Global Home Furnishings

Industry Profile

Reference Code: 0199-0528 Publication date: March 2007

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ABOUT DATAMONITOR
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EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
Market Value The global home furnishings market grew by 4.5% in 2006 to reach a value of $237.2 billion. Market Value Forecast In 2011, the market is forecast to have a value of $296 billion, an increase of 24.8% since 2006. Market Segmentation I Furniture sales accounts for 63.6% of the market's value. Market Segmentation II Europe generates 45.3% of the global market's revenues. Market Share IKEA accounts for 5.4% of the market by value.

Global - Home Furnishings Datamonitor (Published March 2007) Page 3

CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY CHAPTER 1

1.1 1.2 1.3

3 6
6 6 7

Market Overview

Market Definition Research Highlights Market Analysis

CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6 CHAPTER 7

7.1 7.2 7.3 IKEA Group

Market Value Market Segmentation I Market Segmentation II Market Share Competitive Landscape Leading Companies

8 9 10 11 12 14
14 14 14

Mohawk Industries, Inc. Leggett & Platt, Incorporated

CHAPTER 8
8.1

Market Forecasts

15
15

Market Value Forecast

CHAPTER 9
9.1 9.2 Sources

Further Reading

16
16 16

Related Datamonitor Research

Global - Home Furnishings Datamonitor (Published March 2007) Page 4

CONTENTS

LIST OF TABLES
Table 1: Table 2: Table 3: Table 4: Table 5: Global Home Furnishings Market Value: $ billion, 2002-2006 .......................... 8 Global Home Furnishings Market Segmentation I: % Share, by Value, 2006 ..... 9 Global Home Furnishings Market Segmentation II: % Share, by Value, 2006 .. 10 Global Home Furnishings Market Share: % Share, by Value, 2006 ................ 11 Global Home Furnishings Market Value Forecast: $ billion, 2006-2011........... 15

Global - Home Furnishings Datamonitor (Published March 2007) Page 5

MARKET OVERVIEW

CHAPTER 1

MARKET OVERVIEW

1.1

Market Definition
The global home furnishings market consists of the total revenues generated through the sale of furniture, floorcoverings and home textiles, valued at manufacturers' selling price with any currency conversions calculated using constant 2006 annual average exchange rates.

1.2

Research Highlights
The global home furnishings market, which consists of the total revenues generated through the sale of furniture, floor coverings and home textiles, generated total revenues of $237.2 billion in 2006. Furniture sales proved the most lucrative for the global home furnishings market in 2006, generating total revenues of $150.8 billion, equivalent to 63.6% of the market's overall value. The performance of the market is forecast to accelerate, with an anticipated CAGR of 4.5% for the five-year period 2006-2011 expected to drive the market to a value of $296 billion by the end of 2011.

Global - Home Furnishings Datamonitor (Published March 2007) Page 6

MARKET OVERVIEW

1.3

Market Analysis
The global home furnishings market, which consists of the total revenues generated through the sale of furniture, floor coverings and home textiles, generated total revenues of $237.2 billion in 2006, this representing a compound annual growth rate (CAGR) of 3.1% for the five-year period spanning 2002-2006. The global home furnishings market has seen an increase in growth over the past three years. Since 2005 the year-on-year growth rate has remained at 4.5% and this is set to remain static over the coming forecast period. The European region accounts for 45.3% of the global markets value in 2006. This compared to US, which accounts for 21.8% and the Asia-Pacific with 17.2% of the markets value. The rest of the world makes up the remainder of the market, with 15.7% of the markets value in 2006. Favourable conditions for new households, including legislation providing tax benefits to companies building affordable housing in key markets, has prompted a massive surge in the low-cost housing category, resulting in increasing numbers of first-time buyers and creating a considerable rise in the demand for home furnishings. Furniture sales proved the most lucrative for the global home furnishings market in 2006, generating total revenues of $150.8 billion, equivalent to 63.6% of the market's overall value. In comparison, sales of household textiles generated revenues of $56.1 billion in 2006, equating to 23.7% of the market's aggregate revenues. The growth of Internet retail has given impetus to this sector; particularly in the US and European markets, where reduced overheads have allowed for significant price reductions. The performance of the market is forecast to accelerate, with an anticipated CAGR of 4.5% for the five-year period 2006-2011 expected to drive the market to a value of $296 billion by the end of 2011. The rapid growth of the economy in Asia-Pacific, buoyed in particular by strong expansion within the regions developing markets, should see the regions home furnishing markets grow at a much faster rate than elsewhere driving the global market forward.

Global - Home Furnishings Datamonitor (Published March 2007) Page 7

MARKET VALUE

CHAPTER 2

MARKET VALUE

The global home furnishings market grew by 4.5% in 2006 to reach a value of $237.2 billion. The compound annual growth rate of the market in the period 2002-2006 was 3.1%. Table 1: Year 2002 2003 2004 2005 2006 CAGR, 2002-2006:
Source: Datamonitor

Global Home Furnishings Market Value: $ billion, 2002-2006 $ billion 210.3 213.6 217.1 227.0 237.2 % Growth

1.60% 1.70% 4.50% 4.50% 3.1%

DATAMONITOR

Figure 1:

Global Home Furnishings Market Value: $ billion, 2002-2006

$ billion 250 200 $ billion 150 100 50 0 2002 2003 2004

% Growth 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2005 2006

% Growth

Source: Datamonitor

DATAMONITOR

Global - Home Furnishings Datamonitor (Published March 2007) Page 8

MARKET SEGMENTATION I

CHAPTER 3

MARKET SEGMENTATION I

Furniture sales account for 63.6% of the global home furnishings market's value. In comparison, household textiles and soft furnishings generate a further 23.7% of the market's revenues. Table 2: Global Home Furnishings Market Segmentation I: % Share, by Value, 2006 Category Furniture Household textiles and soft furnishings Carpets and floorcoverings Total
Source: Datamonitor

% Share 63.60% 23.70% 12.80% 100.0%

DATAMONITOR

Figure 2:

Global Home Furnishings Market Segmentation I: % Share, by Value, 2006

Carpets and floorcoverings 12.8%

Household textiles and soft furnishings 23.7% Furniture 63.6%

Source: Datamonitor

DATAMONITOR

Global - Home Furnishings Datamonitor (Published March 2007) Page 9

MARKET SEGMENTATION II

CHAPTER 4

MARKET SEGMENTATION II

Europe generates 45.3% of the global market's revenues. The United States accounts for a further 21.8% of the global market's value. Table 3: Global Home Furnishings Market Segmentation II: % Share, by Value, 2006 Geography Europe United States Asia-Pacific Rest of the World Total
Source: Datamonitor

% Share 45.30% 21.80% 17.20% 15.70% 100.0%

DATAMONITOR

Figure 3:

Global Home Furnishings Market Segmentation II: % Share, by Value, 2006

Rest of the World 15.7%

Asia-Pacific 17.2%

Europe 45.3%

United States 21.8%

Source: Datamonitor

DATAMONITOR

Global - Home Furnishings Datamonitor (Published March 2007) Page 10

MARKET SHARE

CHAPTER 5

MARKET SHARE

IKEA accounts for 5.4% of the global home furnishings market by value. In comparison, Mohawk Industries generates a further 2.9% of the market's value. Table 4: Global Home Furnishings Market Share: % Share, by Value, 2006 Company IKEA Mohawk Industries Leggett & Platt Furniture Brands Other Total
Source: Datamonitor

% Share 5.40% 2.90% 2.30% 1.00% 88.30% 100.0%

DATAMONITOR

Figure 4:

Global Home Furnishings Market Share: % Share, by Value, 2006

IKEA 5.4% Mohawk Industries 2.9% Other 88.3% Leggett & Platt 2.3% Furniture Brands 1.0%

Source: Datamonitor

DATAMONITOR

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COMPETITIVE LANDSCAPE

CHAPTER 6

COMPETITIVE LANDSCAPE

With the exception of IKEA, US companies dominate the global home furnishings landscape, yet the worlds most lucrative regional market is still Europe. The market remains highly concentrated, although several companies are expanding through strategic acquisitions: whilst several of the markets leading players have been attracted to growth markets in Asia-Pacific, the importance of the European market, in terms of revenues, remains strong, with companies continuing to dedicate significant resources towards the region. However, construction in Asia is growing rapidly, as is industrial and commercial construction in the US, where the ceramic tiles market is also developing rapidly. Increasing competition within the market, particularly from low-cost companies within the Asia-Pacific region, are delivering low margin products to the market, which, whilst yielding lower profits, still generate sufficient sales to cover the companys fixed costs and provide a substantial profit margin. In response, European and US based players have invested substantial capital into new machinery, updated equipment and new information systems. In the US in particular, companies have begun to consolidate their operations into fewer manufacturing facilities, decreasing costs and buoying margins. Several of Europes smaller, regional markets have posted significant growth in recent years, with the UK market in particular acting in much the same way as the US market, with low interest rates increasing the availability of cheap credit and consequently increasing consumer spending levels. Whilst spending is strong, several of the strongest companies within the market have begun to acquire rivals aggressively, hoping to protect themselves against any future fluctuations in prices or any increase in competition through economies of scale and scope, by becoming vertically integrated and offering diverse services. The spiraling prices of crude oil and steel continue to affect margins throughout the global market, increasing input and production costs. Falling price of the wood in the US helped local manufacturers, but whilst low prices are a positive development for furniture companies, the situation in the US has become grave, with land now worth significantly more than the trees growing on it, leading to landowners selling the land rather than cultivating new trees. This has reverberated along the supply chain through to the furniture companies w could face a wood shortage in the US in ho future years, forcing them towards expensive imports.

Global - Home Furnishings Datamonitor (Published March 2007) Page 12

COMPETITIVE LANDSCAPE
The availability of strong credit within many of the worlds more developed markets such as the US has, whilst increasing consumer spending levels, opened up an avenue for revenue growth for furniture companies, with several companies having already capitalized by introducing store credit cards. This idea, pioneered by global giant IKEA, has ensured loyalty to a particular company, whilst increasing revenues in terms of the interest gained on financed payment schemes. Furthermore, customers are more willing to purchase expensive products if they can spread their payments out over a longer period.

Global - Home Furnishings Datamonitor (Published March 2007) Page 13

LEADING COMPANIES

CHAPTER 7

LEADING COMPANIES

7.1

IKEA Group
IKEA Group engages in the retail of flat-packed home furniture and other housewares. The company is headquartered in Helsingborg, Sweden. For the fiscal year ended August 2005 the company generated revenues of $21.7 billion, an increase of 14.5% on the previous year.

7.2

Mohawk Industries, Inc.

Mohawk Industries (Mohawk) is a carpet and rug manufacturer for residential and commercial applications along with being a manufacturer, marketer and distributor of ceramic tiles and natural stones, in North America. Mohawk is headquartered in Calhoun, Georgia. For the fiscal year ended December 2005, Mohawk recorded revenues of $6,620.1 million, representing an increase of 11.2% over 2004's revenues. The company also reported a net income of $358.2 million for the same year.

7.3

Leggett & Platt, Incorporated

Leggett & Platt is a diversified manufacturer, engaged in design and manufacture of a broad variety of engineered components and products that can be found in home, office, retail store, and automobiles. The company primarily operates in North America and Europe. It is headquartered in Carthage, Missouri and employs about 33,000 people. The company recorded revenues of $5,299.3 million during the fiscal year ended December 2005, an increase of 4.2% over 2004. The operating profit of the company was $396.2 million during fiscal year 2005, a decrease of 14.2% from 2004. The net profit was $251.3 million in fiscal year 2005, a decrease of 11.9% from 2004.

Global - Home Furnishings Datamonitor (Published March 2007) Page 14

MARKET FORECASTS

CHAPTER 8

MARKET FORECASTS

8.1

Market Value Forecast

In 2011, the global home furnishings market is forecast to have a value of $296 billion, an increase of 24.8% since 2006. The compound annual growth rate of the market in the period 2006-2011 is predicted to be 4.5%. Table 5: Global Home Furnishings Market Value Forecast: $ billion, 2006-2011 Year 2006 2007 2008 2009 2010 2011 CAGR, 2006-2011:
Source: Datamonitor

$ billion 237.2 247.8 259.1 270.8 283.1 296.0

% Growth 4.50% 4.50% 4.50% 4.50% 4.50% 4.60% 4.5%

DATAMONITOR

Figure 5:

Global Home Furnishings Market Value Forecast: $ billion, 2006-2011

$ billion 350 300 250 $ billion 200 150 100 50 0 2006 2007 2008 2009

% Growth 4.58% 4.56% 4.54% 4.52% 4.50% 4.48% 4.46% 4.44% 2010 2011 % Growth

Source: Datamonitor

DATAMONITOR

Global - Home Furnishings Datamonitor (Published March 2007) Page 15

CONTENTS

CHAPTER 9

FURTHER READING

9.1

Sources
This report is based on a combination of primary Datamonitor research, including online, face-t o-face and telephone interviews with consumer and industry players, and secondary research using various sources (including trade associations, news providers and others).

Industry Associations International Furnishings and Design Association (IFDA) 191 Clarksville Road Princeton Junction NJ 08550 United States Tel: 1 609 799 3423 Fax: 1 609 799 7032 www.ifda.com

9.2

Related Datamonitor Research

Datamonitor Industry Profiles Global Homebuilding ($200) Global Household Appliances ($200) Global Housewares and Appliances ($200) Global Household Durables ($200) Global Consumer Electronics ($200) Global Consumer Durables & Apparel ($200)

Global - Home Furnishings Datamonitor (Published March 2007) Page 16