Home Furnishings – Singapore

HEADLINES
The home furnishings market in Singapore amounted to a total retail value of S$1.28 billion in 2006 in constant terms at 2001 prices, having achieved a total growth of 6.8% over the review period.

The home furnishings market in Singapore seen a drastic drop in sales in 2006, with the value of retail sales falling by 3.0% in year-on-year prices.

Household textiles and soft furnishings have been the highest-growth sector over the review period in constant value terms at 2001 prices, posting a total growth of 7.8% or a CAGR of 1.5%.

IKEA – fully owned by Inter Ikea Systems BV – dominated the home furnishings market in Singapore over the review period, being the clear market leader with a share of 10.1% in 2006. Barang Barang was the only other significant brand in the home furnishings market in Singapore, with a market share of 0.4%.

The home furnishings market in Singapore is expected to grow by 19.1% over the forecast period, 2006-2011, in year-on-year prices, or a CAGR of 3.5%. Much of this is attributable to a forecast boost in the demands for furniture, household textiles and soft furnishings.

TRENDS
The year 2006 was one of decline for the home furnishings market in Singapore, which experienced a 3.0% fall in the value of retail sales in year-on-year prices. A number of well-known retailers in the Singapore market closed their businesses during the review period, including Homestead Furniture, Ideal Home, Actus and Pennsylvania House. This decline is expected to be temporary, however, and sales are expected to improve over the forecast period as the economy continues to recover, the property market experiences a surge in activity, and consumers become more confident about spending.

Household textiles and soft furnishings has been the fastest-growing subsector in this market, which is mainly attributable to the increasing uptake of high-quality, premium bedding and bed linen, which are usually made of fine cotton with a very high thread count. The major department stores either have their own in-house lines of bedding and bed linen, or retail brands exclusive to their outlets, and these have proven to be especially popular with consumers.

The furniture and carpets and other floor coverings subsectors also experienced reasonable growth over the review period, as the values of their retail sales increased by 6.1% and 6.3% respectively at constant 2001 prices. This is hardly surprising, since furniture accounts for the lion’s share of sales, or 59.0% of the entire Singapore home furnishings market, in 2006. Furthermore, demand for furniture products is more recession proof and less elastic than those of other subsectors in this market as it is basically an essential good. Carpets and other floor coverings remain a niche market in Singapore, and a small one at that, as the flooring of the majority of homes has been decided and laid during the design, construction and renovation of these properties. The number of consumers who purchase and carpets and floorings in the after-market and lay them in their homes remains small.

Specialist retailers of home furnishings products, such as the megastores IKEA and Courts, as well as independent retailers, remain the dominant distribution channels in the Singapore market. This is largely because they are able to offer a wide range of specialised goods and services under one roof.

COMPETITIVE LANDSCAPE
IKEA is the leading home furnishings brand – and retailer – in the Singapore market, and its wide popularity with consumers hinges on the fact that IKEA sells more than home furnishings products. It sells integrated home furnishings solutions based on its various design themes, which are set up and put on display through its multiple room-setting displays in its showrooms.

IKEA’s room-setting displays allow consumers to picture and visualise how they want their homes to look before committing to a purchase, which is invaluable to the mass market consumers who do not have the luxury of having an interior designer provide them with professional advice and help. Once the consumer has committed to a particular design theme, he or she can purchase the whole room setting straight from IKEA as an integrated solution and have it installed, rather than buying the different components separately.
bulleted icon Mega-retailers IKEA and Courts have expanded during the review period, with IKEA opening a second retail warehouse at the cost of S$125 million in 2006, which boasts 58 different room-setting displays, a playground themed after a Swedish forest, a 550-seat restaurant, and a self-service warehouse where customers can walk in and pick up large furniture items. Courts has also opened its self-titled megastore in the same location spanning 116,000 square feet of retail space. This is its largest outlet in Singapore and intended to be its flagship store.

The market shares of the major retailers and brands in the home furnishings market have changed little over the review period. No significant new player entered the market during this time, and there was no significant development among the major retailers and brands leading to changes in their market shares.

The home furnishings market in Singapore includes both international corporations and brands and local, home-grown retailers and brands as major players. IKEA and Harvey Norman are the most visible international brands and retailers in the Singapore market, with the heavyweight Courts, Barang Barang and V Hive making up the local brands and retailers. There is no outright dominance by either international or local brands/retailers, with intense competition between the major players.

There has been no significant M&A activity in the home furnishings market over the review period.

PROSPECTS

The home furnishings sector is expected to undergo a period of increasing growth over the forecast period, with almost double the growth experienced in the review period. Much of this is will be attributable to a booming economy, increased activity in the property market, consumers’ growing affluence, and their increased willingness to spend more of their income in an upbeat and confident climate.

The furniture subsector is expected to be the star performer of the home furnishings sector during the forecast period, with overall forecast growth of 21.9% in year-on-year prices, or a CAGR of 3.5%. This is attributable to the expected strong performance of the property market, which will result in an increase in the number of new homes to be furnished and decorated – and to expectations of increased consumer spending in a growing economy.
bulleted icon The household textiles and soft furnishings subsector has been forecast to experience significant growth in the future, and demand for up-market and premium bedding and bed linen – among other products – is expected to grow to meet the needs of an increasingly affluent and sophisticated consumer base. The carpets and other floor coverings subsector is also expected to grow, albeit at a slower rate, as there is limited scope for such a niche market to expand even in the current climate.