According to CSIL, world upholstered furniture consumption amounts to USD 80 billion, about 15% of the total furniture market.

GLOBAL TRENDS, REGIONAL ANALYSIS AND MARKET OUTLOOK

The upholstered furniture segment has been one of the most increasing within the furniture market, particularly in 2021 when it marked an exceptional growth in 2020.

The 2019 (pre-pandemic) levels have been reached (and surpassed) by all the geographic regions (except for South America), with Europe and North America being the fastest-growing markets. Asia and Pacific, and North America are the leading markets for upholstered furniture, jointly contributing to nearly 70% of the global market. Over the past decade, North America has gained market share at the expense of Europe, which saw its weight in the world upholstered furniture market decrease.

In terms of individual countries, 2022 was marked by a sustained increase in the United States market, which is confirmed to be the largest market for upholstered furniture worldwide. On the other hand, China, the second leading market, had a slowdown mainly caused by the poor performance of the economy, the recession of the housing market, the pandemic dynamics and related containment measures.

The world market for upholstered furniture is projected to contract in real terms in 2023, with consumption decreasing in all world regions except Asia and the Middle East. This results in a resumption of growth in 2024, with modest growth in Europe and North America and a substantial consumption increase in Asia.

COMPANIES’ STRATEGIES AND COMPETITIVE SYSTEM ANALYSIS

Since the pandemic outbreak, disruptions occurred along the entire value chain, forcing upholstered furniture manufacturers to rethink their strategies and implement actions taken along the supply chain.

According to CSIL’s survey (April- May 2023), which targeted a sample of global manufacturers in the upholstered furniture industry, nearly 40% of the companies identified “increasing the number of suppliers” as the most frequently mentioned strategy for 2023. This strategy has gained increasing importance, as manufacturers are moving towards having multiple suppliers for each raw material, rather than relying on a single supplier. The second most important strategy for respondents was “shortening the supply chains by being more local” (30% of respondents).

About 20% of respondents consider moving production closer to the markets where they sell (nearshoring) as an increasingly important strategy. Being one of the most labour-intensive segment within the furniture sector, the upholstered furniture industry is more than others subject to labour cost impact. As such, this industry was one of the first to globalize.

Production localization is influenced by the convenience of sourcing labour and raw materials, among other factors, making some countries more competitive. These factors reshaped the sector’s geography and continuously affected the companies’ decision-making and investment strategies related to the localization of manufacturing plants, inventories, and supply chains.

Approximately 40% of the CSIL Top 100 upholstered furniture manufacturers have manufacturing activities outside their home countries. European companies show the highest level of delocalization, with a significant presence in Eastern European countries, such as Poland, Romania, and Lithuania. More recently, due to the trade tensions between the U.S. and China, Chinese manufacturers started to set up factories in South Asian countries (mostly Vietnam and Thailand).

Partially because production costs increased fast also in those countries, and companies are increasingly asked to reduce the time-to-market, Chinese manufacturers started to open facilities across different geographical areas (more recently, Mexico has been among the preferred destinations, but also the United States and Europe). It is evident that in the last two years, companies have changed their inventory management, trying to build stock with additional raw materials to minimize the probability that products will go out of stock.

In 2023, this strategy largely decreased the importance among manufacturers, indeed mentioned by less than 10% of respondents. Overstock becomes an issue in the industry (particularly for the U.S. market) starting from the end of 2022 and will also continue in 2023.

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CSIL’s Report “The world upholstered furniture industry“, provides a comprehensive overview of the global upholstered furniture industry, including crucial statistics on production, market size, and international trade. The report also offers consumption forecasts and detailed profiles of the leading manufacturers worldwide, with a specific focus on the top 20 countries in the upholstered furniture market.

CSIL Top Furniture Companies is a new research series providing insights into the largest companies in the furniture and furnishings market. The series offers rankings and performance data of firms operating at a global level or within specific geographical areas.