The Furniture Sector in Pakistan: Export performance and ... - TRTA i

On the buyer’s side, there are globally operating furniture retail chains and buying groups
representing the collective interests of nationally important furniture dealers. Both have stayed
in the vanguard for changes in the international market. In fact, these have been important
drivers in opening up furniture trade for more trade. They have realised new cost-slashing and
earning opportunities in outsourcing labour-intensive manufacturing to the developing
countries. As a response, there is an abundant stock of new manufacturing capacity that has
been established with the help of government support and tax breaks. Not all of these are,
however, profitable or competitive today
Demand factors
Wooden household furniture tends to be a durable good that is highly responsive to personal
income expectations. Its purchase often represents a major investment by consumers in
household and office furniture, for instance. There is a clear tendency to postpone the purchase
when income expectations decline, and vice versa, increase purchase if personal incomes
prosper. Consumption is also affected by demographic factors such as birth rates, marriage
rates, life expectancy and household size. It is also responsive to the degree of social and
geographic mobility of the population.
The demand for household furniture and accessories directly correlate with new residential
construction, and office furniture follows trends in non-residential construction. A growing
segment, however, is the renovation, maintenance and improvement (RMI) sector, which
already accounts for 40-50% of total construction in Western Europe. Increasing mobility of
the population is also feeding furniture replacement purchases. For example in the United
States, about 40 million people move home every year. This often triggers furniture shopping.
Furniture is becoming more a fashion item with shorter change intervals, trend-setting and
even seasonal styles. This means that the life cycle of household furniture is becoming shorter,
and the collections themselves will have to be renewed more frequently. The key to success in
mass markets is flexible and cost-efficient production, with savvy designs.
In summary, the key factors that influence the demand for household furniture include:
• Disposable personal income
• Consumer confidence
• New housing and non-residential building starts
• Increase in the average size of new houses
• Increase in the number of bedrooms in new single-family homes.
Consumers in the United States and the European Union markets have been induced to accept
more eccentric and ethnic designs and mixed styles from exotic countries. This is an
indispensable opportunity for a “globalised” furniture trader, who sources items from all over
the world. Equally, it is the lifeline for “traditional” furniture-makers in the developing
countries.
Trade nomenclature
For the convenience of defining the product coverage (of the trade chapters), reference is made
here to the commonly applied trade nomenclature (Table 2.1).
International Trade Centre 9