Author: Mintel Group Ltd.
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Consumer Trends, Attitudes and Spending on the Home - UK - January 2021
Overview
 
Spending on the home has been among the best-insulated non-food retail sectors, as extended periods inside pushed the home up the agenda amid this disruption. In fact, 73% of consumers spent money on the home in the past year, up sharply on 2019 (66%), 2018 (67%) and 2017 (63%). Moreover, this is matched in spending intentions (72%) over the next year; again up sharply on the three previous years.

However, total value sales still fell, by an estimated 3.1% to £67.07 billion in the past year. This was despite the strength of the home improvement and appliances markets and the windfall of new demand amid the surge in flexible living, as the market was hit by a huge decline in the initial months of the first lockdown and a reduced appetite for big-ticket purchases for much of the year. The third national lockdown in the early months of 2021 is sure to continue to hold the spotlight on the home, while greater confidence is set to see this demand upscale moving forward. 

Further, the disproportionate impact of this uncertainty has seen demand grow increasingly polarised, as it is split between those limited to downscaled, and necessity purchase, and those increasing spending amid this new demand. This polarisation has squeezed operators in the middle of the market, thereby suppressing total expenditure in the past year. Moving forwards, this is set to intensify as the impact of ongoing job insecurity, uncertain childcare arrangements and volatile unemployment rates impacts, in particular, on less affluent consumers. 

Moving into 2021, however, there is a significant opportunity as those less affected by ongoing uncertainty begin to upscale spending, buoyed by the money saved in other non-essential sectors. Ultimately, added time indoors over the past year has seen many consumers reassess the layout of their living spaces and prioritise this in future spending. As a result, the market could be set for a new windfall of major projects, a particular focus on communal and outdoor areas; lining up a surge in kitchen and bathroom refits, home extensions, conservatories, garden makeovers and garden rooms.

Key issues covered in this Report
●	The impact of COVID-19 for spending on the home.
●	How this disruption will change demand in the short, medium and long term.
●	Opportunities for retailers amid this disruption and extended periods inside.
●	The future of the purchasing journey for the home and the growing role of online-only retailers.
●	The opportunity for wellbeing and sustainability in the market.
●	Technological innovations to bridge the gap between multichannel retailers and housebound consumers.

COVID-19: Market context
This report was written in January 2021.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March. 

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. It wasn't until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions. 

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions in January 2021, effectively leading to a full UK-wide lockdown. There is no defined end date for the lockdown, although the legislation regarding the English lockdown that was presented to Parliament extends to 31 March.

The UK’s vaccination programme started on 8 December 2020, and with both the Pfizer-BioNTech and the Oxford-AstraZeneca vaccines licensed for use in the UK, the government is on track to offer a vaccine to 15 million people by mid-February.

Impact of the January lockdown and the vaccination rollout
Our core assumptions on the path of the pandemic had always included an expectation of severe disruption to markets and consumers’ lifestyles well into 2021, with a strong likelihood that the virus would still be with us even into 2022. Although the second wave of infections and subsequent lockdown puts us towards the negative end of our initial expectations, these developments are still broadly consistent with our previous assumptions.

Similarly, Mintel had factored in the likelihood that an effective vaccine would be available from early to mid-2021. The licensing of the Pfizer-BioNTech and Oxford-AstraZeneca vaccines puts us slightly ahead of that assumption, but the challenge associated with rolling out a new vaccination programme to millions of people means that our previous assumptions are still broadly consistent with the new reality.

Economic and other assumptions
Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021 and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until Q4 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The second wave of infections and subsequent lockdowns means that the short-term prospects for the country are consistent with the OBR’s negative scenario, but this needs to be balanced against the fact that the vaccine rollout is ahead of even the OBR’s central scenario. Medium to long term, then, we are still basing our forecasts and market analysis on the OBR’s central economic scenario.

Products covered in this Report
For the purposes of this Report, Mintel has used the following definitions: 

This Report looks at consumer attitudes towards their spend on the home. This Report is an overview. It looks at their priorities for buying for their homes and delves into the triggers for purchases. Broadly it will take in:

●	Furniture
●	Carpets
●	Decorating
●	The garden
●	Energy (savings)
●	Security
●	Home extensions
●	Smart home developments.

These are all topics that we cover in much greater detail in other home Reports.

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