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- Figure 26: DFS, financial performance, 2006-10
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- Figure 27: DFS: Outlet data, 2006-10
- Dreams
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- Figure 28: Dreams, financial performance, 2006-10
- Figure 29: Dreams Plc: Outlet data, 2006-10
- HomeForm Group
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- Figure 30: HomeForm Group, financial performance, 2008-10
- Figure 31: HomeForm Group Ltd: Outlet data, 2005/06-2009/10
- IKEA
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- Figure 32: IKEA Limited, financial performance, 2006-10
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- Figure 33: IKEA UK: Outlet data, 2006-10
- Nobia (UK) (inc Magnet)
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- Figure 34: Nobia (UK): Group financial performance, 2006-10
- Figure 35: Nobia (UK): Outlet data, 2006-10
- Furniture Village
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- Figure 36: Furniture Village, financial performance, 2006-10
- Figure 37: Furniture Village Plc: Outlet data, 2006-10
- ScS
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- Figure 38: ScS, financial performance, 2006-10
- Figure 39: ScS Upholstery Plc: Outlet data, 2006-10
- Steinhoff UK
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- Figure 40: Steinhoff (Homestyle Group), financial performance, 2006-10
- Figure 41: Steinhoff UK: Outlet data, 2006/07-2009/10
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- Figure 42: Retail offering and store portfolio of Steinhoff UK, June 2011
Retail Advertising and Promotion
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- Key points
- Sector advertising expenditure
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- Figure 43: Main media advertising expenditure on furniture and furnishings, 2006-10
- Leading advertisers
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- Figure 44: Main media advertising expenditure on furniture and furnishings, by top 25 advertisers, 2006-10
- Expenditure relative to turnover
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- Figure 45: Selected retailers’ advertising spending as % of sales, 2010
- Expenditure by media
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- Figure 46: Main media advertising expenditure on furniture and furnishings, by media type, 2006-10
- Expenditure by month
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- Figure 47: Topline spend, by month, 2007-10
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- Figure 48: Main media advertising expenditure on furniture and furnishings, by month, 2010
- Recent advertising campaigns
Brand Research
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- Brand map
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- Figure 49: Attitudes towards and usage of furniture retailer brands, May 2011
- Brand attitudes
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- Figure 50: Attitudes, by furniture retailer brand, May 2011
- Brand personality
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- Figure 51: Furniture retailer brand personality – macro image, May 2011
- Figure 52: Furniture retailer brand personality – micro image, May 2011
- Correspondence analysis
- Brand experience
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- Figure 53: furniture retailer brand usage, May 2011
- Figure 54: Satisfaction with various furniture retailer brands, May 2011
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- Figure 55: Consideration of furniture retailer brands, May 2011
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- Figure 56: Consumer perceptions of current furniture retailer brand performance, May 2011
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- Figure 57: Furniture retailer brand recommendation – Net Promoter Score, May 2011
- Brand index
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- Figure 58: Furniture retailer brand index, May 2011
- Figure 59: Furniture retailer brand index vs. recommendation, May 2011
- Target group analysis
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- Figure 60: Target groups, May 2011
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- Figure 61: Furniture retailer brand usage, by target groups, May 2011
- Group One – The Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – The Individualists
The Consumer – Where Do We Shop for Furniture?
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- Key points
- IKEA and Argos are the most used stores but market is fragmented
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- Figure 62: Outlets used to purchase furniture in the last three years, June 2011
- Trend shows purchasing activity down sharply
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- Figure 63: Outlets used to purchase any furniture in the last three years, 2006-11
- Home shopping the only winner
- Department stores and small chains and independents retaining relevance
- DIY stores outperform kitchen specialists but both suffering from reduced purchasing activity
- Large furniture chains suffering from lack of footfall
- IKEA has strong appeal to young and affluent adults
- Argos achieves broad appeal
- DIY doing well among ABC1 families
- Small/regional furniture chains and independents reliant on older and affluent consumers
- Repertoire use in a fragmented market
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- Figure 64: Repertoire of number of outlets used to purchase furniture in the last three years, June 2011
The Consumer – Attitudes Towards Spending on Furniture
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- Key points
- Risk-averse consumers are hard to motivate
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- Figure 65: Consumer attitudes towards spending on furniture, June 2011
- Purchasing being deferred, even when replacement is needed
- Value important to all
- Affordability a big issue for younger adults
- Credit deals to act as a lever
- The influence of attitude to spending on stores
The Consumer – Factors Influencing Choice of Store
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- Key points
- Consumers are highly receptive to promotions
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- Figure 66: Factors considered important when choosing to buy furniture, June 2011
- Strong need to emphasise and variety of designs
- Quality assurance and sustainability have credence among affluent consumers
- Contemporary, exclusive and custom-made designs are an influence on high spending customers
- Immediate availability a key attribute
- Unlocking demand with credit and flexible payment terms
- Help from staff and past experience more important to older consumers
- Branded and British-made furniture of secondary importance
- Factors influencing choice and use of stores
The Consumer – Furniture Shopping Behaviour
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- Key points
- Promotions drive footfall, especially among younger shoppers
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- Figure 67: Shopping behaviour for furniture, June 2011
- Older shoppers looking for value rather than cheapness
- Retailer loyalty strongest among older people
- Ineffectual advertising
- Shopping around takes time and multi-channel touch points can help
- But non-store shopping is still fairly limited
- Service issues more important to older consumers
- Convenient and flexible home delivery has wide appeal
- Multi-category stores appeal to younger shoppers
- Furniture buying behaviour and use of stores
Appendix – Internal Market Environment
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- Figure 68: List of furniture retailers gone into administration since August 2010
- Figure 69: List of new entrants/expansions by existing players since August 2010
- Figure 70: Consumer Price Indices for furniture and furnishings, Jan 2009-May 2011
- Figure 71: Penetration and purchasing of lounge/living room furniture, by type of purchaser, by demographics, 2010
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- Figure 72: Penetration and purchasing of dining room furniture, by type of purchaser, by demographics, 2010
- Figure 73: Penetration and purchasing of kitchen furniture (including fitted kitchens), by type of purchaser, by demographics, 2010
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- Figure 74: Penetration and purchasing of bedroom furniture (excluding beds), by type of purchaser, by demographics, 2010
- Figure 75: Penetration and purchasing of beds, by type of purchaser, by demographics, 2010
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- Figure 76: Agreement with selected lifestyle statements, by demographics, 2010
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Appendix – Broader Market Environment
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- Figure 77: Housing Transactions – Q1 2008-Q1 2011
- Figure 78: Housing equity withdrawal, 2008 Q1-2010 Q4
- Figure 79: Trends in exchange rate between the US Dollar and euro and Sterling, Monthly Average – Jan 2008-May 2011
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Appendix – Brand Research
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- Figure 80: Brand usage, May 2011
- Figure 81: Store commitment, May 2011
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- Figure 82: Brand momentum, May 2011
- Figure 83: Brand diversity, May 2011
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- Figure 84: Store satisfaction, May 2011
- Figure 85: Store recommendation, May 2011
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- Figure 86: Brand attitude, May 2011
- Figure 87: Store image – macro image, May 2011
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- Figure 88: Brand image – micro image, May 2011
- Psychographic Segmentation
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- Figure 89: Profile of target groups by demographic, May 2011
- Figure 90: Psychographic segmentation, by target group, May 2011
- Figure 91: Store usage, by target group, May 2011
- Brand index
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- Figure 92: Store index, May 2011
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Appendix – The Consumer – Where Do We Shop for Furniture?
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- Figure 93: Most popular outlets used to purchase furniture in the last three years, by demographics, June 2011
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- Figure 94: Next most popular outlets used to purchase furniture in the last three years, by demographics, June 2011
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- Figure 95: Other outlets used to purchase furniture in the last three years, by demographics, June 2011
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Appendix – The Consumer – Attitudes Towards Spending on Furniture
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- Figure 96: Most popular consumer attitudes towards spending on furniture, by demographics, June 2011
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- Figure 97: Next most popular consumer attitudes towards spending on furniture, by demographics, June 2011
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- Figure 98: Outlets used to purchase furniture in the last three years, by most popular consumer attitudes towards spending on furniture, June 2011
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- Figure 99: Outlets used to purchase furniture in the last three years, by next most popular consumer attitudes towards spending on furniture, June 2011
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Appendix – The Consumer – Factors Influencing Choice of Store
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- Figure 100: Most popular factors considered important when choosing to buy furniture, by demographics, June 2011
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- Figure 101: Next most popular factors considered important when choosing to buy furniture, by demographics, June 2011
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- Figure 102: Other factors considered important when choosing to buy furniture, by demographics, June 2011
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- Figure 103: Least popular factors considered important when choosing to buy furniture, by demographics, June 2011
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- Figure 104: Outlets used to purchase furniture in the last three years, by most popular factors considered important when choosing to buy furniture, June 2011
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- Figure 105: Outlets used to purchase furniture in the last three years, by next most popular factors considered important when choosing to buy furniture, June 2011
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- Figure 106: Outlets used to purchase furniture in the last three years, by other factors considered important when choosing to buy furniture, June 2011
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- Figure 107: Outlets used to purchase furniture in the last three years, by least popular factors considered important when choosing to buy furniture, June 2011
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Appendix – The Consumer – Furniture Shopping Behaviour
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- Figure 108: Most popular shopping behaviour for furniture, by demographics, June 2011
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- Figure 109: Next most popular shopping behaviour for furniture, by demographics, June 2011
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- Figure 110: Other shopping behaviour for furniture, by demographics, June 2011
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- Figure 111: Outlets used to purchase furniture in the last three years, by most popular shopping behaviour for furniture, June 2011
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- Figure 112: Outlets used to purchase furniture in the last three years, by next most popular shopping behaviour for furniture, June 2011
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- Figure 113: Outlets used to purchase furniture in the last three years, by other shopping behaviour for furniture, June 2011
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