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The seats with wooden frames market in Germany (January 09, 2012)

Please, read the table summary of what a promising product should possess to be successful on the EU market.

Consumption - The EU market in 2008 for non-upholstered furniture was valued at € 2.9 billion. The German market for non-upholstered furniture represented 6.8% of the total EU market or € 650 million.1 Germany was the biggest consumer of non-upholstered furniture in 2008. After Germany were Italy (€ 385 million) and France (€ 350 million). The market is expected to remain stable in 2010 and 2011 as all major furniture buying countries are likely to be in recession.

Production - The EU production of seats with wooden frames was valued at € 750 million in 2008. The German production of seats with wooden frames represented only 2.5% of the total EU production or € 19 million. Germany was one of the mid-sized EU producers. Before Germany were the Netherlands (€ 25 million) and Slovenia (€ 22 million). German production decreased by 12% per annum for the period 2004 – 2008. Further decreases are expected in 2010 and beyond, especially due to the fact that the country lacks competitive advantage in this product group.

Trade - The EU imports of seats with wooden frames were valued at € 808 million in 2009. The German imports of seats with wooden frames represented 21.1% of the total EU import or € 170 million. Germany was the largest importer of seats with wooden frames. The country was followed by France (€ 119 million) and the UK (€ 118 million). German imports remained flat in the period 2005 – 2009. On the other hand, German imports from DCs increased by 1.7% per annum for the same period. The share of DC imports out of total imports in Germany in 2009 was 60.9%. For a comparison, the same percentage was 56.8% in 2005. The main DC suppliers to Germany in 2009 were: Vietnam (23.5%), China (15.5%), Indonesia (12%), Thailand (2.2%) and Turkey (1.9%). China increased its share by 5.5% in total for the period 2005 – 2009. Vietnam’s and Turkey’s imports also saw increases, of 3.5% and 1.6% in total for the same period respectively. Indonesia was the biggest loser in terms of share, losing 4.1% in total, Brazil lost 2.2% and Ukraine 1%.

Trends - In Germany there is a trend to increased exports of components, which are assembled abroad in eastern EU countries or in Asia. Many manufacturers have already relocated production overseas. Greater emphasis is being placed on design, quality control and finishing.

There has been an increase in products using lighter hardwoods and a decline in products using tropical hardwoods. This has been driven by environmental pressures, as well as by consumer demand.

Germany is an interesting market for exporters from developing countries. Local production has been adapting to the global economy. Germany is a big market, and as such will offer opportunities despite the difficult trading environment.

For opportunities and threats for the seats with wooden frames sub-sector we refer to the Module Trends and segments for non-upholstered furniture.

Please, use the consumption data with caution as it is apparent consumption (Imports + Production - Exports).

The seats with wooden frames market in Germany

Price and price development - According to Eurostat, 2008, furniture prices in Germany were below the EU average. In terms of the general level of prices (all items included), the price index in Germany was similar to those in the Netherlands and Austria. In terms of furniture prices, German price levels were similar to those in Sweden and Portugal. Furniture retail prices increased by 0.5% between April 2009 and April 2010 (compared to 1.1% on average for the EU 27). This compared with inflation in the German furniture sector of 4.3% between 2004 and 2008 and 2.1% in 2008, indicating rising prices in the past and stable prices now.

Within each country there are wide variations between prices in different market segments, as well as differences between the same retailers in different countries. The leading retailer, IKEA, is present in many EU countries. The following non-upholstered furniture example illustrates the differences within and outside the Eurozone. Using IKEA’s Agam wooden chair the following prices were found around the EU for the same product:

  • In the Eurozone, The Netherlands € 29.95; France € 35; Spain € 29.95; Portugal € 29.95; Austria (NF); Slovakia € 29.99; Belgium € 34.95; Italy €39.35; Finland € 39.95; Greece and Cyprus (NF).
  • Outside the Eurozone, United Kingdom £29.99 (€ 36.22); Hungary 7,990 Ft (€ 28.31); Czech Republic 899 CzK (€ 34.68); Denmark 249 Dkk (€ 33.48); Romania 137 Rol (€ 32.49); Sweden 399 Kr (€41.30). Exchange rates at 9th June 2010.

Buyer requirements - As a manufacturer from a developing country preparing to access Germany, you should be aware of the market access requirements of your trading partners and the German government. Follow this procedure: Select your market sector and the EU in the category search in CBI’s market information database, www.cbi.eu/marketinfo and then select Domestic furniture sector. For more systemised information see the module Compliance with EU Buyer requirements.

Detailed information on packaging can be found at the website of ITC on export packaging: http://www.intracen.org/ep/packit.htm. Information on tariffs and quotas can be found at http://exporthelp.europa.eu/.

  • Promising products

DC countries, located close to

the EU e.g. Turkey, Serbia,

Albania, Kosovo, etc.

DC countries, located remotely from the EU e.g. Vietnam, Indonesia, Thailand, etc.

DC countries, located remotely

from the EU e.g. Vietnam,

Indonesia, Thailand, etc.

 

Successful business model

example => Poland, Romania,

Bulgaria

 

Successful business model

example => Vietnam

Successful business model

example => China

Market => Mass to middle-end

products

 

Market => High-end products

Market => Mass products

1.        Fashion-oriented, quality, diversity

Fast reaction, short lead times

2.        Interesting design and well organized R&D

3.        Short production batches, small orders - requires either manufacturing or high stock levels

 

1.Skills in making hand-made (carved) products; high quality, unique shapes, in most cases longer production series

Interesting design and well organized R&D, combined with exotic (tropical) wood usage (international marketing)

2. Fast reaction is not essential, longer lead times. When necessary one would be obliged to work on the basis of some stocks of ready finished products or semi products (the most labour intensive parts) within Europe

1.   Cheap, mass, standardized products; repetitive high* quality for long production series

2.   Well organized R&D, esp. in the field of implementation of third party design in production

 

3.   Labour-intensive products

 

4.   Fast reaction is not essential, longer lead times

5.   Up-to-date design

 

*High quality does not necessarily mean expensive and luxury. High quality is within the service level agreement i.e. defects <1%.

 

Suitable trade channels - The German furniture market has a varied system of distribution and a wide number of commercial operators, including manufacturers, wholesalers, retailers, agents and consumers. The key distinction is between traditional and non-traditional channels. Traditional channels include direct importing and the retail trade, which includes specialist retailers, technical specialists (e.g. kitchen specialists), independent retailers and large non-specialists including DIY, hypermarkets, department stores and mail order. Non-traditional channels include electronic commerce (either business to business – B2B, or business to consumer – B2C), factory outlets, TV shopping and direct sale by manufacturers.

Interesting wholesalers and importers include:

Buying groups are very strong in the German furniture market, accounting for over 60% of the market. The main buying groups are Begros - http://www.begros.de; Garant - http://www.garantmoebel.de; Union - http://www.union-moebel.de; Europa Moebel Verbund - http://www.emverbund.de; and VME - http://www.vme-online.net.

In the specialist segment, IKEA - http://www.ikea.com/de - is the clear market leader with a turnover of over € 3 billion from 45 outlets. Höffner - http://www.hoeffner.de - has 20 outlets and is part of the Möbel Walther Group, which also includes Sconto - http://www.sconto.de. Many of the other leading specialist chains are part of buying groups. Roller - http://www.roller.de - has 82 outlets, while Dänisches Bettenlager (owned by Jysk) is also well represented on the market with 627 outlets.

Among the new and developing distribution channels, the most important are factory outlets. Interlübke - http://www.interluebke.de, Cor - http://www.cor.de - and Wasa -http://www.wasamoebel.de - all well-known manufacturers, have opened outlets to sell directly to the public.
In the non-specialist sector, KarstadtQuelle and Otto are important players. KarstadtQuelle operates both department stores - http://www.karstadt.de - and mail order operations -http://www.quelle.de. Otto - http://www.otto.de - is a leading mail order company.

More information on the structure of distribution channels in Germany can be found at the trade association for the furniture industry - http://www.wohninformation.de - and at the site of the Federation of Wood and Plastics Industries - http://www.hdh-ev.de.

Finding a suitable trading partner - There are a number of ways to look for a suitable trading partner in Germany. The first place to look would be to contact the main trade association(s), followed by trade fairs, which tend to feature a list of exhibitors, many of whom may be potential partners. In addition to these sources, there are often a number of general or specific information portals that will be useful. The following organisations may be worth looking at:

How to approach partners - The most important ways to develop a business relationship are to either exhibit at one of the main furniture trade fairs, or to make a direct approach to wholesalers or major retailers. It is also extremely important that you have a professionally produced website, so that potential partners are able to see for themselves what type of organisation you are. They may well make an evaluation of you on this basis. Your website may also enable you to contact consumers directly. General information on doing business like approaching potential business partners, building up a relationship, drawing up an offer and handling the contract you can find in the module Finding buyers.

Useful information for finding prospects

Trade Fairs

 

Trade associations

We refer to the following non-upholstered seating modules for more information: Promising EU export markets, Compliance with EU buyer requirements, Trends and segments, Trade structure and channels, Price and price developments.

MINH TUAN Craft



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