SFIC: Optimistic Outlook for Singapore Furniture Industry
Continued sentiments of overall optimism see the industry forecast a pleasing growth of 7.4% from 2012 to 2015. It is anticipated that the total market size will reach S$6.25 billion in 2015. However, despite general optimism over the four years, the furniture industry saw slower than expected growth in 2014; figures have been adjusted to S$6.22 billion from previous forecasts of S$6.34 billion.
In an assessment of the market size broken down into the industry’s various sectors, retailers steal the show as the only sector to post continuous year-on-year growth. Retailers forecast that in 2015, the sector will achieve a size of S$1.20 billion and account for 19.2% of the total market. Contract manufacturing sector which, despite shrinking slightly from 2012 to 2013, is expected to rebound strongly to hit a 7.7% growth from 2013 to 2014 and a 3.7% growth from 2014 to 2015, reaching a high of S$2.29 billion in 2015.
Notably, the Singapore furniture industry’s 2012-2013 year-on-year growth has risen from a previous estimate of 3.2% to a verified growth of 4.1% but 2013-2014 forecasts dropped by almost half to 2.6%. This reflects the conservative figures that were provided for 2014 revenues. Charting Singapore’s year-on-year growth against the global year-on-year rates, national growth has in general fared better or similarly. While national growth rates have seen a general downward trend since 2011, they are expected to maintain positive percentages, which are aligned with the global growth rates.
Future expansion plans
Over a third of respondents are actively planning to set up permanent operations overseas in the next three years, whilst two-thirds have not yet formed such a decision. To allow for improved targeted assistance for the many companies expressing their appetite to explore overseas territories, understanding where the internationalisation hotspots are will help to concentrate planning efforts.
As a region, Southeast Asia is set to dominate as the most appealing destination for investments in the coming three years, with respondents citing countries such as Myanmar and the Philippines. Even so, the spotlight is again fixed on Malaysia and China, which are expecting to receive19% and 18.4% of permanent operations respectively. Not only do they currently hold the largest proportion of overseas operations, but their appeal is predicted to last for the next three years.
Challenges and opportunities
Challenges have invariably remained similar to previous years and, although there are some overlaps, they can broadly be classified into four categories: design, controlling costs, international expansion and labour. Although furniture players are fully aware of the importance of excellent design, they must contend with issues such as sourcing for the right designer, copycats and rapidly evolving consumer tastes. Cost control and labour problems trouble businesses across the economy, whilst international expansion can bring its own unique set of challenges. However, companies have also flagged areas of opportunity; for example, tax agreements and multilateral treaties give businesses the chance to capitalise on overseas markets, in particular Southeast Asian markets. The credibility and recognition afforded by the Singapore brand has also provided room for further investment in and differentiation through Singapore designs. It may be a competitive market, but there are glimmering pockets of opportunity for the furniture industry.
Source: This survey is commissioned by SFIC with the support of SPRING Singapore, and prepared by business consulting firm, BDO
Edited by Panels & Furniture Asia