ZF English

Furniture market poised to top 1bn euros

14.12.2007, 19:55 11

A 10-15% surge sustained by the real estate boom, further segmentation and the arrival of new players, as well as mounting exchange rate pressures are several features expected to characterise the domestic furniture market in 2008.
Imports will continue this year's upward trend and gain a rising market share, which, according to ZF estimates, is set to exceed 1bn euros this year. In 2006, imports accounted for 30% of sales, slightly higher than in 2005.
In contrast, exports are expected to cause problems for producers, which will have to find alternatives in order to stay afloat.
Production cutbacks, resulting in a lower number of employees, asset sales and major investments in upgrading and design are the main initiatives Romanian producers are likely to introduce in 2008.
At the same time, the relocation of large plants from city centre sites (due to pressure from real estate developers and hypermarket networks) is also likely to gain momentum next year.
Yet, whilst at the level of production the situation is far from favourable for producers, in retail players will benefit from the positive situation generated by the overall economic climate and higher incomes.
"In 2008, I believe the growth rate of Romanian furniture retail will continue at around 10-15%, and real estate projects will continue to have a significant impact. On the other hand, constant wage increases and a more visible middle class market will also have a positive impact on furniture retail (...)," said Dan Sucu, Mobexpert chairman.
However, Dumitru Petcu, general manager of Alprom Pitesti, is less upbeat and forecasts market growth at 6-7%. He also speaks about producers' continued lack of appetite for exports despite the latest evolution of RON against the main currencies being favourable to players.
Segmentation is now the most obvious trend on the market. Whereas until several years ago major operators dominated the market with general stores, the first specialised networks have now emerged.
Another tendency shaping up is partnerships between players and real estate developers. This type of partnership will continue to develop over the next two years as new apartments are delivered onto the market.
At the same time, 2008 is set to be the year of major expansion in furniture retail.
Mobexpert, the market leader, plans to open 4 new stores in Romania in the wake of investments worth 8m euros. IKEA (present with a single store) intends to expand outside Bucharest in the coming years. Austrian-based KIKA will also rely on the Romanian market and plans to open 8 stores over the next five years. KIKA will open its first store in Romania in the autumn of 2008 in Bucharest, followed by units in Timisoara and Oradea in 2009.

Furniture market
A 10-15% surge sustained by the real estate boom, further segmentation and the arrival of new players, as well as mounting exchange rate pressures are expected to characterise the market in 2008
Whilst at the level of production the situation is unfavourable to producers, in retail players are expected to benefit from the positive situation generated by the overall economic climate and higher wages
Segmentation is currently the most visible trend on the market

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