Axel Schramm

Worldwide furniture consumption increases

Strong impulses for growth from Asia and the USA

A new phase in home furnishing has begun. For most people, home furnishing is becoming more important and thus more attractive as well. There are reasons for that. In the emerging markets, the big ones like India or China, more and more people are enjoying a share of prosperity. So they have a higher income and can invest more money in furnishing their own homes. All over the world, business with furniture and furnishing objects is becoming increasingly important.

Furniture consumption worldwide has doubled in the past ten years to roughly 335 billion euros. For the year 2015, an increase of 4 percent in worldwide furniture consumption is expected. Per person from Peking to Ulan Bator to Mombasa to Hyderabad to Washington, that is 47 €.

That growth comes mostly from Asia. While the furniture market in Western Europe will probably decline by one percent in the current year, furniture sales will increase by 2 percent in North America, 3 percent in Eastern Europe, 4 percent in the Middle East, parts of Africa, and parts of South America, and 6 percent in Asia.

The development in demand for furniture worldwide corresponds to the economic outlook in the most important sales markets. However, at the present time, a slowdown in GDP growth is expected because of the crises worldwide. Economic researchers expect the world economy to continue to pick up this year and next year, but not as much as in the past years. The Asian emerging nations, above all China with an estimated growth in GDP of 7.4 percent in 2014, have taken on the role of the most important economic driving forces worldwide. For the USA, a constant but moderate increase in GDP is also predicted - 1.7 percent for this year and 3 percent for next year.

With its meanwhile 28 member countries, the European Union is the largest economic area in the world. The 507 million inhabitants generated a gross domestic product of 13 trillion euros in 2013, which represented a decrease of 0.2 percent in comparison to the year before. The crisis-plagued economy in the EU continues to be weak this year. The growth forecast for this year is therefore only 1.1 percent and the outlook is rather unclear. The EU economy is still in a slight recession.

According to the current prognosis of the EU Commission, the real GDP will grow slightly in the EU – by 1.6 percent - in 2014 and in the euro area by 2.2 percent. For 2015, growth of 2 percent in the EU and 1.7 percent in the euro area is predicted.  

Who is providing the various economic areas with new furniture now?

The world’s largest furniture producer is and remains the People’s Republic of China with a total share of 31 percent. The Chinese production volume for furniture has increased significantly in the past years. Meanwhile, however, a weakening in growth can be detected due to increasing manufacturing and material costs and the resulting higher costs of production. For example, the imports of Chinese furniture to Germany decreased by 9.8 in the past year. The USA produces 14 percent of all furniture, followed by Italy with a 7 percent share and Germany with 6 percent share of world production. With that 6 percent – from the year 2013 – Germany is in fourth place worldwide and thus in a very important position.

Our domestic industry had to face declines in sales in 2013 due to the generally difficult market environment. For the year 2014, we expect a stable turnover at the level of the previous year. In the first half of 2014, the German furniture industry showed an increase of 1.6 percent in sales. So our sector is not progressing economically at the present time. That will not change much by the end of the year, in our opinion, so we are expecting a “black zero” for the entire year 2014.

In the German furniture industry right now, 84,220 men and women work in a total of 518 companies. At the same time a year ago, there were 84,388 employees in 528 companies.

The significance of the German market is also reflected in the per capita spending of consumers for furniture. Germany is an attractive and competitive market, because Germans love home furnishing.

Back to the global perspective:
The changes in the past years, especially because of China’s highly increased production and Chinese furniture exports, have also changed the flow of goods. The worldwide trade in furniture will increase again this year by 5 percent to roughly 100 billion euros. The main buyer worldwide is the USA. Germany follows as the second most important furniture buyer worldwide, then France, Great Britain, and Canada. Because of the increasing income of its inhabitants and generally positive spending behavior, the Asian market is also continuing to grow in importance as a sales region. In addition to the domestic producers, Germany and Italy are also increasingly profiting there with premium brand furniture.

In the current year, from the view of the German furniture industry, North America is becoming an important market where we were able to sell significantly more furniture in the first half of 2014 (+ 5 percent). Foreign business in the EU was also positive for us (+ 1.6 percent). Otherwise, foreign business stagnated for German producers. In the first half of the year, exports decreased by a total of 0.5 percent to 4.6 billion €.

This is, of course, only a small excerpt from the global world of furniture. For if we look at the trade volume in our sector worldwide – which has more than doubled in the past ten years – we can be optimistic.