The launch of new furniture stores on the medium-price segment is expected to continue to stir up competition on the domestic market, whilst pressures on prices and supply segmentation already characterise the industry.
The launch of new furniture stores on the medium-price segment is expected to continue to stir up competition on the domestic market, whilst pressures on prices and supply segmentation already characterise the industry.
Despite having witnessed a calm period until last year, domestic furniture retail has experienced a rebound during the past year with the entrance of Sweden's IKEA group and with the announced projects of Austria's KIKA. Although it has not experienced tight competition between major players so far, the domestic market has matured and its growth potential is attractive to foreign investors. "(...) Romanians' rising purchasing power is creating a middle class with growing incomes, in parallel with the fast expansion of available housing space, which is pushing the furniture and accessories market higher," said Cornel Oprisan, retail manager of IKEA Romania.
In European countries, Oprisan believes the furniture and decorations market accounts for around 2% of GDP on average. Thus, in Romania, where the GDP is worth over 100bn euros, the potential furniture and accessories market could top 2bn euros. At present, the furniture market is not yet worth 1bn euros, but was worth 566m euros in the first 6 months of this year, according to estimates by the Association of Furniture Producers in Romania (APMR). This year, growth is forecast at around 10%.
"Obviously, there are still a lot of growth opportunities. (...) In the coming years, I believe the Romanian market will support the development of networks that specialise in various types of furniture," said Dan Sucu, Mobexpert group chairman.
He feels that, given the general economic climate, Romanian retail is characterised by remarkable maturity, which is mirrored by the furniture retail market. "(...) We are talking about supply segmentation pushed to the extreme," explained Sucu.
The first specialised retailers include outlets that supply office furniture, which currently boast this year's fastest growth rates. In addition, companies such as Nolte Kuchen, Haka Kuche and Alveus, which specialise in kitchen furniture, have also made their presence felt on the market. So far, their arrival has supported supply segmentation and definition along public segments and product categories.
"Meanwhile, supply will become more complex both on the general and specialised segments. This will lead to rising competitiveness that will generate pressures and price differences, whilst supply capacities must have an adequate response to an increasingly well defined customer segment," added Dan Sucu.
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