Blog: Are home and DIY retailers sitting pretty for growth in 2014?

After seven years of turmoil, the housing sector is daring to hope for growth this year. In the last week alone economic data and encouraging trading updates provided home retailers with real optimism for 2014.

On Tuesday we heard that GDP rose 1.9% last year – the fastest annual growth rate since before the recession in 2007. That can only be good news for consumer sentiment. Indeed, GfK figures on Friday showed that confidence was at its highest for nearly seven years last month. And according to the index, consumers’ propensity to buy big-ticket items increased seven points to -10. This is 12 points higher than this time last year, and is an encouraging sign for retailers operating in the home and DIY sector.

Nationwide reported on Wednesday that the housing market, which is so intimately linked to the purchase of home goods, was beginning to return to normality following a rise in first-time buyers, boosted by the Government’s Help to Buy scheme and rising employment levels.

On Friday bellwether John Lewis revealed that home sales surged 14.8% in the week to January 25, “perhaps heralding the housing market recovery”, managing director Andy Street said.

Further positive news came from the world of M&A. We heard last week that Bathstore owner Endless was mulling a sale of the bath specialist after a successful revitalisation plan.

And looking back to earlier in January, Ikea and Dreams both reported strong starts to their January Sales period.

But while all home and DIY retailer will be keeping their fingers crossed for a sustainable recovery in 2014, few will be holding their breath. The issue of wages failing to rise in line with inflation persists, and while consumer confidence improved last month, it still remains volatile – the GfK index dropped for three consecutive months from October to December.

Furthermore, Carpetright’s profit warning last week demonstrated that it is still tough out there, although it should be noted that the flooring giant’s UK arm held up well compared with its ailing Dutch business.

While 2014 could be the year of growth in the home sector, after years of struggle, sadly big-ticket retailers know better than to assume any rebound in the challenging and unpredictable home market.