Following today’s release of Wren’s figures for the 52 weeks ending 31st December 2023; Matt Walton, senior retail analyst, at GlobalData, a leading data and analytics company, offers his view: “Gravity has finally caught up with Wren as it has reported its first sales decline, with revenue falling by 9.2% for its FY2023. These figures were supported by its fledgling US business which grew its revenue to £16.8m, with UK sales down 9.8%. The cost-of-living crisis and the weak housing market contributed to Wren’s weaker performance as shoppers prioritised essentials and experiences over major purchases. The market declined sharply during the second half of 2023, as the post-lockdown boost in demand fully ran its course and demand for big-ticket purchases weakened. Figures from GlobalData’s Consumer Sentiment tracker showed a sharp increase in the proportion of consumers who thought it was a bad time to make major purchases in June and July 2023, and it remained low for the remainder of the year. This was highlighted by growths in H1 at both trade specialist Howdens and Wickes in FY2023 becoming declines for the overall year.
“These results are disappointing for Wren, especially compared to its competitors. Wickes saw design & installation sales decline by just 1.7% in 2023 while Howdens recorded a 0.7% fall in its UK sales. GlobalData figures indicate that IKEA also outperformed Wren in the kitchen market in 2023. With the overall kitchen market recording a low single digit decline in 2023, Wren’s poor results are more due to its internal performance rather than the market. IKEA’s affordable price points and more consumers turning to tradesmen, reiterated by the significant outperformance of trade at major DIY specialists, indicates that Wren’s offer has lost a little traction, especially in terms of price perceptions.
“However, Wren’s 2023 performance is likely to be an aberration. Improving consumer confidence in early 2024 and wage growth outpacing inflation means that customers are more willing and able to replace their kitchens. This is reiterated by Howdens reporting a 4.3% uplift in sales during the first half of its FY2024, signifying that demand for kitchens is starting to recover. Wren has attempted to improve its price perceptions with an advertising campaign which launched in mid-December 2023, showing that kitchens are an affordable way to refresh a home.
“Wren’s move into fitted bedroom furniture gives it a presence in another growth area as economic conditions and consumer confidence improve, and store refits will help boost awareness of its bedroom offer. The retailer’s US offer also has the potential to achieve a step change in growth as in October 2024 it entered into an agreement with Home Depot to open concessions in its stores, initially in Connecticut but with reported plans of having 100 concessions in the next three years.”
