Emerging Virtual Reality & Furniture Industry Market Outlook: Ken Research

Overview: Over the past decade, world furniture trade in 70 major countries, home to roughly three fourth of the world’s population has grown hand in hand with the furniture manufacturing business. Furniture trade and manufacturing occupies a significant position in the global trade and manufacturing market. However, Furniture Industry Analysis suggests that it has witnessed a downturn in its increasing trend in the last 2 years. This could be attributed to various factors such as Brexit, change in international trade policy of the new US administration or even stagnancy in furniture industry developments. Furniture Market Research Reports highlight that the major countries importing furniture are United States, Germany, the United Kingdom, France and Canada. Export on the other hand saw a major change with Vietnam surpassing USA in the list of major exporters.

Market Trend: There is no doubt that furniture is not a dynamic industry and does involve some level of stagnancy in its products. That said some companies like Haworth are actually trying to incorporate technological advancements in their furniture manufacturing business in order to tackle the dynamic environment. In order to overcome this paradigm shift Haworth has come up with a new product ‘Bluescape’ which offers virtual work spaces and eliminates the need to purchase costly boards, projectors etc. and allows dispersed teams to organize, design, decide, share and deliver on team or collaborative projects. In USA and countries of Europe, another similar kind of technology that has surfaced into the furniture industry is Virtual Reality. In order to improve consumer engagement furniture manufacturers and dealers are in demand of more and more VR content. By doing it allows the manufacturers to digitize their products and create digital assets to improve their efficiency. VR technologies tend to use digital assets (3D models) in order to create interactive virtual work spaces. This technology allows companies to show their customers entire set of production collections without maintaining huge inventories. Such 3D models also enable them to highlight product features and display product concepts. Dealers create entire virtual showrooms and virtual tours that consist of real life like environments designed to connect with customers. This also benefits the consumers as they can now access the virtual environment 24/7 with the simple use of a desktop or a virtual reality headset.

Competition: Furniture dealers and manufacturers have been keeping an eye for the best partner in order to ensure their consumers the best augmented/virtual reality experience. Ashley Furniture Industries, North America’s largest furniture retailer is closely working with Merxent, a leader in augmented and virtual reality for products and spaces. IKEA has partnered with Apple to take advantage of apple’s augmented reality services in USA and countries of Europe. SERVEX US and sayduck are some other AR/VR companies working on similar concept of redefining furniture industry.

Conclusion: Over the years we are seeing a shift away from cubicles to open desks and café tables or other flexible yet multiuse work spaces. With concepts such as activity based planning, instead of a single space that fits the needs of many worker, Augmented and Virtual Industry enable workers to decide their working space on their own that would allow them to work at their best.

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The Impact of IKEA on Emerging Markets: Ken Research

Introduction: On March 12 2018, IKEA appointed Peter Betzel as the new CEO for IKEA India. This change simply signifies the growing commitment by IKEA towards the Indian Furniture Market.  Before India, Betzel was managing IKEA’s largest market- Germany. The Swedish retailer has bet big on India with a plan to open 25 stores across India by 2020 with each store having an investment of approximately USD 80-110 Million being made for each store. The company plans to have stores in almost all of India’s tier one cities with plans for Bangalore, Mumbai and the National Capital Region. The company, as of 2016 had already invested over USD 350 Million and was one of the first companies to gain approval for 100% FDI. The market for Indian furniture is estimated to be worth USD 20 Billion as of 2018 with online furniture sales contributing only USD 250 Million. The majority of furniture sales happening in India are brick and mortal outlet sales.  Although IKEA is marking their entry into India with their Hyderabad store set to open in 2018, there is an emerging market they have managed to gain a solid foothold on, China. IKEA China is seeing strong growth with the company managing revenue of USD 2 Billion for the year 2017 alone. Customers visiting the retail stores increased by 11% to 90 Million while the visits to websites increased by 24% to 75 Million. This growth has shown potential for IKEA in China which has led to their decision of opening 3 new stores by the end of 2019.

Impact:  The entry of a company such as IKEA is a major improvement into the market for furniture in emerging economies such as India and China. India and China are rapidly developing nations with an increasing number of people entering the middle and upper middle classes owing to better employment and developing pay structures that are satisfactory to employees. The increasing pay leading to a growth in disposable income allows for consumption into a sector like furniture where products are highly differentiated and are usually used medium to long term based on the quality of the furniture. The entry of a company such as IKEA that sells economical furniture and simultaneously implements a DIY model of consumption not only allows access to quality furniture to a larger number of income groups, but also allows furniture which is based on functionality to be appealing for a variety of consumers. This implies an expected increase in satisfaction from utility based furniture which has a pleasant design, all for a lower price than traditional retailers which is one of the key factors for IKEA expected to dominate the Indian Furniture market, more so the furniture raw material is expected to be locally sourced which would allow for greater margins. Finally IKEA standards for customer service is exemplary, as seen in the case of China. For the sake of the Chinese market, IKEA lowered their prices for furniture by almost half in order to appeal economically to the Chinese population. This signifies a strong commitment towards expanding the customer space and brand equity of the company in emerging markets.

Outlook: IKEA expects that India and China will become part of their biggest markets and are set to go toe to toe with their European customer base. Although this may take some time for implementation, there is strong possibility of IKEA becoming the market leader in the furniture market with growing disinterest by popular furniture players in the Indian market such as Future group being almost ready to abandon their furniture segment as it has consistently been a loss maker, second reliance already having exited the market, and landmark having falling sales over recent sales periods, aside from the lack of well structured competition, the level of fragmentation in the market presents a need for a company like IKEA capable of building a sustainable customer base and growing the interest of the Indian furniture market while managing to scale the business of the Chinese markets simultaneously.

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Global Luxury Furniture Market: Ken Research

Introduction: Luxury Furniture was something that only the wealthy could usually afford and primarily still is, although there has been significant increase in the capacity for those who can afford to obtain luxury furniture. Rising disposable income and the effect of cultural globalization have boosted the demand for luxury furniture and moved the demand center from the hospitality sector to the homes of individuals. While the hospitality sector was the predominant market for luxury furniture, there is now an increasing desire for consumers to purchase luxury furniture. This is further supplemented by the growing use of luxury furniture in Spas which is one of the key markets for industrial sale of luxury furniture due to the high reliance on aesthetics.

Market Overview: The luxury furniture market is expected to grow significantly in the upcoming period with the market valued at USD 23 Billion in 2017 and to be worth over 30 Billion by the end of 2023. This gives it a modest CAGR of 4.6%. The market is poised to grow faster beyond 2025 owing to increasing standards of living and an expected growth in consumer disposable income.  A major demand segment in luxury furniture is the use of art based furniture and recycled furniture, both of which are expected to be worth over USD 2 Billion by 2020. The luxury furniture market is expected to be one of the key drivers behind the growth of the furniture market.  With increasing emphasis on design and comfort, luxury furniture is poised to have major increase in industrial as well as commercial demand. The main channels for sale also play a crucial role as most luxury furniture is unique and the originality becomes a major selling point, hence, brands focus on the extent of differentiation they can offer in their design aiming to create design that cannot easily be replicated or to use materials that are rare for the construction of the furniture. Primary sales channel works through the distributor as many times, manufacturers deal with industrial sales majorly. Although the manufacturer winds up having higher margins despite mostly having lower prices than the distributor. Although the largest contributor to the market will be in the European region, the market is expected to experience high growth primarily in the Asia pacific and the Middle East region. Emerging economies are expected to be participants in the luxury furniture market in the long term

Key Drivers: The main drivers behind the luxury furniture market in any region are relatively similar, the primary driver being the increase in disposable income. Growing changes in lifestyle along with cultural and financial growth of the population have led to the market demand for more unique and authentic furniture which has originality attached to it. Another key driver is the increased demand from the hospitality sector owing to the increase in construction of luxury hospitality facilities in Asia and Europe. The other key driver is the emergence of the furniture art market where the entire focus is on the design of the furniture.

Competition Scenario: Some of the key players in the global luxury furniture market include Muebles Pico, Nella Vetrina, Laura Ashley Folding PLC, Henredon Furniture Industries, Inc., Giovanni Visentin srl, Iola Furniture Ltd., Turri S.r.l, Herman Miller, Inc., Heritage Home Group LLC and others. Companies born to serve the made to order requirements are now opening their stores in different geographical locations to provide buyers creative designs that go well with time. Besides this, many furniture manufacturers are partnering up with artists or interior designers to create and offer a luxury range of furniture.

Opportunities: There is a major opportunity for authentically designed furniture which is commercially viable. Although there are antique pieces of furniture, due to the requirement of functionality unlike wine, most furniture required to be used does not increase in value with time. The primary selling point for furniture luxury is the functionality and the design coupled with the extent of comfort. Most luxury furniture is manufactured using wood and that has been the major driver of the wooden furniture market being worth over USD 6 Billion in the year 2017.

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Ready to Assemble Furniture Market Outlook: Ken Research

Introduction: Ready to assemble (RTA)furniture is a concept introduced roughly around the 1850’s which allowed for two primary benefits- the reduced cost of labor as assembly was expected to be done by the customer, and a reduction in the requirement for space as the furniture was shipped as parts and not as the finished product. This reduction in labor and space became a favorable trend for manufacturers which was expected to be continued in simplistic component based furniture. Another major benefit in using ready to assemble furniture was that there was a shortage in manufacturing time as well. The reduction in time requirement and the cost saving from reduced requirement for space and labor led to manufacturers attempting to maximize the sale of ready to assemble furniture, primarily for low margin products which would boost profitability. High value furniture which earned a premium for manufacturers would not usually be ready to assemble as the price of the furniture was quite high and did not justify the need for reduction in cost of delivering and manufacturing. Although the RTA concept did not work with premium customers, the reduced cost of furniture due to the need for customer assembly was highly accepted by low and middle income customers who could now manage to afford better quality of furniture just by assembling it themselves. This began the trend of assembling furniture for cost savings for consumers and manufacturers.

Market Overview: The ready to assemble furniture market is growing steadily. The market, which was valued at over USD 10.5 Billion in 2014, has grown to USD 11.8 Billion in 2017 and is forecasted to grow to over USD 16 Billion by the year 2025 as per the most recent Furniture Market Research Reports.  The growth of ready to assemble furniture is primarily attributed to the growing needs for functional and effective furniture at a lower price for low and middle income households. Another key driver is the increasing trend of Do It Yourself market participants towards assembling their own furniture. Given the growing need for functional and economic furniture which can be fit into smaller households and still is a low cost for consumers, there is a major need for furniture that is sturdier and is capable of usage for longer periods of time. Ready to assemble furniture is primarily purchased on the basis of utility. The sales channels usually is through direct manufacturer sales as a majority of categories of RTA furniture are sold directly. RTA furniture covers almost all sub categories of furniture ranging from tables and chairs to more sophisticated furniture like book shelves, work desks and sofas. The increasing popularity from the industrial side is owing to the level of cost savings that is availed by major manufacturers on manufacturing and transportation. This is vitally important for furniture which is sold to low and middle income households where the profit margin for the furniture is considerably low. 

Opportunity: There is growing need for viable providers of ready to assemble furniture which is at lower cost. The market is currently dominated by players like Sauder Woodworking, Dorel Industries, Bush Industries, Inter, IKEA Systems, Tvilum, South Shore, Whalen Furniture and  Homestar. The major player being IKEA leading through its reputation for consistently lowering furniture costs year on year. There is an opportunity for furniture providers capable of delivering superior design and better functionality at a competitive price. Considering the major value offering is functionality and cost, there is not significant differentiation in the RTA market, providing an opportunity for new manufacturers with innovative and cost effective designs for ready to assemble furniture to benefit from

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