Market performance January to March 2008.


Overall picture

The market slowdown already identified in the last quarter of 2007 has been accelerating at the start of 2008 with January and February showing significant year-on-year decline.

This is not a surprising picture if you take into consideration the overall economical situation in the UK. The housing market is slowing down and prices are dropping, mortgages are more difficult than ever to secure and banks are pulling out of the market all the mortgage offers over 90%, resulting in buyers with small deposits being frozen out of the market.

In addition to this oil prices are at their highest ever price, the cost of grocery goods increased significantly and the rising cost of energy and raw materials are all having an impact on economic forecasts.

To quickly summarise the situation, consumers' wallets are under massive pressure as they are spending more money for essential needs such as food, gas, mortgages repayment and rent.

Retail review

Due to weather related reasons the 2007 gardening season started very early. This early start will have an impact on the year-on-year comparison between 2007 and 2008. Contrary to last year, 2008 had a late start.

We had snow during the March bank holiday weekends in 2008, which suggests that sales within the gardening market might not be as good as last year. Obviously the late start of the season will have an impact on the diy market performance, but a late start does not mean a bad gardening season. Let's remember that last year we enjoyed quite a late end of the season, still seeing strong sales in August and September.

In terms of total diy market performance, gardening is driving the decline with sales down -4%, followed by room specific, fixtures and fittings and tools and equipment. The decorative and buildings and trade sectors enjoyed small increases whereas homewares was up by 2.5%.

The market behaviour does make sense. The gardening side is declining due to the weather meaning that customers who want to undertake a diy project are focusing on indoor activities such as decorating.

New approaches

With the ongoing threat of recession and the unpredictable weather conditions, the indication is that the diy market is in for a rough ride this year.

That said, if consumers cannot afford to go on a foreign holiday or move house, this can have positive connotations for the diy market.

Consumers could choose instead to redecorate, invest in new furnishings and improve their garden. Or will consumers decide to wait and see which way the wind blows before spending any important amount of money on their house. Could smaller projects be the customers' choice in 2008?

For further information, please contact Stephan Lamouroux, senior account manager, DIY at GfK Retail and Technology on 0870 603 8287 or at Stephan.lamouroux@gfk.com.

www.gfkrt.com

Read the comment of Daniel Fearnley, account director Retail and Technology at GfK, in 'Viewpoint' DIY Week May 23, 2008.

Click here to see the graph for total DIY sales.
Click here to see the graph for total home sales.

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