Storm or Plain Sailing?

SOME THOUGHTS ON USING FORECASTS TO YOUR ADVANTAGE & SOME INSIGHTS INTO WHAT MIGHT BE GOING ON WITH CONSUMER DEMAND & SPENDING IN THE UK

I was listening to a BBC Radio 4 programme the other day discussing economic forecasting. The question was posed - is the OBR (Office for Budget Responsibility) doing a good job as they rarely seem to get a forecast right?

The answer was, that is not really the point; that forecasts will always be inaccurate to some extent. They are there for guidance and interpretation. They do not predict but suggest.

I can accept that; but how can you navigate what is a lot of very confusing and sometimes conflicting information to get a fair reflection of the conditions you are going to face?

In this article I'm using my experience and judgement to have a look at some of the data and discussion washing around and hopefully giving you a few nuggets of thinking that might help your own.

I'm not a financial whiz-kid; nor an economist.

But I am a market and customer strategist and former marketing director so I'm giving you my perspective on it all, as this is what I would do if I were getting ready to write, update or review the business strategy and draft next year's plan in the furniture, interiors and garden industries.

'Uncertain' is no help to anyone

The narrative I've been hearing from business is always about volatility and uncertainty.

Imagine a shipping forecast that said 'we've seen a lot of data come in and the general conditions will be uncertain'.

Not much help is it?

Uncertain is more an expression of the nervousness we feel, and volatility the bumpiness we see in demand, than an attempt at explaining what to expect.

I often hear it being used as an excuse for people missing budget. Which is OK, in that it is understandable, but also not; it's not much help.

What's the antidote?

Well of course better forecasting; but if you know it will remain stormy - no let's say squally (ie moments of calm with intense periods of wind and showers in between) - for the foreseeable future I would say

Build in contingency - you are not going to get performance on a daily, weekly, month or even quarterly basis accurately predicted in these sorts of times.

For a big business that will feel alarming. I know. I used to have to achieve sales forecast accuracy of +/- 5% by product line every month. I'm glad I don't have that headache now.

For smaller businesses I would say go for the longer term view and work on that. Use the underlying conditions to shape and manage your expectations of what the future will look like.

Underlying conditions and context

Top line and to have uppermost in your thoughts at all times : consumer confidence is still super fragile. People are being ultra cautious.

And it will not change soon. You can bet it will be like this for a good few years yet, and you won't get very good odds on that either.

Inflation is stubbornly high. The economy is refusing to bounce as the government would like it to, and all the talk is of energy prices again and tax rises.

Expect flat demand

I read reports where they say, kind of triumphantly, consumer spend in the 12 months to Jan 25 was up 0.4%. And people get excited...yeah growth!

Well yes and no.

I get that is a big number when you are dealing with £s in billions. But when you apply 0.4% growth to your business that is the same as saying we will be flat. I doubt you will be celebrating or happy with that as a potential growth figure.

Globally there are macro trends in play that all forecasts I read say demand will be flat, even accounting for shifts between countries. China and India are not coming to the rescue on this one; they are feeling it too - and as markets where prices have risen fastest are in the UK and Europe we can expect this to dampen demand at home substantially.

There are times of course when sales do tick up. You may get your usual seasonal peaks.

In June the sun was out, literally, and lo and behold the spending gloves came off as 'feel good' kicked in.

What did we spend on? Beer, barbeques, cooling fans, lipsticks and oddly furniture.

Garden furniture OK I can understand. But there was also a blip in all types of furniture.

Barclays reported furniture sales in retail were up 8.2% in June 2025. Those levels of spend have not been seen since March 22 when the pandemic forced everyone into spending time at home and oddly, or naturally, people took a look around them and decided on buying some new stuff to improve their lives.

Reports attribute (but cannot confirm) the June 25 increase in furniture sales to a rise in home completions in late q1 ahead of the stamp duty rise. Seems logical, but not conclusive.

And also that is a pretty one off, short term hit, hardly a trend.

Watch out if your think it signals market growth. One swallow does not a summer make.

Seeing sales rise in June is good but it is no indication this level of rising demand will continue. I would suggest it will not.

Consumer confidence remains 3 points below the long term average at around 97% in May 25 (Office for National Statistics) and for me that is the biggest indicator that the spending gloves will remain on.

Shifting priorities

Consumer confidence at 97% is not all disaster. It's been creeping unsteadily upwards from a low point in q3 2022 but still well below the heady heights of the year before.

(Incidentally - nerdy thought - with 100 as the average the dimension of low 92% and high 102% is actually quite small, so perhaps the dynamic shift within the usual range is more significant. I know it is one of the best things to correlate with demand for furniture. That and trends in house prices).

Households continue to spend (and remember as I give these figures people cleverer than me have already adjusted for inflation. These are from Barclays 10 year review, which uses all of our bank and credit card spend as data. That's some databank and covers 40% of all UK consumer spend!)

In their report, issued 5th June 2025, they identified:

• Spend on essentials has grown 5% in 2021-2024.
• Spend on discretionary items 9.2%.

Hooray?

Hold your horses. It's a yes but.... not a start dreaming of exponential growth.

What the household is now prioritising is experiences, travel and entertainment....then little luxuries. By that I mean beauty. Think posh lipsticks and you are in the right zone. What could that extend to in our categories? I think you should at least

Consider or explore opportunities in premiumisation and positioning your product or service offer as an indulgent reward?

The other interesting spend hike is in what the report describes as 'insperiences'. This is the amount consumers are willing to spend on subscription services (digital/ TV etc) at home.

Consumers are seeking to curate their best experiences (posh word for make good memories and good times happen) in the very core space we sell into - the home.

Over 88% of households have at least one subscription.

And their average monthly spend is £50.70 - or £600 a year.

Now that is not a lot to switch to spend on our products and services but do the maths at the macro level and its quite a number. In fact its £17.3bn annually.

What fraction of that might you like to go after or attract or enhance with something you offer that makes the whole at home, in garden experience they are trying to create even better?

Have a serious look at 'insperiences'. It's a trend. Its happening, its big and its relatively new - and from our category perspective, unless you are selling pizza ovens, outdoor bars or barbeques I would say untapped. What's not to like?

Conclusion

That's probably a lot to take in all in one go so here's a summary of what I talked about and a bit of a wrap up based on the idea of storm or plain sailing.

When you start reviewing your strategic performance and thinking about next year

1. don't think its all gone wrong this year because your forecast accuracy was off.
2. think about what you achieved with a longer term view; identify what is working and what needs to change on that basis not on any short term one.
3. plan expecting flat demand and volatility in when and how that demand shows up.
4. take into account shifts in consumer priorities
5. have a look at new trends that are happening now - little luxuries and insperiences look promising.

So will it be storm or plain sailing?

If you can recognise this context and adapt and plan accordingly these shifts will work to your advantage. It may feel bumpy at times, but the boat will stay more than afloat.

I'm Simon and I help owners and strategy/ growth leaders in the furniture, interior and garden design markets use creative thinking, market intelligence and customer insight to build inspiring plans for growth.

It all starts with 'Spark'.

To find out more please DM me and we can chat in more detail and explore if it is right for your business now.