FURNITURE MARKET
Paper
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FURNITURE MARKET IN RUSSIA
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TABLE OF CONTENT
1. General overview of the Russian furniture market ... 3
2. The dynamics of furniture retail sales for the period 2010-2017 yy.. ... 4
3. Market trends-2018 ... 5
4. Profile of Moscow leading furniture retailers ... 7
5. Furniture Import volume into the Russian territory in 2014-2018yy ... 8
6. Furniture export volume from Russia in 2013-2017 yy and 3Q2018 ... 10
7. Furniture import volume from Belgium in 2013-2017 and 3Q2018 ... 12
8. Key Russian manufacturers ... 14
9. Market opportunities ... 15
10. Sources ... 16
January 2019
Economic Representation of Flanders c/o Embassy of Belgium
1. GENERAL OVERVIEW OF THE RUSSIAN FURNITURE MARKET
In the period end of 2014-beginning of 2015, some Russian markets (including the furniture market) fixed a record level of sales volume as customers were afraid of devaluation and bought durable goods (furniture, household appliances, electronics, etc.). Since that moment, the consumer demand has been significantly dropped:
- In 2015, in Russia the furniture sales turnover decreased by 9.9% compared with 2014 and amounted to 419.8 billion rubles.
- In 2016, the volume of retail sales slowed down the declining and dropped by 0.6% (to 417.5 billion rubles).
- In 2017, there was fixed insignificant growth of 0,6%, the retail sales totaled 418 bln. RUB.
MARKET FEATURES Highly Competitive market DOMESTIC
MANUFACTURERS AMOUNT
5 000 Enterprises (500 of them are considered as large ones)
MARKET VOLUME 418 bln.RUB MARKET CAPACITY 600 bln.RUB
EXPORT &IMPORT The import volume into Russia of the furniture products exceeds the export from Russia by 5 times.
2. THE DYNAMICS OF FURNITURE RETAIL SALES FOR THE PERIOD 2010-2017 YY
(in comparable prices (in bln.RUB).
Source: Rosstat, RBK Market analytics
In comparable prices, the sales volume has demonstrated although minimal, but positive dynamics through the significant growth of furniture retail prices on the Russian market. But taking into consideration the market volume in terms of manufacturers prices as well as import volume, the situation is not so optimistic as till 2014 the dynamics remained positive. However in 2015, the market in this terms demonstrated a serious drop by 7,3%. The main reason of this drop is a sharp import decrease and decline in domestic production volume.
The trade margin of furniture retailers has steadily risen from 2012, and in 2015, its figure has reached considerably more greater mark or 85,2%. Thus, it means that some of retailers continue shifting part of their expenses on the customers.
349.4
372
410.8
436 466
419.8 417.5 418
2% 6.5% 10.4%
6% 6.9%
-9.9%
-0.6% 0.12%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
150 200 250 300 350 400 450
2010 2011 2012 2013 2014 2015 2016 2017
Market volume Real growth rates
3. MARKET TRENDS-2018
- Growing role of E-commerce in furniture retail
Russian customers prefer to buy home and office furniture online because in online stores it’s rather convenient to check and compare products that help to save time and as well as furniture which is offered at a lower price.
- Import substitution policy
Market analytics have stressed that the procurement volume of the imported office furniture has steadily decreased, but at the same time, the Russian manufacturers, on the contrary, are expanding their production facilities for this category of furniture especially that one of premium class intended for Top-management. The matter is that there is a Government Resolution N1072 prohibiting the purchase of imported furniture for state institutions for two years, as of December 01, 2017 till December 01, 2019. This Resolution was signed by Russian Prime Minister Dmitry Medvedev. ‘The decisions were made in order to utilize the production capacity of domestic furniture and woodwork industry enterprises, in order to improve the competitiveness of Russian production’, the document states. The ban includes all kinds of furniture, including furniture for schools, kindergartens, clinics and hospitals.
- Development of the domestic production
According to expert estimation the growth rate of domestic furniture amounts to 2-3% in terms of volume and 8-10% per year in terms of value.
- Launch of localization process for furniture components in Russia
This is actual particularly for those ones that have a high share in the trade margin caused by transport expenses. The matter is that the furniture market in Russia is very dependent on the currency exchange rates: most components have to be purchased abroad.
- New co-operation forms
The furniture manufacturers or companies are co-operating with real estate developers to offer turn- key solutions for apartments in new constructed buildings.
- The increasing share of retail sales in the total sales structure (please, see the diagram below ‘where Russian customers prefer to buy furniture’)
- New channels for sales and promotion.
Furniture promotion in social networks, the Russian manufacturers are using VK, Facebook and Instragram as well as co-operating with lifestyle bloggers in more active way to promote their products.
- Creating of daughter companies. For example, the companies that are working in luxe or premium segments, establish daughter company to develop their portfolio and support their expensive brand.
The profile of this new founded company is more budget furniture and projects for serial manufacturing.
- The main furniture shopping format in Moscow and Moscow region is shopping centers, the matter is that almost one third of all sales on the Russian furniture market is concentrated in Moscow or Moscow region.
Where Russian customers prefer to buy Furniture, in % of volume purchase
Source: https://www.promebel.com
Furniture multibrand
centers or shopping centers with furniture retail
space 70 Furniture
Hypermarkets: IKEA, Hoff, Leroy Merlin
12 Furniture Internet
stores 7
Street-retail and monobrand shops
5
Construction market 3
Other 2
4. PROFILE OF MOSCOW LEADING FURNITURE RETAILERS
The biggest Furnitures centers Premium brands
Price segment: Premium and upper premium
“Tri Kita”, http://www.3kita.ru/
Premium brands Grand, http://www.grandfs.ru/
Furniture spaces in big shopping and entertainment centers Price segment: Upper medium
and premium Tvoy dom, https://tvoydom.ru/
Price segment: Medium RIO Concept Furniture centers
Price segment:
Upper medium and premium
Twinstore, https://twinstore.ru/
FOCUS on architects and designers Price segment: Medium ROOMER , http://roomer.ru/
General trends in Russia (by Furniture category):
Children’s Furniture: FOCUS on new construction solutions for baby and children’s furniture and accessories
Design Furniture FOCUS on Neo-Art-Deco and furniture of old-fashioned 60-70’s style Kitchens FOCUS on bright colors solutions
Cushioned Furniture FOCUS on the more affordable price segments with ‘democratic’
prices. The most popular divans are three-seater ones with corner modification (around 20-30% of the total sales in this category)
5. FURNITURE IMPORT VOLUME INTO THE RUSSIAN TERRITORY IN 2014-2018YY
Furniture Import Dynamics into the Russian territory in 2014-2017yy and 3Q2018 (in bln.US doll).
Source: http://ru-stat.com
In 2017, the import volume into the Russian territory increased by 36% and amounted to 2,66 bln.USD compared with 1,95 bln.USD in 2016. However, if we compare the import level of 2013 which totaled 4,67 bln.
USD., the dropping gap is still significant, despite of the growth rate of 36% that took place for the first time since 2014.
4.67
4.28
2.37
1.95
2.66
2
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Import volume
2013 2014 2015 2016 2017 3Q2018
-37% +36%
The import structure by countries in 2017 in terms of volume in %
Source: http://ru-stat.com
In the structure of imports by country, on the TOP-10 the first place is occupied by China (38% or 1bln.USD), in the second place Belarus (9% or 242 mln.USD) followed by Italy with a share of 8.4% or 224mln. USD.
Belgium for Russia is a partner number 37th with a share 0.1%.
China 38
Belarus Italy 9.0
Germany 8.4 5.5 South Korea
5.5 Poland
5.2 USA 2.4 Slovakia
2.1
Czech 1.9 Nederlands
1.8
Other 20.2
China Belarus Italy Germany South Korea Poland
USA Slovakia Czech Nederlands Other
The import structure by category in 3Q2018. Import structure by category in terms of volume in %
Source: http://ru-stat.com
In 9M2018 on the Russian furniture market, the highest share of imports is concentrated in the segment of wood furniture for living rooms, dining rooms, bathrooms and halls. The highest level of competition among Russian manufacturers is concentrated in mattresses and mattress supports, in this sector the share of imports is insignificant.
6. FURNITURE EXPORT VOLUME FROM RUSSIA IN 2013-2017 YY AND 3Q2018
In 2017, the export volume of furniture goods from Russia amounted to 480 mln USD in terms of value with a significant increase of 25% compared with 2016 when the export volume amounted to 383 mln. USD.
Sitting furniture 35%
Medical Furniture 2%
Other furniture Mattress supports 29%
2%
Lamps, lighting equipment
25%
Pre-fabricated facilities
7%
Sitting furniture Medical Furniture Other furniture Mattress supports Lamps, lighting equipment Pre-fabricated facilities
Furniture export dynamics from Russia in 2013-2017yy and 3Q2018 (in mln. US.doll)
Source: http://ru-stat.com
Russia’s main export partners on the Furniture market in 2013-2017 yy. in terms of value in %.
Source: http://ru-stat.com
473 468
393 383
480
376
0 100 200 300 400 500 600
2013 2014 2015 2016 2017 3Q2018
- 16%
+25%
Kazakhstan 36.4
Belarus Germany 15.0
9.7 Ukraine
4.0 United States
3.0 Norway
2.6 Poland
2.0 Hungary
1.6
Italy…
Other 24.0
In the period 2013-2017, in the structure of exports by countries for furniture goods, there were two key export partners of Russia, it is Kazakhstan (36% or 800 mln. US doll.) and Belarus (15% or 330 mln. US doll).
Germany is on 3rd place with a share of 9,7% or 213 mln. US doll.
7. FURNITURE IMPORT VOLUME FROM BELGIUM IN 2013-2017 AND 3Q2018
Furniture import dynamics from Belgium in 2013-2017 yy. and 3QM2018 in bln. US doll.
Source: http://ru-stat.com
In 2017, the Import volume of goods from the product group ‘Furniture; bedding, mattresses; lamps’ from Belgium into Russian Federation amounted to 3.6 mln USD in terms of value with a drop of 16,3% compare with 2016 when the import volume amounted to 4,3 mln. USD. This is almost three times less, while in 2013 the import volume achieved the mark 9,2 mln.US doll.
In the import structure of goods, the highest level of sales was fixed in terms of value of category ‘Lamps
9.2
6.8
5.1 4.3 3.6
2 1.8
0 1 2 3 4 5 6 7 8 9 10
Import volume
2013 2014 2015 2016 2017 3Q2017 3Q2018
Source: http://ru-stat.com
Furniture Import from Belgium to Russia in 1H2018. Total sales by month in terms of value (in thousand USD).
TOTAL: 2 mln. USD (+25% compared to 1H2017, when the Import volume totaled 1,6 mln.USD).
http://ru-stat.com 125
274 353
370 156
289
805 275
134
340 329 168
0 100 200 300 400 500 600 700 800 900
Jan Feb Mar Apr May June July August Sep Oct Nov Dec
95.6
195
728 309
401 281
0 100 200 300 400 500 600 700 800
Jan Feb Mar Apr May June
The Import Structure from Belgian to Russia by product category in 3Q2018.in %
8. KEY RUSSIAN MANUFACTURERS
SHATURA (600 points of sales), https://www.shatura.com/
LAZURIT (500 points of sales), https://lazurit.com/
ANGSTREM , (points of sales in 120 Russian cities), https://www.angstrem-mebel.ru/
STOLPLIT, https://www.stolplit.ru/
TRIYA, https://www.triya.ru/
Sitting furniture
20% Medical Furniture
2%
Other furniture 12%
Mattress supports 11%
Lamps, lighting equipment
32%
Pre-fabricated facilities
23%
Sitting furniture Medical Furniture Other furniture Mattress supports Lamps, lighting equipment Pre-fabricated facilities
9. MARKET OPPORTUNITIES
- There is still a niche for the European manufacturers of the furniture and accessories in the premium segment as the furniture and interior solutions of such manufacturers are more relevant when implementing the projects in the new-constructed buildings of business and premium segment.
However, in the medium and especially upper-medium segment the opportunities are rather narrow as it’s a sector of very high competition. The crisis situation of the last years has motivated players to optimize the manufacturing and apply the better practices of European and US markets as manufacturing process optimization, loyalty programs and branding improvement, all these measures lead to the positive effect on the domestic furniture market. The domestic manufacturers are confirming that the highest growth potential for them is centered in these 2 segments.
- Opportunities in children furniture sectors. Lack of interesting solutions, for example baby beds for prolonged period from 3 till 16 years with interesting construction elements as well as additional accessories for children´s room.
- Complex furnishing of public spaces or working directly with designers in frames of the concrete design project manufacturing unique furniture. There are perspectives for foreign manufacturers in co-operation development with architect and interior design studios.
Promotion opportunities:
- Taking part in Art-Bazars or Master klass. The big show rooms or special furniture trade center (as Twinstore) are arranging this kind of events to promote their current or potential clients, new interesting projects or young designers.
10. SOURCES
Statistics
http://ru-stat.com https://fedstat.ru/
http://www.gks.ru/
Articles:
http://amedoro.com/ru/
https://rb.ru/analytics/rbc-furniture/
https://mebel-news.pro/
http://www.diy.ru/post/9388/
https://www.promebel.com
https://www.kommersant.ru/doc/3466126 https://www.meb-expo.ru
https://thekomod.ru
