INSIGHT | JKMR
JAYNE BARBER, JKMR
‘ Studios: focus on personalised solutions’
The KBB market research specialist forecasts a promising future for kitchen studios, which will continue to benefit from offering a personal service
Nonetheless JKMR expects that 2023 will see a very similar level of volume decline as the kitchen market experienced in 2009, with 2023 installation numbers projected to be around 10% down on 2022 levels. But it is there that similarities between 2009 and what looks likely to happen in 2023 end. The volume fall of 2009 was realised almost entirely in the new-build and social housing supply sectors. The volume fall of 2023 will be driven by a decline in owner-occupiers and small-scale landlords purchasing. In 2009, total market value at end-client price rose 4.6% despite a 10.3% volume decline. At present, JKMR projects 2023 market value will be only around 1% up on that of 2022.
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The fact that market value will see such low growth might suggest a wide-scale shift towards the most budget-facing retail routes. However, this would be a simplification. Instead, in many cases mass-volume store clients have opted for lower-cost choices, rather than turned to intrinsically cheaper outlets. It has also been the case that all mass-volume retailers have taken steps to launch entry-level products that offer a ‘designer’ feel, since this has not been a recession that was unforeseen.
ith housing demand still exceeding supply, the UK has not seen the house price ‘collapse’ that it experienced in 2008/9.
MDAs and sinks will gain further share. The mass volume sector, however, is arguably overcrowded for a recessionary market, and it is possible that the industry will see at least one operator scale back, or even exit, fitted kitchen retailing. In the studio sector, JKMR does not expect a panic-driven switch to a price-driven business model as client numbers decline. Instead, studios are likely to focus on providing personalised solutions to clients who have realistic budget expectations, while maintaining regular communication with those potential clients who genuinely need to ‘wait until next year’ for their project to be financially practical. It may be, however, that studios will see a growth in clients adopting a hybrid buying process, sourcing some products direct to take advantage of D2C prices. .
Compare and contrast At present, JKMR does not believe the market over the next two years will see any substantial shift in the balance between trade- and consumer-facing multiples, with the latter still dominating the market in volume terms, but having a notably lower value than volume share. JKMR believes that 2024 installation numbers will fall further on 2023 levels, although they will remain far above the levels seen in the 2009 to 2012 recession.
In the second half of 2024, it may be that consumer confidence will start to improve, or adjust itself to a ‘new normal’, and consumers re-engage with major refurb projects. Further price rises, and consumers continuing to look for more cutting-edge products, should mean that, providing the 2024 volume decline is not as steep as that of 2023, the market will see value growth of at least 2% to 3%.
In the short term, with installations declining, retailers will have to drive company growth through improving client budgets and keeping tight control of margins. In the mass- volume sector, this will mean continuing to roll out consumer credit and ‘cheap but chic’ product launches. For the trade sector, ‘instant’ stock availability and ‘added-value’ services will be key for client loyalty. It is also likely that own-brand
The mass-volume sector is arguably overcrowded for a recessionary market and the industry may see at least one operator scale back, or even exit, fitted kitchen retailing
Historic patterns would suggest that after a recession, it can take up to six years for kitchen installation growth to be reinitiated. However, JKMR currently believes it unlikely volumes will slide downward con - tinually until the end of the decade, as consumer credit and the kitchen’s role as now the key living space make conditions very dif - ferent from previous recessions. It is worth noting, however, that the
THE BIGGEST OPPORTUNITY FOR RETAILERS IN 2024 IS...
ENGAGEMENT Provide educational and experiential-based promo- tional events to keep former clients engaged and to keep the company name prominent in the local community.
industry has a long tradition of a new player appearing as a recession ends, who completely rewrites the rules as to how the kitchen market should be tackled. If this happens once more, then all existing players will need to have the confidence and flexibility to respond to ‘the new lot’.
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