Furniture of soft prices – Kommersant

Cheaper part of the components allows furniture manufacturers to adjust selling prices to stimulate demand. In the first quarter, suppliers note a decrease in average prices by 7-15%, to the levels of early 2022. But the trend is uneven: the demand for furniture in the premium segment remains under great pressure, the expert says, and its cost, on the contrary, will grow.

According to the results of the first quarter of 2023, selling prices from furniture manufacturers decreased by an average of 7% year-on-year, the Association of Furniture and Wood Processing Industries of Russia (AMDPR) calculated. For some categories, prices have fallen more noticeably. Prices are reduced for retail and office furniture, kitchen furniture, metal furniture, specify in AMDPR. Manufacturers can adjust the selling price by reducing the cost of some components. Thus, according to AMDPR, prices for plywood this March fell by 49% yoy, for chipboard, fiberboard and MDF – by 26-39%.

In the spring of 2022, furniture manufacturers raised prices due to interruptions in the supply of materials, higher logistics costs and an increase in the exchange rate, said Vadim Chernushkin, executive director of Angstrem. Now, according to him, price tags are returning to the level of early February 2022. In Angstrem stores in January-March 2023, the average cost of one product decreased by 8% year-on-year, the top manager claims.

Divan.ru commercial director Yevgeny Romanov says that prices in the first quarter of 2023 were about 10-15% lower than last year. Commercial Director of OBI Russia Dmitry Bondarenko says that the chain has been holding retail prices since the end of 2022, and the company’s supplier has reduced prices for chipboard furniture. Mr.Doors said that over the same period, product prices rose within the annual inflation rate. In Hoff, “Kommersant” did not answer.

Suppliers are adjusting prices in the context of a noticeable reduction in the furniture market. According to AMDPR, in the first two months of 2023, furniture production in the country in physical terms decreased by almost 10%, to 7.9 million units, due to a decrease in the activity of buyers. Mikhail Burmistrov, general director of Infoline-Analytics, says that in the first quarter of this year, furniture sales in monetary terms decreased by about 35% year-on-year. Sergey Shikhov, CEO of Mr.Doors, explains the dynamics with the rush demand at the beginning of 2022. As the top manager notes, any price reduction should stimulate demand growth.

Mikhail Burmistrov adds that many retailers are still counting on a gradual recovery in sales and, despite the presence of significant inventories, are in no hurry to sharply reduce furniture prices, limiting themselves to marketing promotions. According to him, in the second quarter the situation on the market is gradually stabilizing. In April, furniture sales were estimated to be 10% lower than last year, and in May they were already within 3%, the expert says.

Alexey Vanchugov, managing partner of Vanchugov & Partners, says that the difference in selling and retail price dynamics can be explained by the increase in retailers’ costs. In most cases, prepayment is required for the supply of goods today, while previously networks had the possibility of deferred payment and factoring, and additional costs are included in the price for the consumer, he notes.

Independent retail expert Irina Bolotova points out that the need to buy basic furniture remains even in times of crisis, and the demand for products in higher price segments is under great pressure.

In the premium segment, there are no prerequisites for reducing the cost of furniture, Sergey Shikhov adds. On the contrary, in the second quarter, price growth is expected to be within 10-15% due to the strengthening of the exchange rate against the ruble and, accordingly, the growth in spending on foreign components, he explains. OBI Russia is not yet ready to declare an increase in the cost of products made from chipboard and wood, but “already receives requests to increase selling prices for wardrobe systems due to the increase in the cost of metal.”

Alina Savitskaya