Country Report  

Russian Furniture Industry

By Artem Vasiliev, Chief Editor of Mebelny Bisnes

Saint Petersburg, city and a federal subject of Russia

According to the results of 2011, Russian furniture industry finally got the better of recession: the production volume exceeded the level of pre-crisis 2008. The year-to-year increase amounted to 19.8%, from about 89.5 billion rubles in 2010 to 107.2 billion rubles in 2011. The shadow economy sector is growing much faster: its estimated production volume, which is not included in the official statistics, was about 50.6 billion rubles in 2010 and reached 80.7 billion in 2011. As a result, Russian furniture production increased the level of 2008 by 6% in current prices.

Traditionally, Central Federal District has the largest share (38.6%) of domestic furniture production. The smallest share is in Far Eastern Federal District (2.1%). Last year, the highest rates of growth have been achieved in North Caucasian Federal District (130.9%) and Volga Federal District (122.2%).

Production index fell below 100 percentage points in the categories of chairs, armchairs, desks, linen cupboards. Zero dynamics has been shown in the sector of sofa beds. The remaining product categories are in the black, with the highest growth recorded in the mattress sector.

Future forecasts generally agree that recovery in demand and further growth of retail sector will be smooth but firm. These prospects are supported by positive factors such as relatively high income level, rapid emergence of innovations, and yet a high proportion of young consumers (up to 40% of them are people under the age of 30, who will improve their welfare and complement the demand).

As to development prospects of furniture market in Russia for the near decade, the key factor would be the consequences of Russian entry into the World Trade Organization. One proof of this is that the share of imports in the Russian furniture market remains to rise: it’s about 55%, according to the official statistics, and about 40% when taking into account the shadow economy sector.

In 2011, the furniture imports exceeded US$2.96 billion, and its growth rate (+35% year-to-year) is much faster than in domestic production. More than a half of imported furniture came from Italy, China and Belarus. In spite of considerable import duties (40% and above), the volume of imports of low priced furniture is growing at a faster pace, and the positive dynamics of furniture imports from China also remained consistently high. Such furniture competes directly with the products of the majority of domestic producers.

Furniture exports decreased in 2011 by 2.1%, with the total about US $214.5 million (14 times less than the imports). It seems that the actual market conditions are not forcing domestic players to open up new foreign markets for their products. But nevertheless, development of the export potential is a burning issue for the Russian market players today.

Altogether, the furniture consumption in Russia increased by 66.2 billion rubles (or 26.2%) in 2011.