Dhe hot real estate market is causing increasing problems for the furniture industry in Germany. “We have a new tough competitor: the development of housing costs,” says Thomas Grothkopp, managing director of the furniture and kitchen trade association (BVDM). The unhealthy increase in purchase and rental prices for apartments and houses, the high real estate transfer taxes, but also the cost increases for electricity, gas and water would tie up those purchasing power that cannot be invested in furniture and kitchens.
In addition, there is a decreasing willingness to move because every new purchase and rental contract is associated with painful additional costs. “But if fewer apartments are moved, less will be spent on a new facility,” complains Grothkopp ahead of the International Furniture Fair in Cologne (IMM Cologne), the largest of its kind in the world with almost 1,300 exhibitors.
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The will is definitely there. At any rate, this is shown by a current survey by TNS Kantar’s market researchers on behalf of the Association of the German Furniture Industry (VDM). According to this, almost ten million households in Germany can imagine buying new furniture in 2020. The will to buy is particularly great in the younger population groups. “There is no shortage of potential demand,” says VDM Managing Director Jan Kurth. On average, almost 2600 euros are reserved for furniture in the annual budget per household, the study showed. 17 percent of the respondents would even plan with more than 5000 euros.
But surveys are one thing. What consumers actually buy is another matter. After all, it is not only the housing costs that burden the budget, which is actually profitable due to low unemployment and rising incomes. There is also competition from other consumer goods such as consumer electronics, but also from travel, cars and e-bikes. And all of that was more popular than new furniture recently.
People buy pots instead of kitchens
The optimism of the furniture trade and industry has also been great in the past two years. In 2018, however, the production figures of domestic manufacturers stagnated; in 2019, the medium-sized sector even lost sales. The trade was already in the red in 2018, but in 2019 there could be a plus, reports the BVDM. The association predicts that revenues will increase by four percent to 32.4 billion euros.
“However, this is not due to the furniture,” says Grothkopp, managing director of the trade association. Rather, the significantly expanded marginal ranges would play an increasingly important role, for example pots and dishes, lights and candles, pillows and blankets or picture frames and decorative accessories such as vases and bowls.