Argos is set to overtake MFI as the UK’s leading furniture retailer, according to a new report by retail analysts Verdict Research.
The report predicts that MFI, which has been market leader for over 20 years, will also fall behind DFS and Ikea. Argos in 2006 has a 6.2% share of the market – rising over the past five years as it expanded its portfolio.
Alastair Lockhart, senior retail analyst at Verdict, says that MFI’s previous management had a sensible recovery plan but adds that it was "too little too late". He says: "Problems which stemmed from a dysfunctional supply chain and a disastrous repositioning exercise in 2004 were compounded by increasingly tough market conditions in 2005 and 2006 to cause the company’s sales to haemorrhage."
MFI was sold to private equity group Merchant Equity Partners earlier this year, and now plans to revitalise the chain with new investment. It has already shifted its £29m advertising account from Publicis into M&C Saatchi and is expected to move its media business into Walker Media from ZenithOptimedia.
Lockhard says that MFI should concentrate on rebuilding the brand and dealing with operational issues.
He says: "MFI still has an extensive portfolio of recently refurbished stores, and a pipeline of investment on the agenda."
But he believes that it is unlikely that it will reclaim its market leading position for the "forseeable future".
He predicts that Ikea is well placed to take the number one spot because it has become more flexible about store plans and locations.