January 20, 2004

By: Ross Mak
Website: http://www.1st-in-toys.com

Retail Sales of Gifts Such as Toys, Games, Jewellery, Ceramics, Glassware and Leather Goods were Valued at £4.42bn in the UK

This report on Giftware considers the sectors of toys and games; jewellery, watches and silverware; ceramics; glassware; and small leather goods. Retail sales of such items intended as gifts were valued at £4.42bn in 2002, representing a modest increase of 1% on the previous year. Consumers are taking advantage of low interest rates and are accumulating personal debt. According to the Confederation of British Industrys Quarterly Distributive Trades Survey, the volume of UK retail sales increased at their fastest rate in 6 months in May 2003, amid good weather and the end of the Iraq war. The survey found that sales were increasing year-on-year in most retail sectors, with the strongest growth seen in sales of footwear and leather goods. However, all the companies operating in the sectors covered in this report are challenged by cheap imports, high domestic production costs and high-street discounting.

The UK has a trade deficit in each of the giftware sectors considered in this report, with the exception of ceramics. However, even in this traditional sector, the trade surplus is fast diminishing. The industry has manufacturing over capacity in the UK; high production costs mean that UK manufacturers cannot compete with cheap imports from countries with low manufacturing costs. Consequently, UK manufacturers are increasingly moving production overseas. In June 2003, the Wedgwood Group announced its intention to outsource production of its medium-priced earthenware brand Johnson Brothers, resulting in the loss of 1,000 jobs in Stoke-on-Trent. However, production of its premium-priced Wedgwood-branded earthenware will remain in the UK.

According to the Department of Trade and Industrys survey E-Commerce Impact Study for the Giftware Sector, published in December 2001, a slow take-up of e-commerce was — even then — resulting in UK giftware firms falling further behind other countries in adopting e-commerce solutions. This allowed overseas manufacturers to make their presence known to UK retailers through the Internet and, by taking advantage of cheaper production costs in their individual countries, further undermine the competitive position of UK giftware firms.

Each of the giftware industries in this report has suffered from the general decline in UK manufacturing, and where domestic production does still exist, it is likely to be at the premium end of the market. However, designer brands, which are cherished by UK consumers, are no longer perceived as being the sole preserve of the very wealthy, which has the effect of decreasing exclusivity, as the brand becomes more visible among the general public. This leads to the inevitable decline in demand from prestige consumers, as the social image of the brand erodes.

As far as the retail of giftware is concerned, Hamleys, Selfridges, Debenhams and House of Fraser were all subjects of takeover speculation by mid-2003. However, it remains to be seen how these, and other, mergers will affect the competitiveness of the high-street retail stores.

About The Author:

Ross Mak is a successful author and regular contributor to http://www.1st-in-toys.com.  Find all the toys you wish you had as a kid. Fun and educational toys found here.