The home textiles market

During the most recent five-year period, Hemtex has grown by an average of 10.5% annually. Hemtex has increased its market shares due to a strong brand, combined with a successful business concept.

Home textiles are considered less cyclical than other retail segments, but during 2008/2009, demand was affected by a sharp economic decline and a weak trend for private consumption. Most home textile products, however, are of such a nature that they are replaced relatively frequently, and the cost for purchasing home textiles is also relatively low, compared with other home-improvement investments.

Customers are normally not particularly conscious of brands with regard to home textiles. This means that the name of the retail company, availability in stores and prices are important competitive tools in the market.

Sector undergoing long-term growth

According to Hemtex, the Nordic market (excluding Iceland) for consumer sales of home textiles was worth approximately SEK 18.3 billion in 2007, measured in terms of sales, of which the Swedish market accounted for about SEK 5.7 billion, the Finnish market about SEK 2.5 billion, the Danish market about SEK 4.2 billion and the Norwegian market about 5.9 billion.

Viewed over the long term, home décor and home textiles are among the most rapidly growing retail sectors. During the period 2003-2007,  the market grew by more than 3% annually in Sweden. During 2008, the Swedish market contracted by about 4.5%, according to the market research company GfK.

Hemtex experienced strong growth up until 2006/2007 when operating income amounted to SEK 221 M. During 2008/2009, Hemtex showed a negative trend with respect to both sales and income. Against this background, decisions were taken regarding cost savings and structural measures within store operations.

Nordic competitors

Product ranges among companies in the Nordic home textiles market vary greatly. Some companies have a product range consisting only of home textiles, while other companies offer a broader selection that includes furniture, mattresses, rugs and other home decor products.

Hemtex, Kid Interiør, Princess Gruppen, Eurokangas, Jotex and Hansen & Dysvik are the largest Nordic companies with a product offering consisting mainly of home textiles. Jysk has a broader product range with significant collections of furniture and home decor products, with home textiles accounting for 20-25% of total sales, according to Hemtex’s estimates. At IKEA, home textiles account for a limited share of total sales but are significant in absolute terms, accounting for 12.0% of the Swedish market in 2008, according to GfK. Competition in the home textiles market has increased in recent years, and more retail companies have expanded their product ranges to also include home textiles. H&M Home is one of the latest additions to the industry. Furthermore, competition is increasing from the mail-order sector, with the Internet as an increasingly common tool for customer purchases.

The Swedish home textiles market

During 2008, Sweden’s GDP declined by 0.2% (growth: 2.6), while private consumption declined by 0.2% (growth: 3.0). Sales in the true retail market (excluding state-owned liquor stores and pharmacies) increased by 3.3% (6.6), according to the Swedish Retail Institute (SRI).

The Bank of Sweden’s forecast is that GDP will decrease by 1.6% in 2009 and increase by 1.7% in 2010. SRI estimates that retail sales will increase by 1.0% during 2009.

The Swedish market for sales of home textiles to consumers amounted to about SEK 5.4 billion in 2008, according to GfK. This was a decline of 4.5%, compared with 2007. Market development during 2008 constituted a trend reversal, since the market had grown by more than 3% annually since 2003.

Hemtex has a leading position in the Swedish market for home decor products with a focus on home textiles. Hemtex is also the Swedish player that offers the broadest selection of home textiles. Hemtex focuses on home textiles, while its competitors are furniture stores, superstores and department stores that have their main operations in areas other than home textiles. Hemtex’s market position focuses on the medium price sector, although with certain products in the higher price segments.

Hemtex’s primary Swedish competitors are IKEA, Jysk, the mail-order sector and Åhléns. Within the low-price segment for Bedroom and Bathroom, IKEA, Jysk and the mail-order sector are the main competitors. Within the medium-price segment, Åhléns is the primary competitor, while specialty stores are competitors in the high-price segment. According to GfK’s 2008 survey, Hemtex is the market leader with 26.4% of the market, compared with 28.4% during 2007. Thereafter come IKEA with 12.0%, Jysk with 10.4% and Åhléns with 4.1%.

The Finnish home textiles market

During 2008, Finland’s GDP increased by 0.9% (4.5), while private consumption increased by 2.0% (3.3), according to the Bank of Finland, which expects Finland’s GDP to contract by 0.5% in 2009 and to increase by 0.7% in 2010. Private consumption is expected to increase by 0.7% in 2009 and by 1.9% in 2010. Hemtex expects the Finnish home textiles market to decline somewhat during the 2009/2010 fiscal year.

According to Hemtex’s assessment, the Finnish home textiles market amounted to about SEK 2.5 billion in 2007. Finland has a strong design tradition, and interest for home textiles is great. In Finland, Hemtex’s primary domestic competitors are Kesko with Anttila and Kodin Ykkönen, SOK and Stockmann. These chains primarily sell home textiles with strong domestic brands and proprietary brands. Foreign players are also active in the Finnish home textiles market. IKEA has three department stores in Finland, two in the Helsinki area and one in Turku, while Jysk has a nationwide chain. All of these chains compete with Hemtex, primarily in the low- and medium-price segments. Within mail-order, Hobby Hall and NetAnttila have leading positions. Specialty stores consist of the textiles chain Eurokangas, which is strong in goods sold by the meter in the low- and medium-price segments, and to a lesser extent small textile stores. Hemtex has a market share of about 9% (9) in Finland, according to the Group’s own estimates.

The Danish home textiles market

According to the Danish Economic Council, Denmark’s GDP increased by 0.4% (1.8) during 2008, while private consumption rose by 0.8% (2.4). During 2009 and 2010, GDP is expected to decrease by 0.5% and 0.3%, respectively.

According to Hemtex’s estimates, the Danish home textiles market amounted to about SEK 4.2 billion in 2007. Just as in Sweden, interest in home decor is great in Denmark, and there are many magazines and TV programs devoted to the subject. The Danish market is more polarized than any other Nordic market. A relatively large portion of sales are in the upper price segment with high design content. In Denmark, Hemtex competes with Jysk, Botex, IKEA, Ilva, the Magasin and Salling department stores, Coop and Dansk Supermarked. Magasin, Salling and Ilva are active in the high-price segment, while the others operate in the low- and medium-price segments. In addition, Bahna and Inspiration sell some home textiles and compete with Hemtex in home accessories, quilts, pillows and sheets. In recent years, many independent local home textiles stores have closed, thus creating scope for Hemtex’s expansion. Denmark is Jysk’s domestic market, and Jysk has a strong position in the home textiles market, followed by Botex. Hemtex’s own estimate is that the Group has a market share in Denmark of slightly more than 2% (2).

The Norwegian home textiles market

Norway’s GDP increased by 2.0% (3.1) in 2008, according to Statistics Norway. Private consumption rose by 1.5% (6.0), while retail sales declined by 0.1% (increase: 7.7). Norway’s GDP is expected to decline by 1.7% in 2009 and to increase by 0.5% in 2010, according to Statistics Norway. Private consumption is expected to decline by 0.4% in 2009 and increase by 3.1% in 2010, according to the same source.

According to Hemtex’s estimates, the Norwegian home textiles market amounted to about SEK 5.9 billion during 2007. This makes Norway the largest home textiles market in the Nordic region in terms of value. Measured per capita, it is twice as large as the Swedish market. Hemtex has a somewhat more expensive product range that sells well in Norway. Competitors in Norway include IKEA, Hansen & Dysvik, Jysk, Kid Interiør and Princess Gruppen. Hemtex’s own estimate is that the Group has a market share in Norway of slightly more than 2% (2).

The home textile market in the Baltic countries and Poland

The Baltic economies in Estonia, Latvia and Lithuania have expanded rapidly over the past decade. The high rate of growth resulted in salaries, property prices and private consumption increasing too rapidly to be sustained and led to substantial macroeconomic imbalances. During 2008 and the beginning of 2009, GDP has declined sharply in the Baltic countries. Unemployment has risen rapidly, while incomes have declined. This trend had a negative effect on private consumption and retail sales.

Poland with a population of nearly 40 million is a large market. The country has undergone a major economic transformation in recent years, and the economy has expanded rapidly. The consumer boom in recent years has benefited the retail sector. Today, several Swedish retail chains are established in Poland. The country is also one of the few in Eastern Europe that has best weathered the economic crisis.