- Individuals Benefit from Affordable Furniture Purchases
It appears that Germans are cutting back significantly on furniture purchases. The German furniture sector predicts a decrease in nominal sales of 7 to 9% this year, as stated by Jan Kurth, CEO of the VDM association. After accounting for inflation, the drop will be even more substantial.
In the first half of the year, despite rising costs, companies recorded a 9% decrease in sales compared to the previous year, with both the kitchen furniture and upholstered furniture sectors experiencing significant losses. The poor economic climate in Germany continues to be a major issue, showing no signs of improvement. The consumer confidence index, compiled by GfK and NIM, dropped significantly in August.
Furniture prices have risen dramatically since 2020, with beds becoming 21% more expensive and upholstered furniture increasing by 16%. Despite a slight easing of price dynamics, modest price hikes cannot be ruled out, according to Kurth. The slow pace of new housing construction remains a concern.
However, Kurth remains hopeful. "We believe we've hit rock bottom," he said. The improved business environment and increase in real wages provide reason for optimism. Online shopping platforms like Temu or Shein do not pose a significant threat to the industry, which claims that the majority of furniture is still purchased in physical stores, with around half of the products coming from abroad.
Furniture sales declined last year, and many companies have had to resort to short-time work due to the challenging circumstances. In August, 38% of surveyed companies applied for it. The closure of well-known companies, such as HÜLSTA, which ceased operations on June 1, and Opti-Wohnwelt and Schröder, which recently filed for bankruptcy, is a grim reminder of the situation.
Christoph Lamsfuß from the IFH retail research institute identified several factors contributing to the crisis: "Following years of investing in their own homes during the pandemic, the furniture industry is now facing a decline in sales. Private investments are shifting towards travel since the end of the pandemic. However, real wages have recently seen significant increases, which will positively impact consumption."
Recently, the furniture industry has shrunk once again. Currently, there are 417 companies, compared to 431 last year. The workforce has decreased from 75,300 to 71,841.
Given the current economic situation in Germany, consumers are cautious about furniture purchases, leading to a decrease in sales. The VDM association expects a significant drop in nominal sales for the furniture sector, with both domestic and international consumers impacted.
