Kitchens and Kitchen Furniture: Inc Impact of COVID-19 - UK - September 2020

OVERVIEW
Key issues covered in this Report
COVID-19: Market context
Economic and other assumptions
Products covered in this Report
Excluded
EXECUTIVE SUMMARY
Impact of COVID-19 on the kitchens market
Figure 1: Short, medium and long-term impact of COVID-19 on kitchens and kitchen furniture, September 2020
The market
COVID-19 will see sales fall sharply in 2020; but opportunities could lie ahead
Figure 2: Consumer spending on kitchens and kitchen furniture, 2015-25 (prepared on 2nd September 2020)
COVID-19 will change the structure of demand in 2020
Figure 3: Market for kitchens, by segment, 2020 (est)
Uncertainty hits the housing market, while the appetite for risk falls
Companies and brands
Wren Kitchens drives growth
Figure 4: Share of consumer spending on kitchens, 2019 (est)
Retailers continue to invest, with a renewed focus online
The consumer
COVID-19 shocks consumer sentiment
Figure 5: Changes in shopping behaviour, 3-11 September 2020
Nearly a quarter of consumers have a utility room
Figure 6: Kitchens and utility rooms in the UK's homes, June 2020
Consumers continue to move to built-in, open-plan layouts
Figure 7: Description of kitchens and dining areas, June 2020
35% have spent money on the kitchen in the past three years
Figure 8: Kitchen and utility room refits and repairs, June 2020
Most projects are an updating of style, but increasing size and storage also key
Figure 9: Motivation behind the project, June 2020
Four in 10 spent under £1,000
Figure 10: How much they spent, June 2020
The store plays a key role in the purchasing journey
Figure 11: Channel of purchase, June 2020
B&Q and IKEA top spending
Figure 12: Retailers where consumers spent most, June 2020
Price and product quality dictate retailer choice
Figure 13: Key purchase drivers, June 2020
COVID-19 will offer new opportunities despite a decline in sales
Figure 14: COVID-19 and shopping for kitchens, June 2020
COVID-19 AND KITCHENS AND KITCHEN FURNITURE 
Impact on the market
COVID-19 will see sales fall sharply in 2020; but opportunities could lie ahead
COVID-19 will shift the nature of demand in 2020
The rise in kitchen use could create opportunities further down the line
Impact on companies and brands
Retailers will turn to online
A new spotlight on technological innovation
Impact on consumers
Impact of COVID-19 on consumer behaviour
COVID-19 will offer new opportunities despite a decline in sales 
ISSUES AND INSIGHTS
The long and short-term impact of COVID-19 on the kitchen market
The need for kitchens that do more will grow with COVID-19
THE MARKET – KEY TAKEAWAYS
COVID-19 will see sales fall sharply in 2020; but opportunities could lie ahead
COVID-19 will change the structure of demand in 2020
Uncertainty hits the housing market, while the appetite for risk falls
MARKET SIZE AND FORECAST
COVID-19 will see sales fall sharply, but opportunities could lie ahead
Figure 15: Short, medium and long-term impact of COVID-19 on kitchens and kitchen furniture, September 2020
Lockdown
Re-emergence
Recovery
Decline ends nine years of consecutive growth
Limited appetite for big-ticket purchases
The closure of stores as a significant constraint
Continued anxiety among the consumer base… 
Figure 16: Consumer spending on kitchens and kitchen furniture, 2015-25 (prepared on 2nd September 2020)
Figure 17: Consumer spending on kitchens and kitchen furniture, 2015-25 (prepared on 2nd September 2020)
…before making a V-shaped recovery 
Opportunities from extended periods inside… 
…but the impact of COVID-19 will remain clear for years to come 
Market drivers and assumptions
Figure 18: Key drivers affecting Mintel’s market forecast, 2015-24 (prepared on 25th September 2020)
Learnings from the last recession
Figure 19: Spending on kitchens and kitchen furniture, 2007-12
Forecast methodology
MARKET SEGMENTATION
A complex but largely stable market
Overarching trends remain
COVID-19 could see a shift to repairs and necessity for many 
COVID-19 could drive the need for storage
Tables and worktop sales will grow with the rise in working from home 
Figure 20: Market for kitchens, by segment, 2020 (est)
CHANNELS TO MARKET
Kitchen multiples grow again, driven by Wren
DIY retailers lost further ground, but find some stability
Figure 21: Kitchens, channels to market, 2015-19
MARKET DRIVERS
Uplift in home cooking amid lockdown…
Figure 22: Changes to home cooking, 26th March-16th April 2020
…bringing a new focus on kitchens 
The housing market slows amid uncertainty 
Figure 23: UK monthly housing transactions, June 2019-June 2020
Slowing real wage growth will hit the appetite for big-ticket spending 
Figure 24: Great Britain average weekly earnings annual growth rates, January 2018-June 2020
Price deflation could ease the impact of disruption 
Figure 25: Consumer Price Inflation, April 2019-July 2020
Consumers continued to take on credit in 2019…
…but the appetite for risk falls with the onset of COVID-19
Figure 26: Consumer credit excluding student loans, April 2017-June 2020
COMPANIES AND BRANDS – KEY TAKEAWAYS
Wren Kitchens spearheads growth
Retailers continue to invest heavily
COVID-19 will put the spotlight on new innovation
MARKET SHARE
Wren Kitchens makes further gains
Figure 27: Share of consumer spending on kitchens, 2019 (est)
Notable non-specialists have grown since 2015
Figure 28: Consumer spending on kitchens, change in market share, by company, 2015-19
Leading kitchen retailers – turnover
Howdens extends its lead with another year of consecutive growth
Wren revenue grows sharply in 2019
IKEA edges further market share
Nobia regains momentum
DIY retailers recover momentum
Figure 29: Leading kitchen retailers, total company turnover (excluding VAT), 2015-19
Leading kitchen retailers – operating profit
Wren matches turnover with significant growth in profitability
Howdens grows profits again despite significant investment
Figure 30: Leading kitchen retailers, operating profit, 2015-19
Figure 31: Leading kitchen retailers, operating margin, 2015-19
Leading kitchen retailers – store portfolio
Howdens opens 39 new UK depots
Wren Kitchens remains committed to expansion strategy
Nobia rethinks its Magnet showrooms
Figure 32: Leading kitchen retailers, store numbers, 2015-19
Figure 33: Leading kitchen retailers, total sales per store, 2015-19
Smaller kitchen retailers – turnover
A mixed bag for smaller specialists in 2019
Figure 34: Selected kitchen specialists, turnover (excluding VAT), 2015-19
Smaller kitchen retailers – operating profit
The majority turned a profit in the past year, but uncertainty lies ahead
Figure 35: Selected kitchen specialists, operating profit, 2015-19
Figure 36: Selected kitchen specialists, operating margin, 2015-19
Smaller kitchen retailers – store portfolio
Store numbers remain largely stable
Figure 37: Selected kitchen specialists, store numbers, 2015-19
Figure 38: Selected kitchen specialists, turnover per store (excluding VAT), 2015-19
COMPETITIVE STRATEGIES
Heavy investment in store portfolios
Continued innovation across product ranges
Digital activity
Figure 39: Wren Mobile app, August 2020
LAUNCH ACTIVITY AND INNOVATION
B&Q launches new kitchen buying experience
First-of-its-kind kitchen purchasing app
Virtual design services to reach home-bound consumers
Experiment with IKEA
ADVERTISING AND MARKETING ACTIVITY
Advertising spend up 5.7% in 2019
Figure 40: Total above-the-line, online display and direct mail advertising expenditure on Kitchens, 2016-19
Wren Kitchens dominates advertising
Figure 41: Top 10 advertisers, 2016-19
Figure 42: Top 10 advertisers, year to August 2020
Wickes launch ‘Housebarrassment’ TV campaign
Wren targets ‘real kitchens’ and social media
Nielsen Ad Intel coverage
THE CONSUMER – KEY TAKEAWAYS
Consumers continue to move to built-in, open-plan layouts
The store remains an indispensable step in the purchasing journey
COVID-19 shocks consumer sentiment
COVID-19 will offer new opportunities despite a decline in sales
IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR
Significant concern remains
Figure 43: Extremely worried about exposure to COVID-19/coronavirus, 7 August-11 September 2020
A fundamental change in shopping behaviours
Older consumers lead the shift in behaviour
Figure 44: Changes in shopping behaviour, by age, 3-11 September 2020
A fifth of consumers expect to spend less on the home…
Figure 45: Planned spend on home products in the coming month, 7 August-11 September 2020
…but 7% expect to spend more
The sector could be buoyed by redirected spending
Figure 46: Consumers who expect to spend more on sector over the next month, 3-11 September 2020
KITCHENS AND UTILITY ROOMS IN THE UK’S HOMES
Nearly a quarter of consumers own a utility room
Figure 47: Kitchens and utility rooms in the UK's homes, June 2020
Near two thirds of consumers have at least some built-in appliances
Figure 48: Type of appliances in the kitchen, June 2020
Freestanding appliances continue to fall in popularity
Figure 49: Ownership of freestanding appliances, 2013-20
LAYOUT OF THE UK’S KITCHENS
More affluent consumers enjoy more space 
A third own open-plan kitchens 
Figure 50: Description of kitchens and dining areas, June 2020
Open-plan peaks among urban dwellers
Figure 51: Description of kitchens and dining areas, by location, June 2020
KITCHEN AND UTILITY ROOM REFITS AND REPAIRS
35% have spent money on the kitchen in the past three years
Figure 52: Kitchen and utility room refits and repairs, June 2020
MOTIVATION BEHIND KITCHEN/UTILITY PROJECT 
Most projects are an updating of style
Increasing size and storage is also a key trigger to purchase
Figure 53: Motivation behind the project, June 2020
COVID-19 could limit spending to necessity for many consumers 
HOW MUCH THEY SPENT
Four in 10 spent under £1,000
Figure 54: How much they spent, June 2020
CHANNEL OF PURCHASE
Stores remain the most popular means of purchase
Mobile purchasing grows more popular… 
Figure 55: Channel of purchase, June 2020
…but this varies by expenditure 
Figure 56: Channel of purchase, by net expenditure, June 2020
COVID-19 could open up opportunities in online purchasing 
RETAILERS WHERE HOUSEHOLDS SPENT MOST FOR KITCHENS
B&amp;Q and IKEA top spending
Figure 57: Retailers where consumers spent most, June 2020
Spending fluctuates year-on-year
DIY retailers regain some ground
Figure 58: Retailers where consumers spent most, September 2019 and June 2020
KEY PURCHASE DRIVERS
Price and product quality determine retailer choice
Stores are best placed to satisfy the need for quality and experience 
Younger consumers seek innovation 
Figure 59: Key purchase drivers, June 2020
Priorities shift by expenditure
Figure 60: Key purchase drivers, by expenditure, June 2020
COVID-19 AND KITCHEN PURCHASES 
Store closures will have blocked purchasing for many consumers…
…while ongoing anxiety will continue to block potential purchases
Opportunities for technological advancements 
Increased localism could help smaller specialists 
Figure 61: COVID-19 and shopping for kitchens, June 2020
Extended periods inside could create opportunities moving forwards 
Figure 62: COVID-19 and shopping for kitchens, by age, June 2020
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology