The companies operating on the luxury furniture market, which accounts for less than 5% of the total industry worth almost EUR900 million, are pinning their hopes on 2011, after 2010 let them down. Yet with a new crisis wave looming, their hopes may very well be dashed again.
The number of those who can afford to buy luxury products is dwindling, considering stock market investors who accounted for part of the demand for luxury furniture have lost a lot of money lately due to the plummeting bourses all over the world. Still, furniture sellers are talking about a slight rebound in demand, partly fuelled by hope that “there can’t be any worse than 2010”.
“2010 was the slowest of the last five years, therefore we can say there was a decline,” says Serban G. Cismarescu, general manager of Innova Interiorism, a company with EUR1.8 million sales in 2009.
Diana Staicu, country manager of Danish retailer BoConcept’s business in Romania, says that the company’s stores in this country witnessed a “quite abrupt sales decline” in 2010, by approximately 15% compared with 2009. BoConcept’s revenue stood at about EUR1.5 million last year.
Clients either migrated to other market segments or postponed buying, waiting for better days and higher incomes. The luxury furniture stores were the hardest hit of the entire market by the drop in purchasing power last year, even though they had not expected to.
The year 2011 saw optimism and sales return. This is what all those interviewed by Business Construct say. Although not constant, the growth was significant compared with 2010, as Innova’s Cismarescu says.
There are several reasons for the increase in sales. First of all, there were the customers who could afford to buy new furniture but had chosen to postpone a purchase and then decided to no longer wait. Then there was the price cut Innova operated and will keep in place by yearend, which helped it gain new customers and brought back old ones.
BoConcept, too, posted growth, which reached 20% in the first half of this year, so that the company is “much more optimistic and hopes to keep the positive trend by yearend.”
Furthermore, there are “only several reliable brands left on our market segment,” BoConcept Diana Staicu says.
Miele, a premium home appliances vendor, also sells kitchens designed by a famous international designer, Philippe Starck, and says the trend is headed up.
“The premium segment was not that hurt by the economic turmoil the rest of the market felt. The trend is still heading up, and demand is greater especially for very high-end products,” says Leo Popescu, sales manager of Miele Appliances Romania.
The company’s turnover went up 45% in the first half compared with the same period of 2010. Last year, turnover amounted to EUR2.17 million, up 11% on 2009.
The company expects revenue to increase by 45% to EUR3 million this year. The Germans have retail operations and an electronic component plant in an industrial park near Brasov (central Romania).
Innova’s Cismarescu expects growth, too, but says it will not be “anything spectacular” before next year’s spring.
(English version by Loredana Fratila-Cristescu)