UK Office Furniture Market Review for 2008

UK Office Furniture Market Review for 2008
– and a look ahead
By John Sacks, owner of JSA Consultancy Services

30 Dec 08
It’s difficult to imagine that 2008 will be looked back on as anything other than the calm before the storm. 

The total value of the market at manufacturers’ net selling prices in 2000 was a touch under £1 billion (£1.2Bn or $1.8Bn at market prices). It fell progressively over the following five years to £670m before recovery set in.  By 2007, the market had clawed itself back to just over £800m and then – global economic meltdown.

Sales in Q1 and Q2 held up but Q3 was down by over 5% and Q4, normally a period of strong sales, is likely to prove to have been very poor. Margins are also under pressure with increasingly heavy discounting to those buyers still around.

Sectors badly hit include, not unexpectedly, banking and finance generally; geographically, the area within the M25 has been hardest hit. Suppliers’ business failures are starting to be seen but more seem inevitable with overcapacity and under capitalisation within the industry becoming increasingly apparent. 

Manufacturers and their dealer customers alike are fighting for survival, keeping costs to a minimum, reducing working capital requirements and conserving cash in the face of nervous and weakened banks. This is likely to spill over into the credit risk area with debt insurers’ limits restricting purchasing power and starving businesses of credit.

For 2009, the brightest stars are likely to be those companies focusing on the Public sector and exporting. OGC, the Government agency which tries to coordinate and concentrate public sector procurement, issued new three year supply contracts to just six office furniture companies in October 2008 compared with the eleven which had held contracts in the previous three years. These six are together likely to have the lions’ share of the UK market for 2009 at least, with poor levels of demand from the private sector contrasting with borrowing fuelled demand from public buyers intended to stimulate the UK economy back to life. 

Manufacturers with export outlets such as Bisley should be better off with the devalued pound helping win business even from European buyers themselves suffering from recession.
© Copyright 2008 John Sacks

John Sacks is the owner of JSA Consultancy Services of London – www.jsacs.com – specialists in providing strategic marketing and product advice to companies in international furniture and furnishings industries.