Fact.MR’s recent study on the office furniture market shows that the market is expected to grow at a CAGR of ~ 7% during the forecast period. The global market value for office furniture is likely to be valued at ~ US$ 47 Billion by the end of 2019. Shifting consumer’s priorities to change the office structure to make it more modular and integrated, for using every square feet of office space is mainly driving the office furniture market growth. Large corporates and enterprises are investing vigorously in furnishing and the peripheries of office spaces to give employees or workers an agreeable, productive, and comfortable environment. Thus, manufacturers are designing office furniture that minimizes stress and offers enhanced comfort. Moreover, smart furniture is expected to gain significant growth in the forecast period. For example, office desks or other furniture comes with an embedded controller and sensor, where the employee can control various tasks such as setting up an optimal temperature. Similarly, smart office chairs can provide employees with posture changing applications. These types of smart office furniture are primarily developed with a motive of convenience and comfort. Moreover, the arrival of home-based office furniture has further triggered the office furniture market growth. However, complexity in logistics and supply chain, fluctuations in raw material costs, and long replacement cycle are hampering the growth of the office furniture market.
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An increasing number of local companies as new entrants is one of the crucial drivers for the office furniture market growth worldwide. These start-ups or emerging companies are sustained by numerous government schemes such as loans, self-certification, income tax exemption, and others. These companies are also backed by experienced mentors and entrepreneurs for establishing a healthy business. Overall government initiatives for helping the small and emerging businesses to grow and launch several plans are likely to boost the growth of emerging companies by introducing favorable policies. These policies are also expected to create noteworthy opportunities for the global office furniture market. Globally, the demand for creative home office furniture is also anticipated to increase significantly, mainly in Europe and the United States. Hence, rising demand for home office furniture backed with the trend of work from home is expected to create a lucrative opportunity for the office furniture market growth globally. Historically, the demand for modular tables and desktop chairs experienced moderate growth. However, increasing prices for office spaces are forcing enterprises and companies to adopt modular office furniture. Moreover, manufacturers are offering innovative multi-functional office furniture to stay ahead of the intense competition.
Booming IT (Information technology) sector is creating substantial opportunities for the office furniture market globally. Moreover, increased emphasis on work aesthetics has created enormous growth for the market. Key players operating in the office furniture market are focused on designing and manufacturing products with changing preferences of customers. Furthermore, RTA (Ready to Assemble) furniture is also gaining popularity among consumers for better usage and convenience.
Since the last few years, per capita spending on online trading channels has increased significantly. Many local and prominent manufacturers are adopting online retail strategies to decrease the product display cost and increase the overall profit margin. Moreover, the number of online furniture stores has increased considerably. Wayfair and Amazon.com are some of the leading online office furniture retailers. Some companies also offer an exchange offer for upgrading old office furniture. This phenomenon is countering the low replacement rate of the office furniture, thereby, boosting the global market growth to a great extent.
Private Sector Development to Boost Demand for Office Furniture
The private sector is responsible for creating 90% of jobs and 84% of the GDP in developing countries. Thus, the growth of the private sector plays an important role in improving living conditions of the poor and creating enormous employment opportunities. This factor assures sustainable economic development. Keeping this in mind, governments in different countries support the development of the private sectors by encouraging micro, small, and medium sized enterprises (MSME). Apart from the government support, investors of private companies are investing in implementation of new technologies and fresh talents. They are confident and optimistic about their future growth by accommodating the changing market conditions and staying way ahead of their competitors. The growth of MSMEs translates into better infrastructure and employee welfare. As newer private enterprises choose advanced office infrastructures, their exponential growth is highly likely to support the office chair market growth in the future.
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Infrastructural Transformation to Drive Sales of Office Furniture
A massive infrastructural transformation is underway on the backdrop of industrialization and economic development in the emerging market. Offices and industrial buildings are important real estate assets as they provide investors with a broad range of income and growth opportunities. In addition, the growth of the private sector has increased the number of office infrastructure in MSMEs. While emerging markets focus on building new offices, office alteration or renovation is another trending approach taken up by industry professionals in developed and developing markets. Alteration or refurbishment activities require installation of new office furniture. Adoption of internationalization in the office infrastructure has led to the adoption of advanced office furniture that provides comfort as well as modern outlook. Demand as such from the growing office sector is set to drive the adoption of office furniture during the forecast period.
Wide Range of Designs to Broaden Consumer Base
According to the capacity of organizations, workplace needs to differ. To comply with these changing needs, manufacturers have introduced a wide range of office furniture. As there are different divisions, designations, and activities in every organization, appropriate office furniture are chosen. For instance, furniture in the conference room will be distinct from that of a private cabin or a desk. For these distinct working environments, a variety of office furniture such as conference hall furniture, ergonomic furniture, and many more are available. For example, conference chairs are designed with backs slightly forward with the intention to keep employees attentive in meetings and discussion. Whereas, an executive chair will have ample number of cushions and a higher back made of leather or high-priced fabric material. Thus, availability of a variety of chairs that suits different office needs attracts huge consumer base in the office furniture market.
Development of Innovative and Cost-Effective Furniture
Design innovation in the furniture sector has led to the introduction of several innovative products that gained considerable traction from consumers. Owing to the preference for modern infrastructure, consumers seek aesthetic beauty in the product apart from its affordability. To comply with this demand, manufacturers have introduced products with distinct designs. The novelty enables consumers to choose one product over another, helping manufacturers to win over the intense market competition. Currently, quick and easy-to-install, foldable, and multifunctional office furniture are trending in the office furniture market. Considering these consumer preferences, the office furniture segment is led by the development of innovative and affordable furniture.
Lower Import Penetration in the Developed Market to Impede Growth of the Office Furniture Market
As the office furniture industry is known for its fragmented nature, only a handful of global manufacturers remain prominent in the market. As consumers in emerging markets have different profiles than customers in developed markets, import penetrations remain low. Consumers choose domestic manufacturers over international players for their office furniture purchase. Even large office furniture purchases are made by contractors, who themselves develop or co-develop the entire furniture project with the manufacturer. The scenario leads to a substantial advantage to national domestic manufacturers as compared to the global market players, reducing the need for office furniture import. Such scenarios of lower import penetration significantly restrain the global supply chain as well as the growth of the global office furniture market.
High Competition between Prominent Players to Offer Quality Office Furniture
Owing to increasing consumer preference for online shopping, several office furniture companies are selling their products through their own website or through popular retail websites such as eBay, Amazon, and more. In 2018, Amazon’s furniture sales reached ~ US$ 4 billion, representing the popularity of an e-commerce platform for buying furniture. The office furniture market is heavily fragmented and only a handful of top manufactures are considering investing in research and development as the market is near maturity.
Some noteworthy developments in the office furniture market are as follow:
In September 2019, Knoll, Anew, and Mazda collaborated on a full circle project.
In August 2019, Knoll acquired Fully, which is an e-commerce company that offers direct, easy access to high-performance furniture for home offices and small businesses.
In June 2019, Steelcase and Anker joined forces to bring mobile power to the workplace.
In April 2019, Steelcase’s SILQ chair is recognized for innovative product design in top international design competition.
In 2019, Steelcase acquired Orangebox, a UK-based maker of alternative furniture and settings for the changing workplace.
In Oct 2018, Itoki signed basic agreement for business tie-up with Dutch work-style reform consulting firm.
In 2018, Steelcase expanded its relationship with Danish Design Company Bolia.
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In Nov 2018, New Itoki headquarters office acquired WELL certification. This certification preliminary (gold level) demonstrates usefulness and effectiveness of office design, which maintains physical and mental health of employees.
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