Textination Newsline

• Sales of Kitchens and Beds is outperforming
• E-commerce puts pressure on the Sector

Paris (GTAI) - Furniture sales in France rose sharply in 2017 for the third year in a row, although the record level of 2011 has not yet been reached. This is reported by the association FNAEM in its annual balance sheet and refers to the close connection with the booming housing market. This also should push the furniture sector in 2018.

After growth rates of 2.4 and 2.3 percent in 2015 and 2016 the French furniture market has again achieved a stable growth of 2 percent in 2017. According to the FNAEM Federation (Federation française du negoce de la ameublement et de equipement de la maison), the market developments are closely linked to the housing and real estate markets. According to the association, every third furniture purchase was made by a household that has moved within the last 24 months.
 
In 2017 16 percent more homes were built in France compared to the previous year. By the end of October 2017, the real estate market also had also registered 16 percent more transactions. The FFB (Federation française du batiment) expects a strong total construction activity again but with a slight decline of 2.5 per cent in the construction of new housing in 2018.

The development of the overall economy and the political environment also have a strong influence on the furniture market. For example, the presidential elections and the change of government in France led to an initial uncertainty among consumers and delays in the awarding of public contracts. Sales of furniture initially developed weakly in the first half of 2017, but then all the more dynamically.

Source: IPEA (Institut de prospective et d'etudes de l'ameublement)

Most strongly grew the kitchens segment in 2017, whereas in recent years in particular bedroom furniture led the sales. Kitchens are particularly benefiting from the improving housing market and a continuing trend in French households to pay more attention to kitchen equipment.

Fitted kitchens gain market share
According to an analysis by the market research company IPEA (Institut de prospective et d'étes de l'ameublement), only 60 percent of households in France have fitted kitchens, much less than in other Western European countries (Germany: around 80 percent). This difference promises good growth rates for this segment for years to come.
According to the market researchers, the gap between the well-running segment of sofas and armchairs over benches is increasing in favor of upholstered furniture. Above all, folding sofas, which are always offered cheaper, continue to make competition to banks.

Other home furniture such as tables, chairs or chests, which continue to make the majority of the market, were, according to the FNAEM association, unable to make up much ground in retailing compared to kitchens and beds in 2017. Also, in 2018, according to the association's expectations, there will be no signs of recovery. According to FNAEM at most the online trade should continue to grow in the home furniture segment.
The sales of garden furniture benefited from warm weather periods in spring 207, which extended the sales season. According to IPEA bathroom furniture could not fully benefit from the upturn in the housing market in 2017. The business often depends on the hardware stores, which often promote low-cost products. Installers would have sold less bathroom furniture in favor of heating systems.
 
Good sales forecasts for beds
The bedroom segment, the leader in growth in recent years, has developed less strongly in 2017. IPEA attributes this to a tougher competition with more price promotions. Lower prices had slowed the sales despite good volumes. The buyers continue to ask for larger beds sizes with a width of 160 cm.

According to a study by the market research firm Xerfi, the bedding segment is expected to grow steadily by 3.3 percent per year until 2019, supported by the housing market and higher disposable income. French consumers would also exchange their mattresses now more often. According to the trade Frenchmen buy a new mattress every 14 year, whereas this happens in the US every eight years. The association of the mattress industry calls 13,5 for Germany.

Retailers operate multichannel strategy
However, the competition in the bed and mattress market is growing, above all due to the success of e-commerce. Online mattress suppliers such as Casper from the USA (with production in Germany), Tediber and Ilobed from France or Simba and Eve Sleep from the UK have launched massive advertising campaigns in France. According to estimations of the providers, they now have reached a market share of about 5 to 6 percent in the mattress segment.

The stationary trade with furniture stores like Ikea, Conforama or But and the bed specialists Maison de la literie, Compagnie du lit or Litrimarche defend themselves against the pure on-line offerors. All major retailers now operate a multichannel strategy, meaning that they try not only to sell in their furniture stores but also via their own online channels. At the same time the shops are upgraded by events, more advice or more frequently changing exhibitions.

Leading in France are the large furniture stores Ikea, Conforama and But. Market leader Ikea claims a market share of 19.4 percent in 2017. Conforama and But did not publish any shares for 2017 but came to 16.1 and 13.4 percent respectively in 2016. According to estimates by IPEA, online commerce accounts for a total market share of around 12 percent. Half of this is accounted for by pure online providers and internet sales by conventional, previously purely stationary, providers.

Ikea aims for a 10 percent online share in France. Conforama claims to already generate 10 percent of its sales via the Internet. However, the company also offers entertainment and household electronics. Of the online furniture purchases, 82 percent are still being picked up at the stores. Conforma wants to do justice to this with additional furniture markets in the low-price segment. At the same time, other sales rooms should be created in which new furnishing ideas will be presented.

Source: IPEA

Conforama joined the French online pioneer Showroomprive.com in 2017 as an investor, hoping to gain expertise in online marketing. Due to the impending bankruptcy of the South African parent company Steinhoff Conforama sold its shares in early 2018 to the supermarket chain Carrefour.

However, the company intends to take advantage of the increased customer interest in the bedding segment with a new high-end store chain under the brand "Il etait une nuit" and is buying additionally more smaller bed houses. The chain But was for a long time for sale until it was taken over in mid-2016 by the third largest furniture retailer Lutz from Austria together with financial investors.