Low-cost imports challenge Furniture Retailers

The furniture retailing industry may face a tough trading environment in 2019-20 with revenue expected to decline by 3.3 per cent during the period, according to IBISWorld analysts.

Mounting internal and external competition is expected to continue to threaten the viability of furniture operators in the current year, with revenue expected to decline to $890.0 million as the industry continues to struggle with a challenging operating environment.

Bao Vuong, IBISWorld senior industry analyst, said the rising volume of low-cost furniture imported into New Zealand is also forecast to hinder the industry’s performance in the current year.

“The availability of low-cost furniture imports is projected to heighten industry competition,” Vuong said.

Industry revenue is also likely to be suppressed by slower growth in residential building construction, which will reduce retail demand for furniture items.

An IBISWorld furniture retailing industry report last year showed it has faced a tough trading environment over the past five years, with revenue growth stifled by increasing competition.

Within the industry, players typically compete on the basis of price and product range.

External competition comes from a range of other operators that sell furniture as part of their operations, including department stores, auction websites and online-only players.

In the next five years through 2023-24, IBISWorld analysts forecast the furniture retailing industry to be operating within a challenging environment .

“Mounting internal and external competition is projected to continue threatening the viability of operators over the period,” analysts said.

The report also showed softer real household discretionary income growth could hinder retail demand for furniture products during the period.