Giftware to the United Kingdom

(Last updated: 19 Jul 2007)

Trends and opportunities

The market

The giftware sector is still experiencing sales growth in certain sectors, despite the economic global downturn, as the positive UK retail sector has shielded the economy to some degree. Lower interest rates in the UK and increased purchases on credit have been a major contributing factor.

The giftware industry reports that although overall sales are growing, this is not uniform across the industry. At the lower priced end of the market, principally the cheaper jewellery and giftware sector, spending is slightly down compared with 12 months ago. In contrast to this, the higher end of the market is experiencing strong growth, especially in homewares, with figures up by over 11 per cent.

Customers are prepared to pay for quality and good design, and there is increasingly strong demand for designer goods for the home. People are spending more on Christmas and birthday presents, and the ‘average’ British wedding now costs around $37,000.

The interest at the higher end of the gift and homewares sector can in part be attributed to the popularity of home, garden and DIY shows on British television, which has stimulated demand.

The UK gift sector is estimated to be worth over $21 billion. It comprises of:

• homewares (not including home textiles)/ceramics – 32 per cent
• jewellery/silverware – 30 per cent
• toys and games – 28 per cent
• cards/wrapping – 8 per cent
• small leather goods – 1 per cent 

(Sources: Gift Trade Federation and Department of Trade and Industry) 

Homewares and ceramics include tableware/decorative ceramics and glassware, gifts for the home (eg. cushions, pictures, frames, decorative boxes) and gardening gifts (eg. sundials, wind chimes).

Jewellery

The jewellery sector includes precious, semi-precious and costume pieces. The sector is growing at an average rate of four per cent. This is a response to rising incomes and greater interest in luxury goods. High carat gold (14ct +), diamond and platinum jewellery are all selling well. However, competition is fierce and there is distinct polarisation between the sale of heavily branded, higher priced global names and non-branded goods at the middle-lower end of the market.

Jewellery retail has seen a shift of share from department stores to specialist shops, which now account for 60 per cent of sales. Other channels have experienced significant growth including direct selling and mail order. The QVC TV shopping channel has increased its market share to almost 20 per cent. Leading retailers in this sector include: Signet, Goldsmiths and Mappin & Webb.

Watch sales have been increasing due to growing brand awareness, the propensity for watches for specific uses and the introduction of seasonal collections.

Silverware

Includes cutlery and silver gifts other than jewellery. The sector has benefited from renewed interest in luxury goods. The relatively low price of raw silver has contributed to manufacturer’s lower overheads.

Toys

Sales of toys have been dominated by film merchandise and computer games, but there is still a market for educational and traditional toys and games. UK toy manufacturers have suffered from the strong exchange rate, and some have set-up overseas manufacturing bases in order to compete. Many retailers now source directly from overseas contract manufacturers to trim costs. Import sources include China and Indonesia. Leading retailers include: Hamleys, Early Learning Centre and Harrods.

Leather goods

The small leather goods sector includes wallets, purses, organisers, desk sets and mobile phone cases. The increased ownership of mobile phones and computers has resulted in new niches for portable leather accessories. Most products of this type are sold through department stores such as House of Fraser or brand outlets such as Mulberry.

Greeting cards and gift wrapping

The greeting cards sector is highly competitive, but industry sources expect it to continue to diversify away from the traditional card-giving times of Christmas, Valentine’s Day, Mothers’ Day, weddings and birthdays. E-cards have not had a significant impact on traditional greetings cards sales, but have perhaps encouraged informal card sending.

The higher end of the gift wrap sector is design-led and heavily influenced by fashion trends. Leading retailers include: Paperchase – specialist stationery, WH Smith – books and stationery and John Lewis – department store.

Opportunities

There are niche opportunities for giftware suppliers offering unique, high quality design-led products with strong points of difference. The industry is highly dependent upon a strong economy and consumer confidence.

Growth areas include:

• Lifestyle gifts for the home and garden
• Unusual, design-led jewellery
• Toys and games, particularly those with an educational focus
• Baby and children's products
• Innovative cosmetics and toiletries

Competitive environment

The homewares and ceramics sector is extremely competitive. To remain competitive, leading manufacturers and retailers have cut margins to reduce prices, particularly in the tableware segment. Leading retailers include specialist and department stores: Habitat, Conran, Heals & Co, Debenhams and Liberty’s.

Tariffs, regulations and customs

ome items of giftware will require an import license issued by the Department of Trade and Industry (DTI).  Get your distribution partner to check for you before shipping. Any item made from a protected plant or animal species will need CITES certificates and licenses from the Australian and British Governments. Check with the Australian Quarantine Inspection Service (AQIS) at an early stage.

If your products are sourced or made in a country other than Australia, you may have to comply with quotas and special licenses. This is a particular issue for textile products. Ask your distributor to check with the DTI.

Consumer protection legislation is the primary concern for giftware. There is legislation covering:

• toys
• textiles
• country of origin
• labelling
• packaging

Trading Standards officers employed by local councils enforce this legislation. It is worth getting your UK distributor to contact their local Trading Standards office for their advice.

The way products are packaged, sold and/or produced will dictate the tariff(s) that apply. The UK is part of the harmonised trade system of the European Union. Common Customs Tariff is applicable to goods from non-EU countries, including Australia. Most duties are ad valorem, based on the GATT Valuation Code (approximate CIF value). VAT at the standard rate of 17.5 per cent will apply to all giftware products. Books and newspapers are zero-rated for VAT.

Before shipping any goods to Europe, you should obtain a written customs duty ruling from the UK customs service. These rulings are called Binding Tariff Information (BTI). Getting a BTI is free and will prevent any conflict over customs or excise duty.

Some goods may require CE Marking.

Industry standards

There are a range of labelling, packaging and safety requirements for giftware products. These are available from British Standards Institution. European Union regulations for consumer protection include the Toy Safety Regulations.

Testing and hallmarking of gold, silver and platinum jewellery is required for all imported pieces at one of four Assay Offices to ensure purity and quality. Details of UK Assay offices are listed on The Electronic Guide.

Marketing your products and services

Market entry

Market entry strategies include:

• Appointing a distribution partner to handle importing and customer liaison
• Managing the customer base from Australia and find a fulfilment company to warehouse and ship to the customers
• Setting up an office in the UK
• Sending one of your staff to the UK as a representative
• Share distribution with another Australian company – preferably with a synergistic product range
• Manufacturing your products in the UK under contract or license
• Undertaking a joint venture with a UK company

Of these options, the most effective is appointing a distribution partner. A UK company will understand how to best present your products, comment on changes to your packaging and will understand how to place the product in the market. These skills take time to acquire and demand exposure long-term to the UK.

Smaller distribution partners often specialise in a particular product sector and may service customers on a regional basis or may supply only certain types of retailer.  Australian exporters may require more than one UK distribution partner in order to access the entire market.

It should be noted that the number of experienced distributors is limited, and it is important to check for conflicts of interest.

UK consumers are very discerning when it comes to packaging and presentation of the product. It is best to work with a UK-based specialist to develop packaging or branding suitable for the market. Your distributor should be able to help. Packaging is particularly important to giftware sales.

When presenting your product to a UK retailer, either direct or via your UK distributor, you will need to consider the following:

• What is the value to the retailer of listing your product?
• How your product ‘fits’ in the current product offering
• Who the target buyers are
• Projected level of sales
• What the retail price will be
• What margins the retailer and distributor expect
• How you are going to promote the product?
• Are you willing to change the product ingredients or packaging to suit the retailer?
• Is an exclusivity deal appropriate?
• Are you ready to provide product samples?

To be successful, you will need to tailor your presentation for each buyer. Visit as many stores as possible to build up a picture of the retailer’s consumer base and consider how your product fits their needs and aspirations. Research the market and your potential competitors thoroughly before making contact with customers.

British companies prefer to have brochures and product samples instead of relying on websites for information. Use of the Internet is widespread, but a physical brochure or sample in the buyer’s hand tends to make a faster impact. Brochures should:

• Accurately project the values of your company
• Include technical information
• Give full details of all products in the range
• Mention the benefits of the product to the retailer – perhaps including a case study of an Australian retailer
• Be relevant to international buyers, eg. provide phone numbers with international dialling codes

Pricing information should be provided separately. It should also be in UK pounds where possible, or at least in Australian dollars with reference to a current exchange rate.

Most major retailers have incorporated the Internet into their business strategy. Most have websites with a brochure format for products. Some have added an interactive sales facility for consumers, but business-to-business sales are not well developed.

Some consumer e-business gift sites in the UK include Confetti (wedding service) and Debenhams (online service from department store).

If you do offer your products for sale to the UK and Europe over the Internet, you will still need to comply with British and European laws.

Distribution channels

It is hard to gauge the exact percentage share of the gift sector, because it is so diverse. Important channels include:

• department stores – John Lewis
• specialist chains – Past Times
• independent gift shops - Oliver Bonas
• museum shops – Victoria and Albert Museum
• garden centres – Wyevale
• airport shops – Gatwick Airport

Almost all retailers will want to buy from one of their known suppliers, or from a company based in the UK, therefore a UK distributor, or some form of representation in the UK is necessary.

If a retailer is willing to buy direct, the supplier should ensure that the buying process is as smooth as possible to encourage take-up. For instance, providing buyers with a sell price incorporating transport costs to the retailer and any import tariffs will make the buyer's decision more straightforward.

Direct selling by mail order using e-commerce or traditional catalogue is a popular and relatively cheap sales method for gift products. All mainstream magazines and newspapers have advertisements for jewellery, craft products, homewares and leather goods.

If you set up your own direct selling operation in the UK, you will need to be aware of consumer protection legislation. It is worth becoming a member of associations such as the Direct Selling Association which provides a code of practice for members.

Links and industry contacts

Giftware–related resources

British Jewellery and Giftware Federation – www.bjgf.org.uk
British Luggage and Leathergoods Association – www.blla.org.uk
British Jewellers Association – www.bja.org.uk
British Toy and Hobby Association – www.btha.co.uk
British Association of Toy Retailers – www.batr.co.uk
Direct Selling Association – www.dsa.org.uk
Gift Association – www.giftware.org.uk
Jewellery Distributors Association – www.jda.org.uk

Trade fairs

International Spring Fair –  www.springfair.co.uk
International Autumn Fair – www.autumnfair.co.uk
GLEE trade fair – www.gleebirmingham.com

Magazines

House Beautiful - www.housebeautiful.co.uk
International Smart House - www.smart-house.net

Government, business and trade resources for the United Kingdom

British Standards Institute – www.bsi-global.com
DTI consumer protection regulations – www.dti.gov.uk
European Union Customs – http://europa.eu.int/comm/taxation_customs/customs/index_en.htm
European Union Portal – http://europa.eu.int/index-en.htm
HM Customs & Excise – www.hmrc.gov.uk/home.htm
Trading Standards – www.tradingstandards.gov.uk
UK Government Portal – www.ukonline.gov.uk
UK Statistics – www.statistics.gov.uk
UK Trade and Investment - www.uktradeinvest.gov.uk

Service providers

Benair Freight Management – www.benair.co.uk

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

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