Opinion: The impact of COVID-19 pandemic on furniture industry

Author: Ashish Aggarwal, CEO of Indo Innovation

The corona virus pandemic has
affected just about every area of our lives. Prior to the announcement of the
pandemic, the furniture industry’s growth had traditionally been thought of as
unstoppable, as sales could come from a variety of sectors, namely – from
traditional channels or through the private & public sector, and commercial
office spaces among others. The logic behind this assumption is that rising
expenditures on listed sectors expands the revenue of the furniture industry as
almost no brand across industries goes without the basic need for furniture. In
this way, the furniture industry is one of a kind that supports the other
sectors of the society.

In the last couple of weeks,
the internal audit teams of many Indian brands noticed a gradual decline in
revenue as sales have been low. Further, across the industry, the deals that
had to be finalised in the upcoming months has been more or less cancelled due
to financial reasons. Essentially, the industry is facing its worst nightmare
with no guaranteed stability. The continued decline in sales due to the
pandemic will make it difficult for brands/sectors to have an upper hand
anytime soon in sales.

In fact, the office furniture
business – a marketplace that has always been on an upswing for brands like
ours – requires a strategic algorithm of ethics, craftsmanship, dedication,
patience and discipline. And since the lockdown business has been dipping
gradually.

Having said this, even during
the present crisis, many brands and thought leaders in the industry are looking
to innovate with what they believe will be the key driving force in the months
to come: eco-friendly furniture. According to many studies, 46% of the growth
in this market will be seen in the APAC (Asia-Pacific) region with market
growth accelerating at a CAGR of almost 6%. In fact, the studies also show that
the incremental growth of the industry in USD, between the years 2018-2023, was
found to be 22.32 billion.

In this matter, Ashish
Aggarwal CEO of Indo Innovations said, “The COVID-19 crisis will have a
substantial impact on the global economy. Businesses all over the world will
have to evolve to accommodate this fluid situation. Your website will become
your business card, your store, and your showroom. Prioritizing digital
merchandising and online presence can help you navigate through this difficult
time. The digital activities will include a series of podcasts or webinars,
virtual product tours, 360-view showroom presentations, and more. Other major
impact of Covid-19 on furniture industry will be on supply chains. Furniture
brands need to develop an effective supply chain response plan to mitigate risk
and prepare for any interruptions that the coronavirus outbreak can cause. This
can involve, among other things, aspects like supplier engagement response with
cross-tier risk transparency, inventory critical part identification,
production-capacity optimization, demand management, logistics-capacity pre-booking,
and route optimization.”

Although the market is
fragmented between major and minor suppliers of office furniture, the trending
demand for eco-friendly furniture will offer immense growth opportunities in
the coming months. Further, to make the most of this trend, market vendors will
focus on the growth prospects in the fast growing segments, while maintaining
their positions in the slow-growing segments.

Additionally, brands have
also started identifying an increasing consumer preference for multifunctional
and customised furniture as one of the prime reasons driving the office
furniture market growth during the next few years. The identification of these
trends was done after careful study of the market size, trends and industry
analysis. Some of these trends include:

·
Increasingly technological offices

·
Flexible and multifunctional spaces

·
Dark coloured office furniture items

·
Vertical gardens, plants and green cover

·
Leisure and relaxing spaces with sleep pods

Finally, however, experts saw an industry wide decline
in output by 10% decline in the first three months of this fiscal. But the
manufacturing of MDF board, which is also used in packing and construction, saw
an 18% jump. It could also have been helped by an 8% rise in exports in that
period. This means that government intervention may help in creating an upswing
in sales for brands such as ours. By encouraging exports of modular furniture,
the government will not only allow the industry to grow during a slump, but it
will also pave the way for future deals that can be made with foreign brands.
Therefore, allowing the opening of a bilateral channel of communication and
opportunities of collaboration between the Indian and the global brands. This,
we believe, could provide the right stimulus that our industry has been waiting
for these past couple of weeks.