Market Outlook  

Brazil Furniture Industry

Social mobility benefits Brazil’s retail and furniture industry

In Brazil, the main channel of consumers shopping are furniture stores, followed by department stores and the franchises or brands stores

According to IEMI Market Intelligence, the increased purchasing power of the brazilian population directly influenced sales in the furniture market. In 2012, 55% of the amount spent on furniture was from people in classes B2 and C. Five years earlier, the rate was 49.8%. In turn, the relative share of consumers in social classes D and E has decreased in the period, due to the smaller amount of people who are currently in these classes.

“A better distribution of income generated an up-size movement in the population (new buying pattern of the consumer to a higher level) and consumption, heating the domestic market and favouring directly brands targeted to the middle class. The remaining segments (high income and low income) also increased, but at a slower pace, losing relative market share,” says Marcelo Prado, director of IEMI.

The study also points out that the main channel of consumers shopping are furniture stores, followed by department stores and the franchises or brands stores.

“In the process of consolidation from the major brands of furniture, we are seeing a lot of interest in diversifying sale channels, with preference for their own brand stores, franchise or exclusive,” adds Marcelo Prado.

Last year Brazil produced 461 million pieces of furniture, an increase of 6.8% over the previous year. This production amounted to R$ 32.5 billion (excluding taxes), 10.1% higher than in 2011 (nominal growth).

From 2008 to 2012, brazilian production increased by 30% on parts and 61% in nominal terms. Adjusted for inflation in the period (in reais), the increase was 29%. For 2013, there is an estimated 7.3% growth in parts and a high of 8.5% in nominal terms.

“The furniture production numbers continue to present a performance well above Brazilian GDP. In 2012, the tax reduction by the Federal Government had great importance in the growth of the industry,” says Prado. The bedroom is still the place of the house for which the consumer acquires more furniture – 34.4% volume parts were produced for this category. The rise of social classes allow this leadership maintenance, since with higher purchasing power consumers invest in well-being and comfort, especially in the place where they sleep, keep their clothes and personal belongings.

“With annual growth rates above 5% per year, with great export potential and an enormous capacity to generate jobs, the furniture sector is showing its strength in Brazil, even in times of valued money. For 2013, we expect a very positive year for retail and industry segment,” concludes Marcelo Prado.