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The British love affair with home improvement is set to get even more passionate – or so retailers reckon.
Some high-street chains, vying for a bigger slice of the £14.3bn market for furniture and accessories, are hiring big names and boosting their offerings.
Marks & Spencer is launching a range designed by renowned interior designer Kelly Hoppen, amid what bosses are calling a drive to “drive our core business, home, forward”.
Rebirth: Habitat celebrates its 60th anniversary with a relaunch of some of its original products
John Lewis’ new kitchen and home decor ranges include saucepans and pasta pots from the collection created by actor and cookbook author Stanley Tucci.
Tesco’s clothing division F&F is moving into the homewares sector with 1,000 items of accessories, bedding, rugs and tableware priced from 50p.
The goal is to offer the latest styles to customers who come to a store to buy food but are susceptible to an attractive variety of home accessories.
Household goods are emerging as the new battleground for the high streets amid improved consumer confidence.
A study by the consultancy firm Gfk reveals that households are beginning to feel more secure when it comes to spending.
Wages have risen faster than prices over the past year as inflation moderates and mortgage rates fall.
Range: Cookbook author Stanley Tucci has been hired by John Lewis
Even those who follow fashion in terms of clothing increasingly want to reflect the latest styles in their interiors.
Social media has raised awareness about what makes a home look dated and the products that ensure it stays up to date.
Meanwhile, optimism has returned to the property market. The latest figures from Halifax show that prices have risen by 4.1 per cent in a year.
When homeowners move house, they tend to spend a lot of money on carpets, curtains and so on.
Amazon and Ikea account for a significant share of home improvement spending, but a bet on listed British companies could give their portfolio a makeover.
Dunelm
Dunelm is the largest player in the UK homewares market. Annual results announced this week show it is continuing to gain market share, although conditions remain “challenging”.
The medium-term aspiration is to control 10% and become “The Home of Homes”. John Lewis and Ikea each have around 4%.
One of Dunelm’s main strengths is what retail experts call its “broad-price architecture.” You can buy a clean-lined Scandinavian leather sofa for £2,600 or a smaller “faux leather” version for £469.
This has helped it to combat discounters and attract a clientele of “all ages, incomes and geographic groups”, as boss Nick Wilkinson put it this week.
This year actions Cannaccord Genuity shares have gained 12 per cent to 1,232 pence. Most analysts rate the stock as a “hold”. But Cannaccord Genuity is a Dunelm enthusiast and is targeting a further jump to 1,325 pence.
Guy Anderson, co-manager of the Mercantile investment fund, which owns a stake in Dunelm, highlights the management’s ability “to operate in a competitive environment.”
Next
Next, a £11.9bn multinational and a member of the FTSE 100 index, is Britain’s largest retailer and a company considered an essential component of a portfolio.
Like Dunelm, Next is able to offer something for every type of makeover, whatever the budget.
You can choose between a practical and smart sofa or the £1,399 leopard-print model from quirky furniture brand Rockett St George.
Thanks to these credentials, the actions Jefferies shares have risen 28 per cent since the start of the year to 10,318.43 pence and are rated “hold” by most analysts. However, Jefferies has raised its target price for the stock to 11,400 pence.
A fall in the stock could be an opportunity to buy because, as next week’s interim results are likely to confirm, the Next proposition is becoming increasingly popular abroad.
Jefferies argues that Next is transforming from a “representative” of the fortunes of the British economy to a “vehicle for growth”.
Another reason to back Next is the size of the stake held by chief executive Lord Wolfson. He is the third-largest individual shareholder and is therefore committed to further developments.
Marks and Spencer
Big name: Marks & Spencer launches a range designed by renowned interior designer Kelly Hoppen (pictured)
Marks & Spencer has become the place to buy the most stylish clothes, winning over a younger clientele who previously found the chain hopelessly dowdy.
The £7bn FTSE 100 retailer now wants to emulate this success in homewares, thereby increasing its market share from 1.5 per cent.
Bulky furniture no longer clutters the home departments of stores.
Instead, you can browse bedding, cushions, tableware and vases and choose a blanket from Hoppen’s range.
The clothing makeover has boosted the shares by 27 per cent to 351p this year, delighting shareholders like me who suspected M&S could replicate the appeal of its food on the fashion floor.
He actions are 80 percent above their level five years ago.
However, they are still 18 percent lower over a decade and as a result, analysts rate the stock a “buy.”
Tesco
Tesco is the UK’s largest supermarket, controlling 27.8 per cent of the food trade.
But the chain is always looking for ways to get us to part with more money.
Tesco’s Finest range is being refined in a bid to compete with M&S and Waitrose, and the move into homeware is another shift towards highly affordable luxury.
Tesco actions Tesco shares have risen 24 per cent this year to 364 pence on the back of UBS’s comments last week. The broker has set a target price of 400 pence, on the basis that Tesco’s profit margins could expand.
UBS describes Tesco as a “versatile, technology-driven company”, highlighting its ability to make the most of the data collected from its 21 million Clubcard holders.
If this information proves that this faithful band desire more cushions and cutlery, they will certainly be supplied.
Sainsbury’s
Tesco’s attack on the homewares sector will be closely watched by Sainsbury’s fans.
The UK’s second-largest supermarket owns Argos, through which it sells beds, sofas, rugs and paintings from Habitat, the iconic British interiors brand.
Habitat is celebrating its 60th anniversary this year, but recent poor sales at Argos have led some to see the division as a “weight on Sainsbury’s neck”.
Could Tesco’s intervention prompt a rethink? Perhaps. In the past six months, Sainsbury’s has actions are up 16 per cent to 290 pence.
Analysts are optimistic about the outlook, although they are relying more on hopes of higher sales of food than of household goods.
B&M
Actions Shares at B&M, the FTSE 100 discount homewares chain, have fallen 24 percent to 426 pence this year, despite better-than-expected first-quarter results that brought news of more store openings.
There are already 741 in the United Kingdom and 124 in France.
The doubt surrounding B&M arises from its apparent reluctance to provide sufficient guidance on how it intends to proceed.
Previously, B&M benefited from shoppers opting for more expensive chains.
Customers would walk into a B&M store to buy one thing, but leave with a whole lot more. This trend has slowed, but analysts are more optimistic and predict the share price could recover to 586p.
However, this seems like a high-risk bet on the home goods boom.
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