Market Outlook  



Russian Furniture Market

Information by Olga Makeeva, Senior Consultant, FINPRO


MARKET VOLUME
• Russia´s furniture market – one of the world´s fastest growing and most competitive. But its share of the world’s furniture market is still rather small (under 3%).

• The official value of the market volume was about 10-12 billion USD in 2012 + a great number of small companies operating in the market were not counted accurately by official figures and not seen in the official statistics (+ app. 5 billion USD).

• 11th largest in the world (only 16th in 2002), 9th for furniture imports and 15th for furniture producer.

• The potential market volume exceeds current furniture sales many times over. Compared to the furniture markets of Western Europe and North America, Russian furniture market is characterized as high demanding and import driven.

• A boom in construction industry over the recent years has affected the Russian furniture market significantly

• The market is expected to continue at an average rate of 9% until 2014.


CONSUMPTION
• The demand for consumer products has grown significantly during the last few years.

• Consumption is the main growth driver in Russian furniture market, and there is demand for furniture in every sector and price category.

• Growing building activity is also a significant development factor. In 2012 the number of new residential buildings reached 219,000, a +9% increase from 2010.

• Domestic production is not able to satisfy the need of local consumers.

• Share of European manufacturers is rather small in comparison to their competitors from Belarus and China.

• 80-90% of population consider the price as the main choosing factor.

• Driven by the need for modernization, construction boom is expected to continue.

• Furniture consumption per capita is still low in Russia when compared to the average registered by high-income countries - in 2012 Russians consumed on furniture less than 30% of what the consumers of high-income countries did.

• The consumption is expected to grow in the mediumterm, supported by improvement of living standards and a high proportion of young consumers.


IMPORT
• Russian furniture market is highly depended on imports. Share of imports in retail sales volume app. 60%

• Increase from USD 1,9 million in 2006 to USD 3,3 million in 2012.

• High customs duties to protect the domestic market from import > to be reduces after the WTO transition period from 41.7% to 12.8% on average for protected positions and from 15% to 10% for unprotected positions.

• Furniture imported from Europe > mainly the premiumclass market segment; local companies produces mostly middle-class and cheap furniture. The situation is now changing as the quality and competitiveness of local furniture is improving. • Imported furniture comes mainly from Italy, China, Belarus, Germany and Poland.

• Italy is the main supplier to Russia with app. 23% market share, but its position is declining (38% in 2007) as the share of Chinese imports is growing rapidly: from 2007 to 2012, the import of Chinese furniture grew +24% per annum, to leave grey market volumes out of account.

• Finnish furniture is imported to Russia, but the volumes are low and decreasing. From 2010 to 2011 furniture exports from Finland to Russia decreased by 2% (from 22 900 EUR to 22 400 EUR), and in the first three months of 2012 there was a 5% decrease.

RETAIL
• Furniture retail market is very fragmented: only 7-10% of the companies are big, while the rest are small businesses.

• The main sales channels are multi-brand shopping centers, mono-brand stores and small independent retailers. 36,5% of all furniture is sold in the Central Federal District, where the largest furniture stores are located. Moscow is certainly the biggest furniture market for all furniture categories.

• The largest furniture stores in Russia are:
–Grand Furniture Trade-Center, Moscow
–Great Furniture Center, St. Petersburg
–Trade-Center “Tri Kita”, Moscow
–Mega-Mebel, a network of furniture supermarkets, which are located in several Russian cities.

• In addition to these, the Swedish furniture company IKEA is very popular in Russia, and their brand is one of the most recognized brands on the Russian market. The company has several stores around Russia, including Moscow, Saint Petersburg, Rostov on Don, Yekaterinburg, Novosibirsk, Omsk, Samara and many others.

• Online shopping has found its way to Russian furniture market, mostly in Moscow and St. Petersburg.

MARKET TRENDS
• Minimalism in office furniture which is more compact and portable.

• Unique designs forms an image of a company or a person

• Edutainment” (education + entertainment) > dividing office space into different zones with comfortable furniture for brakes, lunches, meetings etc.

• Combining luxury, elegancy and functionality

• High price should be visible.

• Russian still prefer dark colors, but also natural colors (light wood, sand, beige etc.) become more and more popular.

• Eco-design is starting to hold more and more favor, but most of the clients understand it mostly like using natural materials and plants in home and office space design.

• Scandinavian style has gained certain popularity, especially in Saint Petersburg. due to a plenty of reasons (Ikea’s popularity, increasing living space. However, for Russians Scandinavian style means primarily laconic brevity and fine lines, but not being plain or too simple.