The Furniture Industry Faces a Post-Pandemic Slump
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Köln.
Once thriving during the pandemic, retailers and furniture manufacturers now grapple with a important downturn in orders. What has led to this shift?
“Everything is becoming more expensive, we remain cheap,”
a prominent furniture retailer proclaims in their latest advertising campaign. Despite efforts to lure customers with enticing offers, the response has been tepid. Many consumers in Germany are opting to avoid furniture stores, redirecting their spending to other areas.
The year 2024 did not bring good news for the furniture sector. Sales among German furniture producers plummeted by 7.4%, totaling 16.4 billion euros. Notably, prices for home furnishings have remained stagnant, with furniture retailers experiencing a decline of between 6% and 8%. This downturn was confirmed by industry associations VDM and BVDM, which reported a decrease in revenue compared to the previous year.
Shifting Priorities Amid rising Costs
What is driving this decline? “The increase in the cost of living forces many families to renovate their expenses. Food and energy take precedence, relegating furniture purchases to a lower priority,”
explains Sebastian Wilde, a retail sales expert from Falkensteg management consultancy.
The furniture industry is also reeling from the aftereffects of the pandemic. “There was a boom during the pandemic as many people turned to home enhancement and furniture purchases,”
notes Marco Atzberger, a trading expert at the I hi Research Institute. However, the surge in demand has since leveled off.
Consumers are now less inclined to make frequent purchases. “Once you buy a sofa, wardrobe, or dining table, you typically won’t be in the market for another one for two to three years,”
states Jean lucas Dürand, head of furniture and kitchens. Currently, many consumers are channeling their disposable income towards vacations and travel instead.
Industry outlook: A Gloomy Forecast
The sentiment within the furniture sector is decidedly pessimistic. The Imm Cologne, one of the world’s premier furniture fairs scheduled for January, was canceled due to the challenging market conditions. An economic survey conducted by the Germany Trade Association at the start of the year revealed that only 4% of businesses in the furniture and home textiles sector rated their situation as good, while 44% deemed it satisfactory. Alarmingly, one-third reported a negative outlook, and only 22% anticipate higher sales in 2025 compared to the previous year.
Challenges in the German Furniture Industry: A 2025 Overview
| By Time.News
Current State of the Industry
the German furniture sector is facing significant challenges, with a notable decline in workforce numbers. Recent statistics reveal a 5.4% decrease in employment, bringing the total number of employees down to 71,231. this downturn is compounded by a 3.8% reduction in the number of companies employing over 50 workers, now totaling 414.
Impact on Employment
the ramifications of these changes are palpable among employees. A recent survey conducted by industry associations indicates that 44% of companies sought to implement short work arrangements in the first quarter of 2025, highlighting the urgent need for adaptive strategies within the sector.
Looking Ahead
As the industry navigates these turbulent waters, it is indeed crucial for stakeholders to reassess their operational strategies. The hiring of new companies, such as the one engaged by Stadtlohn’s Hülsta furniture manufacturer in 2024, may provide a glimmer of hope for revitalization and growth.
Furniture Industry Faces Unprecedented Challenges Amid Rising Bankruptcies
As the furniture sector grapples with a surge in bankruptcies, industry leaders are calling for urgent reforms to stabilize the market.
Bankruptcy surge: A New Era for Furniture Manufacturers
The furniture industry is experiencing a crisis, with notable companies like Opti-Wohnwelt and Lodenkemper succumbing to bankruptcy in 2024. This trend has reached alarming levels, as allianz Trade reports that insolvencies in the sector have hit a decade-high, with over 230 cases recorded last year alone. Maxime Lemerle,head of research on insolvency,stated,”at the beginning,a quick end is not in sight,” indicating that the challenges are far from over.
Ikea‘s Resilience Amid market Decline
In contrast to the turmoil faced by many competitors, Ikea remains a significant player in the market, albeit not unscathed. The retail giant reported a 5% decline in sales for the financial year 2023/2024, attributed to a decrease in customer footfall and a general downturn in purchasing sentiment. The company has responded by slashing prices on numerous products, attempting to stimulate demand in a challenging economic environment.
The Giant in the Ikea sector is relatively well.(Archive image) Image: Sven Hoppe/DPA
Challenges and Opportunities in the Furniture Industry: A 2025 Outlook
The furniture sector faces significant hurdles, yet experts see potential for recovery.
Decline in New Housing Approvals
Recent data from the Federal Statistical Office reveals a concerning trend in the housing market. In 2024, only 215,900 apartments received approval, marking a 17 percent decrease from the previous year and the lowest figure as 2010. This decline poses a direct challenge to the furniture industry, as noted by Christoph Lamsfuß, a furniture expert at the Ifh Cologne Commercial Research Institute. He states,
With it, the shooting of the furniture sector in recent years, the kitchens, it is out of the question.
The connection is clear: new housing typically drives furniture and kitchen purchases through subsequent relocations.
Sales Struggles in the Furniture Sector
The past year has been particularly tough for manufacturers of living room, restaurant, and bedroom furniture. According to industry reports,sales plummeted by 11.2 percent compared to 2023. Specific segments faced even steeper declines, with kitchen furniture sales down by 6.5 percent, mattresses by 5 percent, and office and shop furniture by 4 percent.
Optimism for 2025
Despite these challenges, there is cautious optimism for the current year. Jan Kurth, CEO of the Association of the German Furniture Industry (VDM), forecasts modest sales growth in 2025, attributing this to a potential easing of inflation and an increase in real wages. He remarks,
We provide for a low growth in sales in the low percentage of single size.
Positive Signs from Manufacturers
Andreas Wagner, CEO of the Bünde-based redpunkt manufacturer, shares a more optimistic perspective.He reports a significant uptick in orders since November 2024,suggesting that the new year has begun with a favorable momentum.
We have seen a clearly interesting order input as november 2024, the new year began with a queue wind.
Time.news Talks Furniture Industry Slump with Expert Analyst, Dr. Anya Sharma
Time.news: Welcome, Dr.Sharma. The furniture industry is facing a complex situation currently. Our latest reporting shows a notable downturn. Can you paint a picture of what’s happening in the furniture market, specifically in Germany?
Dr. Anya Sharma: Thanks for having me. You’re right, the German furniture industry is experiencing a definite contraction after a pandemic-fueled boom.We’re seeing a combination of factors at play. The Time.news articles rightly point to declining sales, driven by shifting consumer priorities and the after-effects of the pandemic. People simply aren’t refreshing their homes as frequently as they were a few years ago. They invested in their homes during lockdowns when spending options were limited, and those purchases are still serving their purpose.
Time.news: The phrase “post-pandemic slump” keeps appearing.How much of this is directly tied to the end of that unusual period?
Dr. Anya Sharma: A significant portion. Marco Atzberger’s quote about the surge in demand leveling off is key. The pandemic created an artificial surge that was unsustainable. now,we’re seeing a correction. Adding to this, the sharp rise in the cost of living is heavily impacting consumer spending.
Time.news: The article mentions rising costs putting pressure on families in Germany. does that pressure primarily impact furniture purchases, or does it extend to the industry beyond Germany?
dr.Anya Sharma: The rising cost of living impacts discretionary spending across the board, and of course it isn’t just Germany. Though, the German furniture sector is particularly sensitive. Sebastian Wilde’s comment that food and energy take precedence is very true. Consumers are prioritizing necessities and experiences – like travel, which is drawing disposable income away from big purchases. The sharp rise in insolvencies underlines this pressure.
Time.news: We’re seeing companies like Opti-Wohnwelt and Lodenkemper succumbing to bankruptcy. Is this a sign of a systemic issue within the furniture industry?
Dr.Sharma: Yes, the Allianz Trade report highlighting decade-high insolvency rates is alarming. It indicates that many companies, particularly smaller and mid-sized players, are struggling to adapt to the changing market dynamics. They may lack the resources or agility to weather the storm.
Time.news: Interestingly,Ikea seems to be holding its own,although not unscathed. What’s Ikea doing differently than other furniture retailers?
Dr. Sharma: Ikea’s resilience, even with a 5% sales decline, underscores the power of brand recognition, scale, and pricing strategy. They’re proactively slashing prices to stimulate demand, which is a smart move in this habitat. Ikea also benefits from its wide range and international appeal, providing broader resilience during market shifts. While other retailers are fighting for fewer sales, Ikea’s presence is better established, they can stay afloat a little easier.
Time.news: The article also points to a decline in new housing approvals. How does that affect the furniture market?
Dr.Sharma: That’s a significant factor. As Christoph Lamsfuß highlights, new housing directly correlates with furniture and kitchen purchases. Fewer new homes mean fewer opportunities for furniture sales. people relocating are a key driver of demand, so this decline presents a major headwind. This will certainly present a problem in the coming months.
Time.news: Despite all this, ther seems to be some cautious optimism. Jan Kurth predicts modest sales growth in 2025. Is that realistic?
Dr. Sharma: There’s always room for optimism, and it’s good to see Andreas Wagner reporting an uptick in orders.The projections are good, the German furniture industry is one of the largest in Europe, and despite the pandemic times, still has the potential to recover. A potential easing of inflation and increases in real wages coudl definitely provide a boost to consumer spending in the later half of the year. however, it’s crucial to note that the forecast is for modest growth. The industry is not out of the woods yet.
Time.news: What advice would you offer to furniture manufacturers and retailers navigating this challenging landscape?
Dr. Sharma: Adaptability is key. They need to focus on:
Cost Optimization: Streamlining operations and finding efficiencies to remain competitive on price.
Product Innovation: Focusing on sustainable and space-saving designs to appeal to changing consumer needs and preferences.
Online Presence: Investing in a strong online presence and e-commerce capabilities to reach a wider audience.
Targeted Marketing: Developing marketing campaigns that highlight value and address the specific concerns of today’s consumers. “Everything is becoming more expensive, we remain cheap!” A prominent furniture retailer proclaims in their latest advertising campaign.
* Sustainability: Consumers are increasingly aware of sustainability and are favoring companies that share their values.
Time.news: What are the keywords to keep an eye on in the sector of home furnishing?
Dr. Sharma: Sustainability is a big word, and furniture manufactures should really think about that aspect. Another keyword is Innovation, thinking outside the box could boost the sales more than expected.
Time.news: Dr. Sharma,thank you for your insights. It’s a complex picture, but hopefully, with adaptation and a little economic tailwind, the furniture industry can find its footing again.