How is the furniture industry
Due to the corona pandemic, the Closure of the domestic furniture trade Access to the furniture industry's central sales market was cut, and demand in important foreign markets also fell sharply. Sometimes it also came to Global supply chain disruptionsn. In view of the collapse in demand and due to supply bottlenecks for preliminary products, production was temporarily throttled or even shut down completely. To bridge the gap for the employees in production, in many places Short-time work introduced. However, some companies are unlikely to avoid using additional government funding or other sources of funding to secure their liquidity.
Distance and hygiene regulations can be implemented easily
Unlike, for example, in retail, where personal contact between employees and customers can hardly be avoided, the distance and hygiene regulations for protection against virus infections can be implemented comparatively well in the furniture industry. Depending on Degree of automation and digitization The company succeeds in reducing or controlling employee contacts with varying degrees of effort, e.g. when organizing shift operations, relocating activities to the home office or implementing additional protective measures. The risk of being able to produce only to a limited extent due to a lack of staff is, however, rather low. The companies in the industry have tried as long as possible to maintain the delivery chain to the end customer, especially since according to the decrees, the acceptance of goods in the trade as well as the delivery and assembly at the customer were in principle still possible. The companies were also able to react relatively quickly to the reopening of the trade by restarting production.
When production was restarted, it was not possible to rule out isolated irregularities and delays, among other things due to the fact that supplier parts were not always fully available. This sometimes led to delays in delivery times to retailers. However, there were also points of friction due to the regionally very different approaches to opening up the furniture trade. How much the furniture industry will ultimately be affected by the corona crisis depends largely on whether and how quickly customers make up for their furniture purchases. Decisive factors include the development of willingness to consume (e.g. in times of short-time working) and customer frequency in retail (if contact restrictions are necessary) and to what extent the priorities of consumers may shift in favor of other spending items. The temporary VAT reduction that came into force on July 1, 2020 - provided it is largely passed on to customers - could at least encourage them to make up for at least some of the furniture purchases that have been postponed so far or to bring forward planned furniture purchases.
Alternative procurement concepts
Experience in the crisis could lead to some furniture manufacturers putting their procurement or supplier concepts to the test and, if necessary, making adjustments - e.g. with regard to the search for alternative suppliers or the decision for multi-supplier concepts or in-house solutions. A possible switch of the trade - with a view to reaction speed and delivery reliability - from suppliers e.g. from China or Italy to alternative domestic sources of supply could benefit the German furniture manufacturers and Bringing more focus to furniture “made in Germany”. However, it is hardly to be expected that the price sensitivity of German consumers and the price fixing of retailers will change significantly in the short term.
The German economy already cooled significantly in 2019. This development was largely due to the industry, which found it difficult to break out of the recession; private consumption, however, remained a major pillar of the economy. The furniture industry was able to assert itself in 2019 despite a persistently difficult market environment and ultimately - spurred on by the international business of the kitchen furniture industry - overall stable. Business abroad was overall better than business on the domestic market. The industry-wide export quota rose to a new all-time high of 33%. It was gratifying that, among other things, exports to the two most important Main export markets France and Switzerland have grown strongly, Belgium and the USA also stood out positively as export markets. However, with China - as a result of the slowdown in economic growth there but also due to the trade conflicts between the USA and China - a previously strong sales market has collapsed considerably. Exports to the United Kingdom have been falling as a result of the ongoing Brexit discussions since 2016. In the first quarter of 2020, the furniture industry was down 2.6% in sales compared to the previous year; only the kitchen industry recorded an increase in sales. However, April brought the industry a real slump in sales. This resulted in a drop in sales of a good 50% for the furniture industry in the first quarter compared to the same period of the previous year; All sub-divisions were affected.
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