Report Summary

Period covered: 29 November – 02 January 2021

Note: Reporting periods are either one month or two months behind the current month as standard.

Lockdown hampers growth

• Furniture & Flooring sales plummeted in January, falling by 29.8% year-on-year, compared with a 1.8% growth a year ago.
• Sales growth was hampered by the announcement of the third national lockdown on 4th January to begin the following day, leading to the closure of non-essential retailers.
• Indeed, during periods of lockdown, parts of the sector that are more reliant on physical touchpoints throughout the customer journey have been particularly hard-hit.

Market composition

• Retail sales fell by 1.7% in January, year-on-year, according to the Retail Economics Retail Sales Index (value, non-seasonally adjusted, exc. Fuel).
• There was a sharp polarisation between the performance of food (+9.1%) and non-food (-12.2%).
• However, there was a significant shift towards online as consumers reverted seamlessly to lockdown shopping behaviour.

Housing market muted

• Data on housing market activity weakened compared to its stellar performance in recent months, with indicators for enquiries, agreed sales and new instructions all deteriorating in January, according to RICS.
• In fact, these measures turned negative for the first time since May 2020.
• Welcome news for the sector could arrive in next weeks Budget with speculation that the government may extend the stamp duty holiday, affording home buyers more time to complete deals.

2021 Outlook

• Demand in February is expected to be fairly muted with similar market conditions to January.
• Looking forward, the outlook is more positive. The reopening of stores, greater social contact and a boost from new housing transactions are all likely to support growth as lockdown restrictions are eased.
• For these reasons, Retail Economics forecast furniture and flooring sales in 2021 to rise by 11.2% on the previous year, following a 9.3% decline a year ago.
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Furniture sales decline as non-essential retail closes again