Furniture market to revert to over 10% growth

The year 2006 was a more peaceful year for the furniture market, after in the previous year the market had been seriously shaken by the weak export figures brought about by the stronger domestic currency.
On the retail segment, the market posted a slight increase in 2006, by 5-6%, way below the 25% growth pace reported at the end of 2005, according to market players. This year, the market is expected to rebound, witnessing growth by more than 10%.
According to a survey conducted by InterBiz market research firm, the market is about to enter a period of boom. Thus, the market is expected to reach a value of 1.1bn euros by 2011.
One of the trends manifest in furniture retail starting this year is customer segmentation, much deeper than before, given that the market continues to mature.
In Romania, according to InterBiz, the medium segment is dominant in terms of the furniture market, but the market will become polarised between low price and premium segments in the near future.
Over the past four years, the premium segment has witnessed the biggest increase, owing to imports and the rising purchasing power.
InterBiz notes furniture retail concentrated around five players that increased their weight on the market to 63.6% in 2006. This happened amid investments in Mobexpert, Elvila and Staer store chains.
Staer, as a matter of fact, is the company to have boasted the fastest growth pace in recent years, gaining a top position on the market in just a few years.
The construction sector will remain the growth driver of the market this year, too, but growth possibilities are also related to the fact that Romanians spend 10 times less than Europeans on furniture and decorative objects.
IKEA will also have a considerable impact on the market.
The Swedish retailer opened its first store on the Romanian market, but the 40-50m euros it is expected to derive could overturn domestic players’ plans. IKEA will also tighten competition on the medium segment it targets and also deepen market segmentation. Some specialised furniture retailers have started arriving on the Romanian market, with Haka and Nolte on the kitchen furniture segment, for instance.
At the same time, the market could also witness some price increases.
At a regional level, furniture prices are much lower than in the rest of Europe because of low raw material and labour costs.
This is why price hikes are a natural development as, according to a recent Eurostat survey, Romania had the lowest furniture prices among 33 European states.
Furniture production is projected to increase by more than 10% because of growing domestic demand.
This year could also see some domestic producers streamline their operations.