The fourth British Furniture Manufacturers’ Economic Review, highlights continuing growth in retail – particularly in DIY and household furnishing – but warns winter could bring a sharp fall in sales.
Managing Director of the BFM, Nick Garratt, has examined reports from sources including the British Retail Consortium, the Bank of England and the EY Item Club as part of the Association’s monthly report.
Retail sales and volumes in the UK rose by 12% in October the Office for National Statistics said, marking the sixth consecutive month of increases and well ahead of consensus expectations.
The review of data for October and November suggests that six months of growth in the sector could be impacted by rising unemployment and falling consumer confidence due to the Covid-19 pandemic – although imminent vaccination programmes have been hailed as the ‘light at the end of the tunnel.’
EY Item Club expects the economy to contract 10.1% in 2020, an improvement on the 11.5% contraction forecast in summer.
The pandemic-induced shift to online shopping gathered pace again in October, with sales in stores with no physical presence up 6.4% over the previous month and 45% compared with February 2020.
Capital Economics has stated that, while encouraging, the vaccine is unlikely to boost economic activity until late 2021, whilst accepting that the development has led to a ‘light at the end of the tunnel’.
Nick said: “Since the lockdown in spring, the furniture sector has clearly been a big beneficiary of consumers’ switch from services to buying goods, and in particular the desire to improve their living space.
“Looking forward, people are beginning to lose their nerve regarding their personal finances and as job losses begin to bite this will create a headwind for future recovery. The vaccine will provide a much-needed boost.
“In the recent BFM trade survey, a balance of 81% of manufacturers reported rising material costs and almost all respondents expected further rises as we approach Christmas and enter the New Year.”
