The fall will not be as drastic as last year, when sales dropped by 3.2 per cent, but will still make the market one of the only two retail sectors (alongside music and video) to report negative growth this year, after many years as the fastest growing retail sector.
Looking ahead, the prospects for the sector are mixed. Author of the report Nick Gladding said: 'Though the market will recover in 2007, a re-run to the boom days of double-digit sales growth it achieved in the late 19990s is not realistic.'
The report said that margin recovery, rather than space growth, is now the key priority for DIY retailers. They cannot rely on consumers to resume spending again and must do more to entice them back to stores.
According to the study, DIY retailers should take action on four fronts, if they are to raise profitability: pricing strategies, advertising, range development and store layout. And, in addition to competition from other channels, the DIY sector is no longer in fashion, the report added.
In contrast to previous years, the sector has received much less media attention over the past 12 months, with DIY horror stories becoming much more prevalent. Retailers will therefore need to take a more proactive role in driving demand, if they are to increase revenue.
The dismal sales performance has prompted many retailers to re-engineer their businesses, having to adapt to a changed consumer psyche and new competitive challenges.
Home improvement chain B&Q yesterday revealed tough trading conditions for the 13 weeks to October 28, with a sales increase of just 0.2 per cent to£954.6 million.
The retailer revealed it has been cutting back prices and revamping its stores, in an effort to encourage sales. B&Q group chief executive Gerry Murphy described the UK home improvement market as 'weak and price sensitive'.
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