Rising competition from household manufacturers in low-cost countries has caused revenue to decline
New York, NY (PRWEB) May 15, 2014
Revenue for the Household Furniture Manufacturing industry is expected to plummet over the five years to 2014. A number of factors are expected to weigh on the industry including an appreciation of the Canadian dollar and weak demand from downstream markets, such as furniture stores. Although these factors have inhibited growth, rising external competition from household manufacturers in low-cost countries is anticipated to be the primary force behind the industry's decline. Industry operators in emerging markets, such as China, benefit from lower wage costs in addition to looser regulatory standards. Consequently, they have the ability to pass along these savings in the form of lower prices, stimulating demand from downstream markets. As a result of these trends, revenue for the Household Furniture Manufacturing industry is expected to fall at an annualized rate of 4.8% to $3.0 billion, dragged down by an estimated 3.6% in 2014.
According to IBISWorld Industry Analyst Brandon Ruiz, “International trade, particularly exports, is an integral component of the industry and is expected to remain so in the five years to 2014.” Industry operators are heavily reliant on US downstream markets, such as furniture store retailers and wholesalers. Due to the industry's reliance on trade, fluctuations in the value of the Canadian dollar impact industry demand. For example, as the Canadian dollar appreciates relative to the US dollar, household furniture manufactured domestically becomes more expensive, and thus, less desirable. Moreover, an appreciation of the Canadian dollar increases domestic purchasing power, stimulating demand for low-cost imports.
“Despite these challenges, there are bright spots that will likely support industry revenue from falling further over the five years to 2019,” says Ruiz. Improvements in the housing market are anticipated to bolster furniture sales. Housing starts are expected to rise, which will cause many consumers to purchase new furniture to fill out their new homes. Moreover, disposable income levels are expected to trend higher, which will likely lift premium furniture sales. To combat rising price-based competition, industry operators are expected to focus on high-quality products that sell at premium prices to compensate for their lack of price flexibility. Although positive industry trends exist, demand for low-cost imports is expected to remain strong.
For more information, visit IBISWorld’s Household Furniture Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
The Household Furniture Manufacturing industry manufactures a range of furniture for personal, household and public use. Public furniture is used for hospitals, theatres, cafeterias, schools and other facilities. Furniture may be made on a stock or custom basis and may be sold assembled or unassembled.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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