Market Outlook  

Singapore Furniture Market Outlook 2014

Madam Song Mei Yong, President of Singapore Furniture Ass ociation (SFA) shares her review of the Singapore Furniture market in 2013 and the outlook for 2014.

Madam Song Mei Yong, President of Singapore Furniture Ass ociation (SFA ) shares her review of the Singapore Furniture market in 2013 and the outlook for 2014.

With a total turnover of approximately S$1billion per year, the Singapore furniture market pales in comparison with many other nations. For example, Ashley Furniture, the largest furniture chain in the America has an annual turnover of US$5.6 billion, or about S$6.7 billion. QuanYou, one of China’s largest furniture company, has an annual turnover of about S$2billion. In comparison to these figures, the scale of Singapore’s local market becomes obvious. Our national market size is dwarfed by one individual company.

One of the reasons for Singapore’s small furniture market is due to the average national expenditure on home furniture as well as its small population and country size. The average expenditure per annum on furniture is slightly lesser than S$200. Contrast this with America where the average expenditure is S$330, coupled with those reasons listed above and it becomes clear. It is not surprising to find old and dated furniture which has been used for years even in the homes located in high end residential areas. The key point is the Singapore consumers’ mindset towards furniture - generally cautious and conservative in nature.

Fortunately, being a cosmopolitan city, about 37% of its residents are from overseas, which is similar to other major cities such as New York and London. These new immigrants have helped to cushion our furniture market from shrinking.

In the past year, especially so during the second half as the property prices began to fall, this culminated in the end of the price growth momentum since 2009. Volume of property sales has also declined, particularly in HDB flats, dwelling of most of our citizens. The volume of resale flats has dropped by 32% as compared to 2012, and this had a major impact towards the furniture market. The drop in sales of furniture by 4% to below S$1 billion can be attributed to the decline of the property market.

Outlook for 2014
What is the prospect for 2014? To be honest, I would be a little cautious regarding the year’s outlook. For reasons such as the effect of government’s property cooling policies as well as the overall reduction in the supply of HDB flats. Looking at it from the surface value, we expect a reduction of only 3%. However, upon in-depth analysis, the larger flats (3-room and above) will be reduced by 18% and there will be an increase in 2-room flats. Taking all these into consideration, the outlook does not seem too promising for our furniture sector.

Yet on the other hand, the cost of operations is expected to increase which will further complicate matters. First of which is the ever increasing rental costs in Singapore. At more than S$10psf, it is very costly for furniture retailers especially when compared to other countries like America. As our rental rates are mainly controlled by a few large firms, and not to mention our small market size and high expenses, profits are increasingly harder to achieve. Therefore, it is time for the furniture trade to think out of the box regarding our business model.

At the moment, SFA is exploring this area of evolving business model to aid our members. We hope to gather the support of the industry once the plan has materialized.

In 2013, SFA collaborated with Small and Medium Enterprise Centre to organize seminars for our members to introduce the Work-Pro and Flexi Work schemes. We believe that many members have benefitted from the schemes and further assistance are available to members. SFA has also appealed to the government through SCCCI to extend a Productivity and Innovation Scheme for another three years and also to simplify the claims processes.

In summary, SFA will continue to play its important role to:

- help members to better understand and tap on government assistance measures. Members can participate in seminars organized by SCCCI to help them to take full advantage of these measures.

- help members to thrive in their business in the Furniture Mall and at APFF exhibitions by continuing to increase marketing and advertising activities to improve the traffic flow to these venues.

- help members to keep up to date with new business models such as O2O (Online-to- Offline). It is inevitable that we need to look into e-commerce platforms which are the current phase of evolution in retail industry as online shopping will continue to grow.

- help members to explore global opportunities which are available even in the current downturn, so as to generate new sources of revenue and to remain competitive. In conjunction with the Council of Asia Furniture Associations (CAFA), members can now have the opportunity to have exhibition and retail space in overseas market at special concessionary rates.

Officially established in 1926, Chinese Furniture Dealer’s Association was renamed SINGAPORE FURNITURE ASSOCIATION (SFA) in 1995 to reflect its enlarged role as an effective representative body of the furniture retailers, manufacturers and traders. It has grown from strength to strength, to date SFA serves a membership strength of more than 100 members in the furniture and furnishings industry.

With its mission to promote the development and growth of the local furniture and furnishings industry, SFA strives to elevate the standards of integrity and professionalism amongst its members so as to achieve excellence in service and quality of products to meet the demands and expectations of consumers and society at large. Besides promoting businesses, the association also seeks to promote camaraderie amongst members through the association’s activities.

There are two distinct and highly successful platforms developed by SFA to help its members, namely The Furniture Mall and Asia Pacific Furniture Fair Pte Ltd.

The Furniture Mall concept was mooted by the SFA to find a long term solution for members to succeed in an increasingly costly and competitive environment due to the influx of big furniture stores into the local market. The Furniture Mall is the onestop destination to offer the widest array of quality furniture, furnishing items and interior design services to satisfy different furnishing needs and preferences.

Asia Pacific Furniture Fair Pte Ltd (APFFPL) was set up by the SFA with its aim in organising exhibitions to provide participating Singapore Furniture Association members a convenient and effective one-stop venue to market their high quality and well-designed furniture to the local consumers.

Mdm Song Mei Yong
President of Singapore
Furniture Association