Introduction
Furniture industry has a long history of material, design and pattern transformation which has now equipped with technology to manufacture functional furniture. The growth of global furniture market is expected to harness USD 582.3 billion by 2024, from an estimated USD 414.00 billion in 2016. The growth of millennial population all over the world is increasing the demand for housing and work space, thus augmenting the supply of furniture. Moreover, the increasing number of start-ups, hospitality sector and other commercial spas will drive the growth of the market. Asia Pacific (APAC) region is the highest producer and trading region of furniture.
Furniture industry is primarily operated by local manufacturers, SME’s and a few large enterprises. There huge hold of local furniture manufacturers majorly in the developing countries. Whereas the large furniture enterprises have evolved the manufacturing processes and quality and life cycle of the product with the use of advanced technologies. Over the next decade, large enterprises are expected to take over larger market share by either SME’s merging with them or dying from the stiff competition.
As the economy has grown, more consumers are willing to buy luxury items for their living and work environments. The global luxury furniture market is expected to grow at a CAGR of over 4.2% during 2018-2024 period. In terms of location, Europe has the largest market for luxury furniture, but developing countries such as China and India are not far behind.
Impact Analysis
Organized retail industry is engulfing the furniture industry all over the world, majorly in the developed and few developing countries. The impact of local retailers in the developing regions has been high which is declining with the penetration of internet and awareness of the products available in the organized furniture retailing. The rising number of millennial has led to increase in the awareness among the masses. Global brands have taken this trend into consideration and are spreading their business with new ideas. Moreover, they have come up with innovative business models to engage with the customers and satisfy their dynamic needs. This development lacked in the unorganized retail.
Few trendsetters of the industry are exploring and testing the furniture concepts that may gain popularity. Therefore, the consumers are attracted to make purchases through global furniture retailers or online retailing, in order to get along with the trends. Millennial and medium to low income group of people have shown a great amount of interest in buying furniture from online stores or on rent from various startups that offers modern furniture on low cost rent.
Further, competition in the furniture industry among the global as well as regional companies is increasing all over the globe, impacting the growth opportunities of the companies. The startups are bending towards investments and expenses to stand against the established companies. For instance, Greycork is a furniture manufacturing startup which provides simple, affordable, high quality and good-looking. But the company’s products portfolio has just 9 to 10 components, as compared to 50 components from IKEA. Therefore, Greycork has raised over USD 260,000 through crowd funding for its living room set and shipments of the furniture.
Trends
Organized retailing has led to decrease in the consumers stress in selecting the furniture as per the home designs. For home décor the innovative ideas and designs from the experts are made available to customers and make the process hustle free. Furniture retailers are evolving their business strategies with changing landscape from the point of generational changes. The millennial are looking for multifunctional, reasonable and smaller furniture to adjust in the urban and dynamic lifestyle, and ready-to-assemble furniture market has the largest share among these.
The story of competition in industry is moved ahead to the application of technologies as AR (Augmented Reality) to provide customers a complete view of the furniture when installed at the desired space. Companies such as Apple and Google have introduced mobile devices enabled with AR browser.
The furniture market is majorly impacted by the ongoing design and color trends in the furniture and home décor market. More furniture vendors are choosing to go green. With luxury comes the expanding trend to go green, many vendors are developing eco-friendly furniture. This trend is driven by environmental concerns, such as the problem of deforestation. Although eco-friendly furniture is more expensive, the demand for outdoor furniture is on the rise, making it worthwhile for manufacturers and companies to offer these products.
Furthermore, functional furniture is a new wave in healthcare furniture industry. The rise in number of small household with 2-4 members are increasingly looking out for portable and affordable furniture which goes along with the need and trend. Moreover the living areas in metropolitan cities is gradually getting smaller. Thus there is increasing demand for foldable and portable furniture such as sofa-cum-bed and book shelf turning to bed. The average living area in Beijing, China has decreased to 21 square meters per person.
Dual function furniture has a lot opportunities such as in New York and Beijing, the advanced cities due to large population and large income gap among the population. Majorly the middle income people, who are either young or new employees, have high demand for small living spaces and low priced yet functional furniture. The transformable space is a new trend among these people which makes the room appearance more comfortable and stylish.
Asia-Pacific (APAC) Furniture Industry Outlook
APAC region is the major producer and supplier of furniture. APAC in 2016 accounted for nearly 35.40% market share including Malaysia, Indonesia, and Vietnam as the major furniture manufacturing countries. Whereas, China and India are among the top consumers of indoor furniture. China is the top exporter and producer of indoor furniture using variety of materials, designs and functionality. The openness of the country for international trade, it is attracting the investors in manufacturing industry from across the world. Further the china based furniture manufacturing industries both small and large are highly automated and efficient, giving tough competition to other major producing countries. Wooden furniture from China has secured top position across the globe, surpassing the products manufactured in Germany and Italy.
Indonesia has its global reputation of furniture and handicrafts. Indonesia has abundant supply of required wood for the manufacturing of furniture, thus Indonesia has large contribution in the export of wooden furniture. Indonesia market share in indoor furniture industry was 9.30% in 2016. Apart from the country’s export markets, the furniture industry has huge growth prospects from the increasing demand in domestic and ASEAN region. Indonesia has become highly attractive region in terms of establishing furniture manufacturing base due to supply of raw materials and cheap and skilled labor availability.
Vietnam indoor furniture market has high growth opportunities due to rising GDP and conducive environment for FDI. The expected free trade agreements (FTAs) between Vietnam and partners such as the EU, the U.S. and ASEAN nations in near future, will impact the increase in demand for furniture and rise in exports as the movement of goods may become easier across the borders.
Hence, across the APAC region manufacturing of furniture especially the wooden furniture in on peak. The growth and developmental activities in the region by the construction industry is further propelling the market growth scenario. By 2024, the furniture industry in APAC is expected to leap forward to reach USD 205.70 billion.
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