Ikea and John Lewis' January Sales surges spark furniture recovery hopes

Ikea, John Lewis, DFS, Dreams, Furniture Village and Topps Tiles have all reported sales rises in the critical winter Sales period, which is traditionally the biggest time of the year for furniture retailers.

Ikea exclusively revealed to Retail Week that UK like-for-likes jumped 12% in the 12 days to January 6. UK and Ireland country manager Gillian Drakeford said: “We’ve seen the main areas of growth in living rooms, children’s Ikea and bathrooms, where we have made recent investments.”

Online sales jumped 60%. Drakeford said she feels confident about 2014 as Ikea’s multichannel offer continues to grow. She anticipates strong sales in kitchens in particular after investing £8m in the category.

John Lewis furniture sales climbed 7% in the period from December 24 to January 12.

John Lewis buying director for home Christine Kasoulis said: “John Lewis has seen a really strong start to clearance across the home directorate.

“Customers have really appreciated getting the quality, service, convenience and inspiration we offer year round, but at a saving. What makes our clearance particularly special is that it only happens twice a year.

Beds specialist Dreams chief executive Mike Logue said: “We’ve had a fantastic start to the year. We’re well ahead of expectations, up double digit like-for-like.”

Logue said improvements made since March last year - when Dreams was acquired out of administration by Sun European - including refreshing stores and introducing new product had propelled growth.

Furniture Village said in the in the first two weeks of January in-store transactions rose 23% year on year.

DFS chief executive Ian Filby said cash-strapped shoppers have “genuinely waited for the Sale”. Filby believes the furniture market will be “slightly up on last year” over the January Sale period.

Furniture retailers hope the strong start to 2014 will continue for the rest of the year, following an uptick in consumer confidence and a boost from the Government’s Help to Buy Scheme, which aids struggling house buyers by providing loans and guaranteeing mortgages.

Any improvement in the furniture market will be welcome relief for big-ticket retailers, which have suffered falling demand since housing transactions began to slump in 2008.

A raft of home retailers including Habitat, MFI, Land of Leather, Homeform and ScS collapsed into administration in the tough market.

John Lewis managing director Andy Street told Retail Week earlier this month: “I’m quietly optimistic about some underlying strengthening in the home furnishing area, which we’ve not seen for five or six years.”

Topps Tiles chief executive Matt Williams said 2014 had got off to a “great start”. He said: “Has the market improved? Yes, no doubt. The market dynamics are moving in our favour at last. What we’re seeing in terms of buying activity, you have to attribute a lot of that to first-time buying.”

But he cautioned: “Consumer confidence is still showing a bit of resistance.”

Logue said: “With improvements in the housing market we will see some benefit as people improve their houses. I’m encouraged.

“Over the last three years the industry has seen market erosion. I expect confidence to build. It’s been a really torrid time, not just for retail. I believe 2014 will be an improved year.”

But Logue also struck a note of caution. “It’s still a challenging environment out there. We do expect that outside the Sale it will continue to be a challenging market.”

Filby said that while he expects a “gentle” recovery in the sector this year, conditions are still difficult.

“Any real pick-up in the market is likely to occur in the late spring/ summer, and there will be a good scrap until then,” he said.

“For the core of young families, the disposable income issue has not been resolved. Until that eases – on utilities, petrol, and food – it will remain a very aggressive and a tough market.

“2008/09 was a tough time for the market. It has partly recovered but it’s only been bumping along the bottom ever since.”

Filby also cast doubt on the extent of adoption of the Help to Buy scheme. Just 750 homes have been bought through the initiative since it launched in April. “People have got it a little bit out of context,” Filby said.