Furniture Stores and Corona: How the Pandemic is Changing the Furniture Industry – Economy

The technical term is “cocooning”, based on the cocoon that silkworms weave around them: those who spend more time at home during the pandemic at least want to be comfortable – like the baby butterfly in the cocoon. This is why the furniture industry is generally seen as the winner of the crisis. If, for example, long-distance trips are canceled, many people have more money for their furniture. And the low interest rates make an investment in the apartment attractive.

If you look at the figures that the Association of the German Furniture Industry (VDM) has now presented, the impression seems to be confirmed at first glance. The association reports that an average household in Germany spent 760 euros on furniture last year. In 2019, it was only 725 euros.

2021 has also apparently started well for local manufacturers. The VDM reports sales of 8.4 billion euros for the first half of the year, four percent more than in the same period of the previous year. But that same period last year was particularly weak, given furniture stores that had been closed for weeks. And the most important sales channel in the industry was also blocked for a long time in 2021. “We can no longer rejoice now,” says Jan Kurth, Managing Director of VDM. Local furniture makers still sold 6% less from January to June than in the first half of 2019, when Corona was just a beer brand. The pandemic has changed the industry in four main ways.

Longer delivery times, higher prices: Anyone ordering a kitchen or tall cabinet today should expect longer delivery times – and in the medium term, possibly higher prices. Because furniture makers complain about “considerable bottlenecks” in important raw materials. The Federal Statistical Office reported, for example, that materials such as wood or foam are up to 83% more expensive this year than a year ago. Several companies have stopped production on a daily basis, Kurth explains, due to a lack of equipment.

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Solid timber was last 83 percent more expensive than at the same time a year earlier, the Federal Statistical Office reported.

(Photo: Friso Gentsch / dpa)

There are several reasons for bottlenecks. At the start of the crisis, many raw material manufacturers had reduced capacities. But economies like China have recovered faster than many experts expected. In addition, international logistics capabilities were scarce. In addition, a severe winter at the start of the year slowed down the oil industry in the United States, which exports many intermediate products.

“It can be assumed that the higher production costs will have to be passed through the value chain,” explains Kurth. How much more expensive furniture is ultimately decided by retailers. On average, manufacturers currently need at least two more weeks to deliver the furniture, according to the head of the association. “We do not assume that the issue will be defused in the second half of the year.”

Kitchen requested, office furniture no: Whether a furniture company wins or loses the pandemic depends heavily on the products. Local kitchen makers and upholstered furniture makers made about a sixth more in the first half of the year than in the same period a year earlier, reports VDM. “Cooking is the lifeblood of business,” says Kurth. Germany lowered VAT from July to December 2020; it has become cheaper to buy a kitchen or a sofa. Some of those orders would have turned into sales in early 2021, according to Kurth.

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Highly in demand in Switzerland and abroad: Kitchen manufacturers are currently the most successful companies in the German furniture industry.

(Photo: Daniel Ingold / imago)

On the other hand, things look worse for local office furniture manufacturers. VDM reports that they sold slightly less in the first half of the year than during the weak period of the previous year. We notice here that companies spend less money on furniture during the crisis. No wonder, given that many more people are working from home.

Much more online shopping: When parcel services announce new records during the pandemic, they report several developments. Anyone who has always loved shopping for fashion on the Internet has tended to order even more frequently in recent months. There are also people who did not find out how well online commerce can work during the crisis. And then there are products like patio furniture that were hardly ever ordered online before the pandemic. “It is also a growing market, for example,” said Marten Bosselmann, head of the Federal Association for Parcel and Express Logistics, regarding garden furniture.

A considerable burden for delivery people, which the VDM confirms: the online furniture trade “has seen a boost with the Corona crisis”, explains Kurth. The association estimates the proportion of Internet purchases at “meanwhile at least 20 percent”. Many manufacturers have reported that online ordering has become more important to them.

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Try sitting in a furniture store – they did without and ordered office chairs online instead.

(Photo: Robert Michael / dpa)

The market is becoming international: The combination of online shopping and furniture stores that have been closed for weeks is changing market shares. The VDM reports that furniture imports into Germany rose 23 percent in the first half of the year compared to the same period the previous year. “A lot of things were added from China,” Kurth explains – referring, for example, to office chairs or rolling containers for the home office, and generally furniture with a high proportion of metal. Germany also imported more from Poland and Italy than at the same time last year, for example upholstered furniture or wardrobes. Local manufacturers have therefore lost share in their domestic market. “This worries us,” says Kurth and promotes clear indications of origin on the furniture.

The furniture industry, with its nearly 79,000 employees in Germany, remains a consolation: it also exported more in the first half of the year, reports the VDM – even more than in the last six months before the outbreak of the pandemic. “Foreign markets are the lifeblood of the whole business,” says Kurth. For example, Germany sells more kitchen furniture to France, Austria or Switzerland. Overall, the industry expects its share of exports to be higher than ever this year.

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