Global Furniture Industry Highlights

A Tendency to Natural, Black, & White

The modern world clearly wants products, which are high in quality, ethically correct and, above all, of emotional value.

Young, alternative suppliers now provide serious competition for manufacturers of mass-produced goods in the high-end price segment. Their work is rich in ideas as well as being market-oriented. They have the courage to try something new, are environmentally aware, think long-term and invest in constant values. Their small furniture items, accessories and gifts developed with a love of detail, are not only beautiful but original and functional, too.

The clearly dominant materials are wood, leather and natural fabrics including felt, which must now finally be described as established. The natural trend is becoming stronger. Plastic is rarely used these days. Any synthetic materials used are high in quality and beautifully worked. (Excerpted from Australia's Furnishing International Oct.-Nov. 2007)

Objects of Desire

Brand: it's a small word, but one that holds big meaning. For some, reaching 'brand' status is the ultimate business achievement, but for the vast majority it's an aspiration much the same as flying to the moon. It's widely believed that to become a brand, marketing expenditure needs to go into orbit.

Becoming a brand brings with it the recognition of your peers-it's a marque of success relatively few achieve. It also delivers consumer awareness that can see a business through tough times, while ensuring its continued growth when the going is good.

However, although significant investment is usually a necessity, it's not the only ingredient. You have to consistently deliver something the consumer wants; something that they are prepared to hunt out and pay for, time and again.

A brand has to represent something in the minds of those buying into it; usually a lifestyle they wish to aspire to and certainly be associated with. Whether cars, fashion or furniture, brands comprise quality, elegance and style in inseparable amounts and if all the required boxes are ticked, price becomes less of a driver in the purchasing decision. (Excerpted from the United Kingdom's Cabinet Maker, 5 Oct. 2007)

Bowing to Experience

Retailers targeting the older consumer are set to see the benefits over the next decade. The more mature generations not only have their mortgages paid off but also spend more of their disposable incomes on themselves.

As a result, retailers are now being told to adapt their propositions to the more astute shopper if they want to take advantage of this stream of growth.

Research from Verdict Consulting, part of the Datamonitor Group, found that consumers aged between 65-74 would increase their retail expenditure by more than three-quarters over the next 10 years.

The figures show that this is the fastest growing age group by some margin, although the over 75s will also see above average total spending growth.

By 2017, the research predicts that the over 65s market will be worth 64 billion British pound to UK retail compared to 39 billion British pound in 2007. Furniture retailers will look to gain from this growing market, particularly independents-something many are already doing.

Verdict said the two main factors behind the increase in expenditure are the aging demographic of the UK population and a shift in their mindsets.

The number of 65-74s will rise by 28% over the next 10 years, with the over 75s growing by 19%. These older consumers will also have a different outlook on what they want and will look for far more variety in products; this will alter their buying habits compared with consumers of today.

The research found that previously a younger consumer rove retail growth, but this would not be the case over the next 10 years. "The over 45s will prove to be the engine of retail activity," Verdict concluded. (Excerpted from the United Kingdom's Cabinet Maker, 30 Nov. 2007)

UK retail expenditure for each age group Unit: British pound
Age group	Total retail expenditure growth (2007-17)	Average spend per head (2007)	Average spend per head (2017)	Spend per heard growth (2007-17)
0-14	-3.3 %	732	657	-10.3%
15-24	20.2%	3,378	4,340	28.5%
25-34	35.4%	6,591	7,491	13.7%
35-44	14.9%	6,804	8,891	30.7%
45-54	48.7%	6,467	8,447	30.6%
55-64	43.2%	5,429	7,412	36.5%
65-74	76.6%	4,379	6,055	38.3%
75+	44.3%	3,630	4,415	21.6%
All	35.6%	4,597	5,808	26.3%

WMC Survey Says Vegas Will Be Dominant Market

According to a new survey, furniture industry members believe the World Market Center in Las Vegas will become the dominant U.S. market over the next few years.

Commissioned by the World Market Center (WMC), the Internet survey polled a statistically generated random sample of 256 furniture manufacturers or importers and 869 furniture retailers or buyers from across the U.S. and abroad.

The survey found that 65% of the buyers believe WMC will be the most important domestic market in the U.S. in the next five years, while 31% believe it already is. Among the manufacturers, 58% said that Las Vegas would be the most important market by 2012, with 29% indicating it already is.

Manufacturers and importers also were asked to identify factors that are highly important to their decision to exhibit at markets. Those included reaching new buyers; offering great amenities to attract buyers; having strong, effective marketing; and offering a growing market.

The manufacturers and importers said the WMC ranked significantly higher than other markets in the U.S. for the ability to offer an efficient experience; to travel there affordable and easily; provide food and accommodations at a good value; hosting the market in a good location; providing good deals on products; and having showrooms that are near to each other.

The study also found that large retailers like the Las Vegas Market, a result the WMC maintains is corroborated by the fact that summer 2007 market attracted 75% of the top 100 dealers. WMC executives said the facility is meeting the needs of the global home furnishings industry.

"The home furnishings industry is quickly changing, and the new and future paradigm is very different than it was.... even 10 years ago, in terms of how manufacturers and buyers conduct their business and utilize markets," said Shawn Samson, co-managing partner of the WMC.

The WMC augmented the online research with an exit survey of 381 buyers, conducted independently by BlueSky Research and Survey America of Nevada, on the WMC site during the January 2007 market. Results from the buyers polled in the exit survey found that:

--75% of those attend said it is better than other markets they had attended in the past 12 months.

--86% said they are buying as much as or more at the Las Vegas Market than at other markets.

--94% said they would recommend the market to colleagues, saying it allows them to make highly worthwhile use of their time.

--96% said they were satisfied with their Las Vegas Market experience.

Even so, Brian Casey, president and CEO of the High Point Market Authority, is not about to fold up his tent as a result of the Las Vegas study. He said a comprehensive study conducted for the Market Authority in 2006 found the High Point Market to be the premier domestic home furnishings venue.

"Our study reached out to a broader vase-9,000 buyers, 1,700 exhibitors and 1,400 sales representatives," he said, adding the response rate provided for a confidence level of 95%.

He added the study found that the vast majority of respondents said they come to High Point to see new products; to find new vendors; to keep up to date on industry trends and issues; and to meet with existing vendors.

"After we got those results, we didn't feel the need to pound our chests because the study validated what we had been doing-constantly improving many areas of our market, including our ability to provide unparalleled levels of product introductions, showcasing new vendors and providing direction in terms of trends and fashion," Casey said.

As evidence, he pointed to the recent revitalized pre-market initiative, on enhanced Scout Program to help retailers simplify their market planning and find new vendors, and its High Point Market Live e-mail initiative to keep market goers informed throughout the year.

"The High Point Market is much more than just a trade show," he said. "Our research validates that we represent a significant cross-section of the home furnishings market, and thus our programs and improvements are developed to ensure we are disseminating strategic information not just during the markets, but throughout the year." (Excerpted from Furniture Today, Sept. 24, 2007, Vol.32, No. 4)

Cost Pressures Put the Squeeze on Occasional Resources

Cost pressures in China are squeezing occasional and accent furniture resources at a time when it's difficult to pass along price hikes to retailers.

Sources said that costs have risen as much as 20% on some items in the past year. They attributed that largely to three main factors: the strengthening of the Chinese yuan in relation to the U.S. dollar; escalating labor costs in China; and a drop in value-added tax rebates China's government gives to exporters of finished goods.

Sources can't pinpoint an average cost increase in the occasional and accent category, which encompasses a broad array of products. Even more difficult is to say how much of those increases get passed along to the retailers.

But in one example at Klaussner Home Furnishings, a table with a wholesale cost of US$79 two years ago could have a US$100 price tag today, said product Manager Chris Rayle.

In light of developments in China, Klaussner likely will shift at least some production to Vietnam or Malaysia. Or it might simply drop an item altogether. "I've been going to China for 10 years and it's as bad as I've seen it," Rayle said. "Everybody's scrambling to find out where they can move product to, and how to handle the price increases."

Karen Knoch, merchandise manager for occasional and accent furniture at Magnussen Home, said that on a case-by-case basis the company has passed along some price increases to retailers in the past eight months. But more often than not, it negotiates with its source factories to minimize the effects on both Magnussen and its dealers.

Accent specialist Bailey Street Holding Co. said it has seen a 3% to a 20% cost increase on certain items since August 2006, largely due to increasing metal and glass costs and the cost of producing certain labor-intensive items. In some cases, the company absorbed the costs. In others it changed source factories to get better deals. (Excerpted from Furniture Today, Oct. 15, 2007, Vol. 32, No. 6)

Who is Eco-Friendly? SFC Proposes Standards

The Sustainable Furniture Council (SFC) has released more extensive membership requirements for 2008 in a draft for peer review.

For basic membership, the draft asks for a public statement of support for sustainable practices; an action plan of goals for energy consumption and materials management, which ensures chain of custody for wood; and promotion of the SFC with partners and employees.

Under the basic membership plan, a company must list the amount of energy savings it aims to achieve and explain how it will manage primary materials, including legal and sustainable harvesting of wood.

Above basic status, members can earn silver, gold and platinum exemplary status through increasingly rigorous standards. For retailers, top-level platinum status can be earned if at least 50% of the home furnishings product sold is shown to be sustainable.

The SFC hopes to attract members that can present transparent results, will be subject to third party objective certification, and are accurate in labeling.

The group has criteria for wood, which includes prohibiting large scale harvesting of old-growth forests and conversion of natural forest to plantations.

About 120 manufacturers, retailers, designers and conservation organizations are members of the nonprofit SFC. Officials with the group said they take their role as environmental stewards seriously, as evidenced by the thoroughness of its new standards. (Excerpted from Furniture Today, Oct. 29, 2007, Vol. 32, No. 8)

Globalization Now Impacts All Product Groups

It's a small world after all-the title of this Disney song could just as well be the theme of the U.S. furniture industry in the new millennium.

Between 1992 and 2006, imports of furniture and bedding grew by a whopping 479%. During the same period, retail furniture and bedding sales grew by 117%. It's not hard to figure out that a larger and larger amount of furniture bought by consumers was produced outside of the United States.

The exact percentages are hard to come by because of the way the U.S. government keeps its figures. Once any work is done on the furniture in the U.S. from adding cushioning and fabric to a frame or simply screwing on legs to a table, value has been added, so those products are also counted as domestic shipments. Using a complicated formula, Jerry Epperson of Mann, Armistead & Epperson estimates imports made up 42% of the total household market in 2006, up from 30% in 2000.

Finished wood imports grew by 481% between 1992 and 2006, from US$1.7 billion at landed value to US$9.8 billion. According to Epperson, imports made up 51% of the wood furniture market in 2006. Within the broader category, bedroom imports grew by 939% and kitchen and dining furniture grew by 403% during the same period.

The growth curve for finished upholstered furniture was much steeper between 1992 and 2006; going from just under US$500 million at tariff value to US$3.7 billion, a 662% increase. As a percentage of the U.S. market, Epperson says upholstered furniture imports more than doubled between 1999 and 2006, going from an estimated 11.2% market share to a 24.2% market share.

Bedding, still in its infancy in terms of imports, has shown the fastest growth curve since 2000. At just under US$800 million at landed value in 2006, imports accounted for only 4% of the U.S. market by Epperson's calculations. But that's a 164% increase from the US$300.1 million in bedding imports shipped to the U.S. in 2000, when Epperson calculates they accounted for a 1.6% market share.

There's also been a seismic shift in the origin of imports coming to the U.S. since 1992. The percentage of furniture coming from Asian and Pacific Rim countries has risen from 45% of imports in 1992 to 69% in 2006. In 1992, no single country accounted for as much as one-third of all furniture imported into the U.S. Taiwan was the largest importing country in 1992, accounting for 29% of all imports. Today China accounts for more than one-half of all furniture shipped to the U.S. from other countries.

In 1992, although it was already a top 10 importing country, China's share of total imports to the U.S. was mere 6%, one-half of then No. 2 Canada's import share. In 2006, Canada was still the No. 2 source for furniture imports into the U.S., but its share of imports had slipped from 12% to 10%.

Vietnam, the fifth-largest importing country in 2006, didn't ship enough products in 1992 for the International Trade Commission to report its figures separately. Instead, Vietnam's imports were lumped together with "all other countries" in ITC reports.

During the same time frame, the percentage of imports coming from Europe has slipped from about 20% to about 9% of total, while imports from Latin America have held at about 8%. (Excerpted from Furniture Today, Oct. 29, 2007, Vol. 32, No. 8)

Top 10 countries exporting furniture to the U.S. in 2006
Rank	Country or region	Export value (US$M)
1	China	12,062
2	Canada	2,378
3	Mexico	1,196
4	Italy	995
5	Vietnam	874
6	Malaysia	777
7	Indonesia	614
8	Taiwan	557
9	Brazil	366
10	Thailand	372

'Green' Designs Get Spotlight at Market

Stationary upholstery manufacturers are hoping that eco-friendly seating will become a big selling point in a retail environment that needs all the help it can get.

A number of manufacturers showed green at the autumn market in High Point, and others plans to roll out programs by spring 2008 for a consumer audience that is increasingly concerned about the health of the environment and the health of their families and children.

"The evidence is everywhere," said Woody Woodson, CEO of contemporary specialist precedent Furniture, referring to the surge in interest in all things environmentally responsible. And even though the save-the-earth movement has reached the mass market, and shoppers are bagging their own purchases into their own reusable (and probably green) cloth bags, the big question remains: Are consumers ready to foot the bill?

California upholstery producer Dino Mark Anthony uses lumber from sustainable forests, water-based flues and finishing products, and an abundance of linen and cotton with plans to add hemp and other natural fibers.

Tim Broda, sales and marketing manager, said the company's upholstery is green to "a certain extent." But he has qualms about whether consumers will pay extra for a pure-green product even at Dino Mark Anthony's price points (up to US$10,000 retail for a sofa).

"We're not going to make our furniture less comfortable and charge more money for it," he said. "We do want to make it as green as it can be but we don't think the consumer is ready for it (higher prices, less comfort). It's hard enough to sell them something comfortable."

New York-based Harden Furniture thinks the retail market is embracing earth-friendly products. It is responding with a new green upholstery line that complements its SFI (Sustainable Forestry Initiative)-certified wood program. "The frames and covers are as environmentally responsible as we can make them, and we are sourcing compatible foam for the cushions," said Beth Penley, vice president of design. "Harden is responding to consumer demand for better and safer products, especially at the high end of the market."

Textile mills and other suppliers have been an integral part of establishing the new direction, according to Penley. "It's exciting to see change happening at every level of the supply chain," she added. "We think this is just the beginning for so-called eco-conscious furnishings."

Lee, a pioneer in green upholstery, said its optional NaturalLee package option would become standard on all of the company's upholstery. By using Preserve, a foam derived from soybeans supplied by Hickory Springs, 100% recycled fibers for back and throw pillows and certified engineered wood panel frames, the company said that based on 2007 sales, it had saved over 10,000 galloons of crude oil and has eliminated 54,000 pounds of CO2 emissions.

Rowe is introducing Eco-Rowe with a more expansive phase-in planned for 2008. Initial efforts include the introduction of two new, eco-friendly cushions-Eco-Down from Pacific Coast and Reflex Natural by Foamex-and 21 new 100% natural fiber fabrics, including a hemp and bamboo blend. Rowe also has launched manufacturing and recycling initiatives at its Virginia factory.

Saverio Mancini, director of marketing and communications, said Eco-Rowe was the busiest section of the company's showroom during the recent market. "The buyers' response was encouraging," he said. "West Coast buyers seem to be the most in tune to this type of product."

"Overall, though, the awareness level among consumers as risen so the demand is bubbling up from the consumers to the buyers. Our buyers seemed pleased that they saw the Rowe styling, comfort and value propositions now wrapped in an eco-friendly package," he added.

According to Mancini, the company's research has shown the typical eco-consumer is female, college educated and either earning an independent salary or part of an above-average household income.

Precedent, a Sherrill company, put every environmentally sensitive material it could into its new e-collection, introduced at market. That includes certified engineered hardwood, water-based finishes, recycled steel springs, soy-based foam, formaldehyde-free glues and 65 new covers.

CR-Home's Cochrane upholstery division received good dealer reaction to its Naturals by CR-Home line at market, especially at the US$799 retail price point, according to April Welch, merchandising manager.

"We sold our green opening price point very well," said Welch. "I think the dealers who were able to tie the opening price point (US$799) with the green felt comfortable with that."

She said there seems to be some confusion on the part of buyers over what green really is but she expects that to be solved when the Sustainable Furniture Council sets standards. "That will help us all," she said. (Excerpted from Furniture Today, Oct. 29, 2007, Vol. 32, No. 8)

Traditional Designs on Rise in Youth

When times are tough, people typically go back to what they know-back to basics and back to what's familiar. So it's no surprise that more conservative, traditional youth looks showed up in force at the Autumn High Point Market for 2007.

In 2006, the trend across the board in the juvenile/youth industry was darker finishes and modern designs. Sleek, contemporary silhouettes, bright colors and a less-is-more approach graced everything from furniture and accessories to bedding and gear. While the trend is certainly still popular and even gaining a larger audience, the style pendulum is swinging back toward a more traditional product offering.

At market, manufacturers not only were conservative with the styles they offered but also with the number of collections. When it comes to actual case pieces, there's a trend now toward more entertainment center options for youth bedrooms, especially for boys. There also are more bunk-bed options than ever before, and twin-over-full configurations are gaining momentum.

Of all the case pieces included in youth bedrooms, desks seem to be the ones most in limbo. Retailers say that while desks used to be a mainstay for any youth bedroom, they're selling fewer of them now and even fewer of their accompanying hutches. Whether this is because of the increase in laptop purchases or the fact that kids aren't doing their homework just in their rooms anymore, there seems to be a decline in traditional desk usage.

On the finish front, white is back. Always a staple in youth, white-finished furniture took a backseat in recent seasons to more contemporary looks and darker finishes. White made a big resurgence this season with just about every major youth manufacturer offering at least one group. (Excerpted from Furniture Today, Oct. 29, 2007, Vol. 32, No. 8)

A General Outlook to the Turkish Furniture Market in 2007

According to the capacity reports of the Turkish Chambers and Stock Markets Union (TOBB), when the number of the workers employed the companies is concerned, there are 22 companies which employ more than 250 workers, and there are 100 companies who employ 100 people and above. According to the data of Wooden Products and Furniture Special Export Report, the distribution in terms of cities of the main furniture companies employing 3,000 or more people is as follows:

It is thought that the companies, which prefer factory production, are big ones since their employment rate is high and the number of such companies is increasing day by day. Also, the companies with foreign investment, although low in number in furniture and wooden products sector, are increasing in number, especially those that perform in kitchen furniture sector. The new retail shops opened by IKEA in Istanbul, Ankara and Izmir brought dynamism to the sector.

The demand for furniture is generally parallel to the number of new constructions and to the income increase. The demand for office furniture, on the other hand, is closely related to the number of new workplaces, to the use of office automation and naturally to the increase in employment. Therefore, the demand and capacity rate for furniture, which is consumption good with a highly flexible demand, fluctuates in the connection with the economic changes.

The main reason behind the fact that we cannot increase the capacity is the narrowing down of the demand in the internal market. Lack of internal demand and successively lack of foreign demand are the major causes of the limited capacity of the sector. Finance, problems with the workers and other reasons follow these two main ones.

Foreign Trade of Turkish Furniture Market

Since 2001 the Turkish furniture has become more successful foreign trade. There was a narrowing down in the internal market because of the crisis lived in the past years and the companies tries to get over the crisis by export. The process that we lived showed that this was not a temporary period but it is permanent. Besides, it is preferred by our companies. Export is not considered simple remedy in times of crisis but it is one of the most powerful strengths of a company.

Most of the export and import of the sector is realized from and to EU when the qualities of the EU market and its consumers are considered this is really positive but also it requires a variety (alternative markets such as the USA) in the markets in terms of long-term targets.

By the year 2001 we have reached a positive development process and we hope the continuation of it. This sector, with its plus in foreign trade, will help Turkey a lot where foreign trade is an important issue. The furniture sector has a dynamism and capacity to let the sector increase greatly when healthier macroeconomic conditions are reached and foreign market experiences are got.

A. Export

Although the furniture sector is very important in terms of the number of workplaces and the employment rates it creates, its share in our total export rate is not very high. The share of the furniture market in total export numbers was 0.89% in 2006. The development of furniture sector is possible only with the development furniture export. The furniture export of Turkey increased from US$84.3 million to US$760.2 million within the last 10 years. The most important products that are exported are wooden furniture, convertible sitting groups (not for camping or garden), car seats, and metal office furniture. Our share in furniture export in the world market is 8% in convertible sitting furniture and it is 7% in car seat export.

Although most of the companies in the sector directly export their products most of them export their products through other companies especially through construction companies. On the other hand, the number of the companies, which export their own products through their own distribution channels, is increasing day by day.

Until the 1980's most of the export was realized to Middle East countries. However, after 1990 we started to export to EU countries, Independent States and Russian Federation. The furniture export numbers to Russian Federation and Turkic countries increased together with the increase in the number of engineering.

However, since 1997 with the economic crisis that Russia lived, the furniture export could not reach the level it had reached before. According to the data of 2006 the share of EU countries (27) in our furniture export is 52.2% and the share of neighboring countries is 49.9%. Within the last three years, the export rate to the neighbors has increased whereas the import rate has decreased. It is easy to tell that this process is a positive one in terms of market diversity.

When our furniture export is analyzed the biggest share is that of Germany. We exported US$105.7 million worth of furniture to that country. Other countries that we imported furniture are as follows according to the yearly increase in export: Iraq, France, Netherlands, Greece, England, Iran, Romania, Russia and the U.S. Despite the fact that there has been an export to 181 countries, the export rates are still low because the sector is structured in connection with the internal market and the modern production methods are not used. Financial problems and lack of knowledge on external markets are the other problems we live in export.

The technology that is used in furniture production in Turkey has been developing day by day; export possibilities and the number of exporting companies increase. Therefore, Turkey can compete with the world countries.

The intense trade that we have conducted with EU helps the sector adapt with the EU quality and health standards, the factory production has increased, the consumers have been made aware and the export rate has increased and therefore these developments become a must but not a choice.

B. Import

We lived a sharp increase in furniture import when in the year 1986 the furniture became freer and in the year 1996 we became part of the EU Customs Union and our furniture import increased. Whereas in the year 1994 the furniture import was around US$38 million and in the follow year it was US$68 million with an increase of 79.1%. This sharp increase in export went on in the following years and under the influence of 2001 economic crisis the furniture import decreased to US$112 million with the year 2002 there was a small increase to US$122.8 million. The import rate increases in connection with the economic development and it reached 38% in the year 2006 to US$510.4 million.

EU countries are the leading countries that we import furniture from. After Italy, China is the country which we import goods from mostly with value of US$112.6 million. On the other hand, in our import market EU (27 nations) kept its place with a market share of 61% or US$310.4 million. Among them, Italy is the country that we mostly import from with US$76.7 million and Germany follows with US$61.4 million. (Excerpted from Furniturk Industry--Turkish Furniture Supplier Industry Magazine, 2007 Autumn Issue)