It was just two summers ago when the UK furniture industry was benefiting from the impact of the pandemic. As many were being forced to work from home and families adjusted to home schooling, the pressure to make our homes work harder for us was at its peak.
Cue a high demand for space-saving desks, modular furniture and even the rise in popularity of both table-scaping and the ‘shelfie.’
When discussing the boom, in an interview with The Guardian in October 2020, Nick Garratt of the British Furniture Manufacturers might have seemed to be giving quite the doomsday warning: “Once we sort out the virus thing you can bet your bottom dollar that the travel industry will go bonkers, and the last thing anyone will be spending their money on is furniture. There’s a cold wind that might follow this boom.”
Despite the UK being the middle of a heatwave of record temperatures, that cold wind seems to have landed.
Today online furniture retailer Made.com has announced that it is having to cut revenue and has warned of job cuts. The cost of living crisis has seen many consumers reduce spend on discretionary and ‘big ticket’ items like furniture and technology. Many consumers are still enjoying the home improvements made in the great DIY surge of 2020 and 2021 and are focussed on travel and experiences as the world has opened up again.
This is the third profit warning that Made.com has issued within a year, describing the trading reality as “volatile”. The company was founded in 2010 by serial entrepreneur Ning Li and Brent Hoberman CBE.
In 2021 Made.Com completed its IPO on the London Stock Exchange, joining other big brand retailers who had benefited from the change of habits during the pandemic, including Moonpig, In The Style and MyTheresa,
Whilst consumers still seem to spending on updating their wardrobe for those long-awaited holidays, and keeping commitments to enjoy postponed weddings and birthdays, spending on furniture and interiors have been sacrificed in order to balance the budget.
“It’s clear things are tough for consumers at the moment,” said Nicola Thompson CEO at Made.com. “As such it’s prudent for us to take a conservative view of what we can expect in the second half of this year.”
Furthermore there is an additional £20 million in excess costs for the company to bear, due to operational challenges such as port-disruptions and the need to clear excess inventory.
Made.com stated that it expects gross sales to fall 15%-30% compared to the previous forecast of flat to 15% down. It is looking to make £15 million in savings across the company.
“The management team is actively addressing all non-strategic fixed costs across the business to enable the return to attractive unit economics and ensure the business operating model is flexible for the new environment and better positioned to deliver the long-term strategic goals,” the company said.
As the UK faces further economic pressure with households warned of unprecedented fuel cost increases and rising inflation showing no signs of wavering, the focus for many will be keeping the home warm not on the aesthetics.