Analysis: Market forces
Just what is the market share of the independent kitchen specialist? And how does it compare to Wren and Howdens? In a comprehensive analysis, KBB research specialist JKMR reveals the headline results of the UK Fitted Kitchen Market report…
Words: Jayne Barber
The anecdotal experiences of individual businesses is vital for a broad understanding of the qualitative health of the industry, but when it comes to forensic examination of what’s really happening you have to go to the numbers…
Every year, JKMR publishes the ‘Overview Report on the UK Fitted Kitchen Market’ and it’s a fascinating insight into the quantitative performance of the sector against the wider economic backdrop.
And the headline numbers paint a worrying picture.
The number of new kitchens installed in 2023 was more than 11% lower than 2022 installation levels.
The causes of the decline can be summed up by two things. Firstly, a significant proportion of households have been put off discretionary big-ticket purchases after seeing their disposable income fall once housing and utility costs are deducted and, secondly, new build completions have been substantially lower over the year.
This fall puts the number of 2023 installations below 1.15m, a level not seen since 2015 (outside of the very Covid affected 2020). This is a revealing number but it’s worth comparing the UK kitchen market of 2015 with 2023 beyond installation.
One obvious difference is market value. In 2015 JKMR calculated that end client buying price sales for the core fitted kitchen products (cabinetry, tops, integrated MDAs, sinks and taps) were just over £3.5bn. In 2023 it was over £5.2bn.
In other words, the industry generated half as much money again from the same number of installations – which sounds positive. However, if you look at operating profit as a percentage of turnover for the major companies who have filed 2023 financial year accounts so far, very few show a 2023 level above that of 2015.
So, while the industry is invoicing far more money, it isn’t necessarily translating into improved bottom lines, because the cost of making those products, like the cost of selling those products, has gone up substantially in the last eight years.
Another difference is distribution of sales by price segment. In 2015, our data showed over 75% of all kitchens sold – both retail and new build/social housing – fell into JKMR’s lowest three price categories of ‘Basic’, ‘Budget’ and ‘Lower-Mid’, while 13.5% fell into its highest three of ‘Upper’, ‘Premium’, and ‘Luxury’.
In 2023, 71.5% fell into the lowest three categories but almost 15.5% into the top three and that’s after the starting price for the ‘Upper’ and above increasing almost 50% since 2015.
This means, over the past eight years, clients with high-end budgets (including new build equivalent) have become more important throughout the market.
There are several important factors at play here: rising house prices have made relative investment in a new kitchen shift upward; new build keeps leaning more towards larger detached houses; the market has further matured and clients on their third or fourth kitchen want the latest taps, tops, and appliances; and the kitchen has moved far beyond being a practical room to a stylish space that is expected to epitomise the householder’s whole lifestyle and personality.
One thing that hasn’t changed is that trade-facing routes to market dominate in volume terms, and that domination is on-going. In 2015, trade routes accounted for 58% of all installations, in 2023 it was 63%, and 2024 is projected to see the same level.
Yet 2023 new build/social housing installations (the original trade sectors) were substantially lower in 2023 than they were in 2015, and are expected to be even lower in 2024.
It has been the presence of trade outlets in owner-occupier refurbishments that has driven up its share since 2015, and the Overview Report shows that in 2023 half of all owner-occupier refurb projects were supplied by some form of trade-facing operation.
Another thing that hasn’t changed since 2015, and isn’t likely to change for the foreseeable future, is that Howdens very much dominates that trade-facing sector, and so by extension the UK fitted kitchen market as a whole.
Yet, trade-facing operations haven’t entirely had it all their own way. In 2015, trade routes made up 43% of total market value at end client buying price, but after that made no more value gains; their value share has in fact declined over the last three years, with trade making up only 41.4% of market value in 2023, and projected to see share fall further in 2024.
For most of those eight years it was primarily Wren, aided in some years by Wickes consumer sales, that held trade at bay. But, in 2023, it was the specialists who really helped to boost the value share of the consumer facing routes.
And what of Wren? In 2015 it had just overhauled both Ikea and Homebase to become the fifth largest kitchen retailer in terms of value. By 2023, Wren had been the second largest player, behind Howdens, by a huge margin for several years, with its 2023 cabinetry, tops, appliances, sinks and tap sales not that far short of those of Magnet, Wickes and B&Q combined.
And 2023 wasn’t even an especially good year for Wren, which is more dependent on those younger, mid-quartile income, householders particularly hit by rising mortgage rates and pressure on disposable income.
Let’s turn now to the all-important independent retailers. By contrast, 2023 was a very good year for the specialist studio sector as a whole as it made value share gains for the first time since 2013 (outside of 2020’s atypical trading), and even small volume share gains with their typically wealthier client base less affected by all the external economic issues.
But, again, the specialist sector itself has changed since 2015. It is even more dependent on the top end of the market and includes a far greater presence of pure online activity. It also now includes a large, dynamically growing, operator in the Kütchenhaus chain of franchisees.
In 2015, over 40% of all independent retailer sales were still in the lowest and lower-mid price sectors but they now have little market engagement until the mid-price sector, and over half of all their projects in 2023 were in the Upper, Premium or Luxury price bands.
This shift reflects a deliberate choice by many studios to concentrate on a smaller number of high value projects rather than try to match operations like Wren on price, it also reflects how the studios appeal to generally older, more experienced, kitchen buyers through their boutique ambience, design expertise, willingness to search out niche products, and more personalised service.
It also explains why, in 2023, the independents had a market value share of almost 40% despite accounting for less than 14% of all projects.
By contrast, Magnet, Wickes, B&Q and Homebase combined had over 17% share in 2015 but it was down to under 12% in 2023. However, they have largely been losing share to Wren rather than the studios.
Finally, in 2015 the main concerns for the industry included housing unaffordability, more households renting, predicting when new-build would boom, and changing retail landscapes. It won’t surprise anyone to learn that these are all still concerns and the 2024 Overview Report still analyses these factors and how they will affect the market going forward; but there are also new issues to add to that list.
How will Artificial Intelligence impact the buying journey? What does the growth in online marketplaces mean for kitchens? And what does it mean for the market overall if Howdens and Wren accounted for half of all new kitchen projects in 2023 between them.
The full Overview Report on the UK Fitted Kitchen Market report from JKMR can be purchased by contacting Jayne Barber via email at: [email protected]
