The 2022 balance sheet for the furniture industry in Germany looks great – but only at first glance. The trade reports an increase in sales of eight percent to 35.3 billion euros. And domestic industry was also able to increase its revenues by seven percent to 18.8 billion euros.
“In normal years we would also be happy about that,” says Elmar Duffner, President of the Association of the German Furniture Industry (VDM). However, the situation is not normal – and the quite remarkable sales development is solely price-driven. “The sales volumes, on the other hand, declined overall,” sums up Duffner and speaks of a “difficult market environment” and even of “insufficient growth” in view of the underlying cost burdens.
There were problems above all in the entry-level price segment. “Our takeaway and discount retailers had a hard time fighting,” reports Markus Meyer, President of the Furniture and Kitchens Trade Association (BVDM). This means, for example, low-cost suppliers such as Poco, Möbel Boss or Roller, from which households with smaller budgets shop, who in the current situation with inflation and high energy prices have to make even clearer decisions about what to do with their money. “The first thing we save on is furniture,” says Meyer. Because sufficient money for groceries is more important at this moment.
In addition, the highest price jumps were in the cheap segment. The majority of the goods offered there come from abroad, above all from Asia, but also from Eastern Europe. However, in addition to higher energy and raw material prices, logistics costs in particular play a decisive role.
And they have at times reached record highs in recent months and years. “The price for imported furniture has therefore doubled in some cases,” describes sales representative Meyer, whose main job is the managing director of City-Upholstery based in Kaiserslautern. “And we had to pass that on to the end users.”
This mixed situation is also reflected in the import statistics. After that, the import value increased in 2022, specifically by almost three percent to 10.7 billion euros, as reported by the VDM. At the same time, however, the amount of imported furniture has fallen by twelve percent. This effect is particularly pronounced in China, which is still the largest supplier country: while the import value increased by six percent to 3.2 billion, the number of units fell by 15 percent and thus above average.
The coming months will have to show whether the current development will result in a fundamental trend towards higher-quality furniture. For the first time, BVDM President Meyer reports a slight recovery for the cheap segment in the months of January and February. Especially since there is a normalization in prices due to the recent fall in freight rates.
Nevertheless, the association expects that the demand for medium and high-priced furniture will generally remain more stable than for inexpensive products. Especially since the purchases are no longer made impulsively by consumers, but rather carefully and thoughtfully. “Both segments have their place,” believes Meyer.
However, his industry also sees a clear dynamic in topics such as sustainability, recycling and the circular economy. At the same time, the used furniture business is gaining in importance. “End consumers are less and less hesitant to buy used goods.”
“Both developments will mean that cheap imported goods will have a harder time in Germany in the future,” predicts Jan Kurth, Managing Director of the VDM industry association. “We see a clear trend towards sustainability when it comes to customer requests. And that will lead to shifts in purchasing behavior over the long term,” he says with certainty.
The industry has therefore been using an image campaign “Furniture Made in Germany” for some time, in which manufacturers are certified accordingly and receive certificates. “We want to give customers reliable guidance when making their purchasing decisions,” explains Kurth.
For this furniture, too, consumers will have to dig deeper into their pockets in the foreseeable future. “Further price increases are to be expected,” announces Kurth. He estimates furniture inflation to be around ten percent in 2022. Many manufacturers then held further price rounds at the turn of the year. And the next impact could follow in the middle of the year.
The reason for this is the high cost of energy and raw materials, which up until now could only have been partially passed on. However, compensation is imperative. “Otherwise the companies will get into trouble.” Especially since the next avalanche of costs is already foreseeable in view of the high wage demands of the trade unions. “I currently lack the imagination for declining prices,” agrees sales representative Meyer.
For 2023, trade and industry are therefore equally cautious with their forecasts. The VDM fears sales at the level of the previous year – which would mean further volume losses in view of the price increases. And retailers are also hoping for at least stable demand.
“Everything on shares” is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.
