Office Furniture Market Intelligence

Industry Outlook & Drivers

Global Furniture Industry Outlook

• In 2017, the global office furniture market was valued at $54.99 billion
• By 2018, the market is forecasted to grow at a CAGR of 5 – 6 percent to $58.14 billion
• North America, Western Europe, and some parts of APAC, such as Australia, Japan, Hong Kong, Singapore, have a high market maturity
• Western and Eastern Europe countries, like Germany, Switzerland, Poland, and emerging markets in Asia, like India, Malaysia, Vietnam, Philippines, etc., will drive the demand for office furniture in the near future. These countries are currently in the path of rapid urbanization as well as a rising office construction market are major drivers of office furniture

 Global Office Furniture Market Maturity

• The global office furniture industry is a modestly fragmented industry led by a selective group of global suppliers, who contribute roughly 7–8 percent of the total market size for office furniture globally
• Asia and Europe contribute to around 50–60 percent of the total market size for global office furniture

Global Office Furniture Industry Trends 

• Office furniture contributes up to 15 percent of the global furniture sales, wherein seating, panels, and storage contribute the majority of the overall office furniture sales.
• Office furniture is a labor intensive industry and this industry is adopting increased automation and mechanization to increase efficiency and product standardization
• The top players of office furniture make around 9-11 percent of the APAC market size and this market is highly unorganized in pockets across APAC
• There is a high level of mergers occurring between global players of office furniture and the local level manufacturers and dealers, who act as the distribution channels for these global firms
• There is a significant increase in demand for reuse/recycling of furniture and more focus on innovation to reduce environmental impact

Global Office Furniture: Drivers and Constraints 

• Manufacturing of office furniture is being outsourced to emerging markets like China and Indonesia owing to the rising costs of manufacturing
• There is increased competition from regional/local players for office furniture and this has driven larger suppliers to provide value-added services like space planning, consulting and furniture solutions by providing architect and interior design services

Drivers

Rapid Urbanization: 

• Increase in construction activities and rise of office spaces in major consumer markets like the US, Brazil, and India. The rapid expansion of Fortune 500 firms in APAC has also given rise to the creation of new office space

Recycled Products: 

• In the developed markets, such as the US, there is an increased demand for customized and made-to-order furniture from recycled materials

Demand for Office Aesthetics: 

• Large buyers require innovative or elegant design aesthetics for their office facilities. This leads to procurement of new office furniture that suits the aesthetic dynamics of the facility
• Refurbishment of office space or purchase of new office space drives large buyers to adapt fresh design themes, which may be aimed at increasing the productivity of the employee workforce

 Constraints

Demand vs. Buyer Aspiration:

• Although there might be an increase in demand for office furniture for large buyers, this demand may not be realized by the buyers, who may choose to cut costs owing to the pressure of cost optimization

Rise in Manufacturing Cost: 

• The office furniture industry is labor intensive and is currently facing a labor shortage as well as fluctuations in costs of raw material like wood and energy

Dynamic User Preference: 

• Buyers request variety and innovation in office furniture depending on the requirement and this makes it difficult for service providers to forecast and manufacture the product lines

Global Office Furniture: Key Insights 

Plant Closures and Workforce Reductions Due to Difficult Market Conditions

Difficult market conditions compelled top global and regional manufacturers like Steelcase, Ahrend, Haworth, König & Neurath to shut their production plants and reduce workforce as per their restructuring and modernizing plans.

Example: Steelcase shifted their manufacturing plant from Germany to Czech Republic, which is expected to generate cost savings of around $10 million a year from 2016.

Consulting and Advisory Services Getting Offered as Value-Added Services

Rising competition from local as well as new emerging players, downturn in economic scenarios, decrease in demand by the buyers for the furniture items have compelled manufacturers to offer value added services such as consulting, designing and furniture planning by hiring interior designers and architects

Mergers and Acquisitions to Expand and Gain Synergies

• The office furniture companies are getting aligned with other players to gain from synergies and strengthen their supply chain by getting add-on capability in terms of geographical presence, technology and innovation. With the availability of bank credit, strategic acquisitions have become easier and a notable trend in the industry

Example:

• Global OEM player Herman Miller acquired Maharam Fabric Corp., a family owned company, as part of its strategic planning

Production Capability Expansion by Suppliers

Office furniture, being a labor intensive industry, is increasingly moving towards mechanization and automation to bring efficiency, standardization, production of the required design and quantity of the product

Sustainability Requirements Followed and Advertised by Suppliers

• There is new standard, BS ISO 24496:2017 office furniture, assessing office seating in Europe. Unlike Europe Standards (EN), this standard is, however, not implemented in all European countries
• Most of the global brands and regional players follow minimum LEED and ANSIBIFMA standards
• With buyers having environmental concerns and sustainability targets, manufacturers are using environment friendly materials modified bio-composite sheet made from renewable natural resources is used in the production of office furniture instead of using petrochemicals and advertising the environmental benefits through a number of certification programs