FLANDERS INVESTMENT & TRADE MARKET SURVEY

FURNITURE MARKET

IN RUSSIA

Paper

www.flandersinvestmentandtrade.com

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FURNITURE MARKET IN RUSSIA

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pagina 2 van 16 Furniture market in Russia

TABLE OF CONTENT

1. General overview of the Russian furniture market ............................................................................................ 3

2. The dynamics of furniture retail sales for the period 2010-2017 yy.. ....................................................... 4

3. Market trends-2018 .................................................................................................................................................................. 5

4. Profile of Moscow leading furniture retailers ........................................................................................................ 7

5. Furniture Import volume into the Russian territory in 2014-2018yy ........................................................ 8

6. Furniture export volume from Russia in 2013-2017 yy and 3Q2018 ....................................................... 10

7. Furniture import volume from Belgium in 2013-2017 and 3Q2018 ......................................................... 12

8. Key Russian manufacturers ............................................................................................................................................. 14

9. Market opportunities ........................................................................................................................................................... 15

10. Sources ......................................................................................................................................................................................... 16

January 2019

Economic Representation of Flanders c/o Embassy of Belgium

Mytnaya st. 1, bld.1, entrance 2 119049 Moscow | Russia

E: moscow@fitagency.com | T: +7 499 238 60 85

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Furniture market in Russia pagina 3 van 16

1. GENERAL OVERVIEW OF THE RUSSIAN FURNITURE MARKET

In the period end of 2014-beginning of 2015, some Russian markets (including the furniture market) fixed a

record level of sales volume as customers were afraid of devaluation and bought durable goods (furniture,

household appliances, electronics, etc.). Since that moment, the consumer demand has been significantly

dropped:

- In 2015, in Russia the furniture sales turnover decreased by 9.9% compared with 2014 and amounted

to 419.8 billion rubles.

- In 2016, the volume of retail sales slowed down the declining and dropped by 0.6% (to 417.5 billion

rubles).

- In 2017, there was fixed insignificant growth of 0,6%, the retail sales totaled 418 bln. RUB.

MARKET FEATURES Highly Competitive market

DOMESTIC MANUFACTURERS AMOUNT

5 000 Enterprises (500 of them are considered as large ones)

MARKET VOLUME 418 bln.RUB

MARKET CAPACITY 600 bln.RUB

EXPORT &IMPORT The import volume into Russia of the furniture products exceeds the export from Russia by 5 times.

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2. THE DYNAMICS OF FURNITURE RETAIL SALES FOR THE PERIOD 2010-2017 YY

(in comparable prices (in bln.RUB).

Source: Rosstat, RBK Market analytics

In comparable prices, the sales volume has demonstrated although minimal, but positive dynamics through

the significant growth of furniture retail prices on the Russian market. But taking into consideration the

market volume in terms of manufacturers prices as well as import volume, the situation is not so optimistic

as till 2014 the dynamics remained positive. However in 2015, the market in this terms demonstrated a

serious drop by 7,3%. The main reason of this drop is a sharp import decrease and decline in domestic

production volume.

The trade margin of furniture retailers has steadily risen from 2012, and in 2015, its figure has reached

considerably more greater mark or 85,2%. Thus, it means that some of retailers continue shifting part of

their expenses on the customers.

349.4372

410.8436

466

419.8 417.5 418

2%6.5%

10.4%6% 6.9%

-9.9%-0.6% 0.12%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

150

200

250

300

350

400

450

2010 2011 2012 2013 2014 2015 2016 2017

Market volume Real growth rates

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Furniture market in Russia pagina 5 van 16

3. MARKET TRENDS-2018

- Growing role of E-commerce in furniture retail

Russian customers prefer to buy home and office furniture online because in online stores it’s rather

convenient to check and compare products that help to save time and as well as furniture which is

offered at a lower price.

- Import substitution policy

Market analytics have stressed that the procurement volume of the imported office furniture has

steadily decreased, but at the same time, the Russian manufacturers, on the contrary, are expanding

their production facilities for this category of furniture especially that one of premium class intended

for Top-management. The matter is that there is a Government Resolution N1072 prohibiting the

purchase of imported furniture for state institutions for two years, as of December 01, 2017 till

December 01, 2019. This Resolution was signed by Russian Prime Minister Dmitry Medvedev. ‘The

decisions were made in order to utilize the production capacity of domestic furniture and woodwork

industry enterprises, in order to improve the competitiveness of Russian production’, the document

states. The ban includes all kinds of furniture, including furniture for schools, kindergartens, clinics

and hospitals.

- Development of the domestic production

According to expert estimation the growth rate of domestic furniture amounts to 2-3% in terms of

volume and 8-10% per year in terms of value.

- Launch of localization process for furniture components in Russia

This is actual particularly for those ones that have a high share in the trade margin caused by

transport expenses. The matter is that the furniture market in Russia is very dependent on the

currency exchange rates: most components have to be purchased abroad.

- New co-operation forms

The furniture manufacturers or companies are co-operating with real estate developers to offer turn-

key solutions for apartments in new constructed buildings.

- The increasing share of retail sales in the total sales structure (please, see the diagram below ‘where

Russian customers prefer to buy furniture’)

- New channels for sales and promotion.

Furniture promotion in social networks, the Russian manufacturers are using VK, Facebook and

Instragram as well as co-operating with lifestyle bloggers in more active way to promote their

products.

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pagina 6 van 16 Furniture market in Russia

- Creating of daughter companies. For example, the companies that are working in luxe or premium

segments, establish daughter company to develop their portfolio and support their expensive brand.

The profile of this new founded company is more budget furniture and projects for serial

manufacturing.

- The main furniture shopping format in Moscow and Moscow region is shopping centers, the matter

is that almost one third of all sales on the Russian furniture market is concentrated in Moscow or

Moscow region.

Where Russian customers prefer to buy Furniture, in % of volume purchase

Source: https://www.promebel.com

Furniture multibrand centers or shopping

centers with furniture retail

space70

Furniture Hypermarkets: IKEA,

Hoff, Leroy Merlin12

Furniture Internet stores

7

Street-retail and monobrand shops

5

Construction market 3

Other2

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Furniture market in Russia pagina 7 van 16

4. PROFILE OF MOSCOW LEADING FURNITURE RETAILERS

The biggest Furnitures centers

Premium brands

Price segment: Premium and upper premium

“Tri Kita”, http://www.3kita.ru/

Premium brands Grand, http://www.grandfs.ru/

Furniture spaces in big shopping and entertainment centers

Price segment: Upper medium and premium

Tvoy dom, https://tvoydom.ru/

Price segment: Medium RIO

Concept Furniture centers

Price segment:

Upper medium and premium

Twinstore, https://twinstore.ru/

FOCUS on architects and designers

Price segment: Medium ROOMER , http://roomer.ru/

General trends in Russia (by Furniture category):

Children’s Furniture: FOCUS on new construction solutions for baby and children’s furniture and accessories

Design Furniture FOCUS on Neo-Art-Deco and furniture of old-fashioned 60-70’s style

Kitchens FOCUS on bright colors solutions

Cushioned Furniture

FOCUS on the more affordable price segments with ‘democratic’ prices. The most popular divans are three-seater ones with corner modification (around 20-30% of the total sales in this category)

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pagina 8 van 16 Furniture market in Russia

5. FURNITURE IMPORT VOLUME INTO THE RUSSIAN TERRITORY IN 2014-2018YY

Furniture Import Dynamics into the Russian territory in 2014-2017yy and 3Q2018 (in bln.US doll).

Source: http://ru-stat.com

In 2017, the import volume into the Russian territory increased by 36% and amounted to 2,66 bln.USD

compared with 1,95 bln.USD in 2016. However, if we compare the import level of 2013 which totaled 4,67 bln.

USD., the dropping gap is still significant, despite of the growth rate of 36% that took place for the first

time since 2014.

4.674.28

2.37

1.95

2.66

2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Import volume

2013 2014 2015 2016 2017 3Q2018

+36%-37%

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Furniture market in Russia pagina 9 van 16

The import structure by countries in 2017 in terms of volume in %

Source: http://ru-stat.com

In the structure of imports by country, on the TOP-10 the first place is occupied by China (38% or 1bln.USD),

in the second place Belarus (9% or 242 mln.USD) followed by Italy with a share of 8.4% or 224mln. USD.

Belgium for Russia is a partner number 37th with a share 0.1%.

China38

Belarus9.0Italy

8.4Germany

5.5

South Korea5.5

Poland 5.2

USA2.4

Slovakia2.1

Czech1.9

Nederlands1.8

Other20.2

China Belarus Italy Germany South Korea Poland

USA Slovakia Czech Nederlands Other

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pagina 10 van 16 Furniture market in Russia

The import structure by category in 3Q2018. Import structure by category in terms of volume in %

Source: http://ru-stat.com

In 9M2018 on the Russian furniture market, the highest share of imports is concentrated in the segment of

wood furniture for living rooms, dining rooms, bathrooms and halls. The highest level of competition

among Russian manufacturers is concentrated in mattresses and mattress supports, in this sector the share

of imports is insignificant.

6. FURNITURE EXPORT VOLUME FROM RUSSIA IN 2013-2017 YY AND 3Q2018

In 2017, the export volume of furniture goods from Russia amounted to 480 mln USD in terms of value with

a significant increase of 25% compared with 2016 when the export volume amounted to 383 mln. USD.

In the export structure for the period 2013-2017, there were mainly exports of the products from the

category “Other furniture and parts for it” (48%), followed by “Prefabricated facilities” and “lamps” (18% and

17% accordingly). The share of sitting furniture totaled 12% in terms of value.

Sitting furniture35%

Medical Furniture2%

Other furniture29%Mattress supports

2%

Lamps, lighting equipment

25%

Pre-fabricated facilities

7%

Sitting furniture Medical Furniture Other furniture

Mattress supports Lamps, lighting equipment Pre-fabricated facilities

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Furniture market in Russia pagina 11 van 16

Furniture export dynamics from Russia in 2013-2017yy and 3Q2018 (in mln. US.doll)

Source: http://ru-stat.com

Russia’s main export partners on the Furniture market in 2013-2017 yy. in terms of value in %.

Source: http://ru-stat.com

473 468

393 383

480

376

0

100

200

300

400

500

600

2013 2014 2015 2016 2017 3Q2018

- 16%

+25%

Kazakhstan36.4

Belarus15.0

Germany9.7

Ukraine4.0

United States3.0

Norway2.6

Poland2.0

Hungary1.6

Italy…

Other24.0

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In the period 2013-2017, in the structure of exports by countries for furniture goods, there were two key

export partners of Russia, it is Kazakhstan (36% or 800 mln. US doll.) and Belarus (15% or 330 mln. US doll).

Germany is on 3rd place with a share of 9,7% or 213 mln. US doll.

7. FURNITURE IMPORT VOLUME FROM BELGIUM IN 2013-2017 AND 3Q2018

Furniture import dynamics from Belgium in 2013-2017 yy. and 3QM2018 in bln. US doll.

Source: http://ru-stat.com

In 2017, the Import volume of goods from the product group ‘Furniture; bedding, mattresses; lamps’ from

Belgium into Russian Federation amounted to 3.6 mln USD in terms of value with a drop of 16,3% compare

with 2016 when the import volume amounted to 4,3 mln. USD. This is almost three times less, while in 2013

the import volume achieved the mark 9,2 mln.US doll.

In the import structure of goods, the highest level of sales was fixed in terms of value of category ‘Lamps

and lighting fittings’ followed by category ‘Furniture for sitting, including convertible one into beds and

their parts’ with 42% and 29% accordingly.

Furniture Import from Belgium to Russia in 2017. Total sales by month in terms of value (in thousand USD).

TOTAL: 3,6 mln. USD.

9.2

6.8

5.14.3

3.6

2 1.8

0

1

2

3

4

5

6

7

8

9

10

Import volume 2013 2014 2015 2016 2017 3Q2017 3Q2018

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Furniture market in Russia pagina 13 van 16

Source: http://ru-stat.com

Furniture Import from Belgium to Russia in 1H2018. Total sales by month in terms of value (in thousand

USD).

TOTAL: 2 mln. USD (+25% compared to 1H2017, when the Import volume totaled 1,6 mln.USD).

http://ru-stat.com

125

274

353

370

156

289

805

275

134

340

329

168

0 100 200 300 400 500 600 700 800 900

Jan

Feb

Mar

Apr

May

June

July

August

Sep

Oct

Nov

Dec

95.6

195

728

309

401

281

0 100 200 300 400 500 600 700 800

Jan

Feb

Mar

Apr

May

June

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The Import Structure from Belgian to Russia by product category in 3Q2018.in %

8. KEY RUSSIAN MANUFACTURERS

SHATURA (600 points of sales), https://www.shatura.com/

LAZURIT (500 points of sales), https://lazurit.com/

ANGSTREM , (points of sales in 120 Russian cities), https://www.angstrem-mebel.ru/

STOLPLIT, https://www.stolplit.ru/

TRIYA, https://www.triya.ru/

MIASS MEBEL, http://www.miassmebel.ru/

MEBEL CHERNOZEMIA, http://mche.ru/

8 MARTA, https://www.8marta.ru/

Sitting furniture20% Medical Furniture

2%

Other furniture12%

Mattress supports11%

Lamps, lighting equipment

32%

Pre-fabricated facilities

23%

Sitting furniture Medical Furniture Other furniture

Mattress supports Lamps, lighting equipment Pre-fabricated facilities

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Furniture market in Russia pagina 15 van 16

9. MARKET OPPORTUNITIES

- There is still a niche for the European manufacturers of the furniture and accessories in the premium

segment as the furniture and interior solutions of such manufacturers are more relevant when

implementing the projects in the new-constructed buildings of business and premium segment.

However, in the medium and especially upper-medium segment the opportunities are rather narrow

as it’s a sector of very high competition. The crisis situation of the last years has motivated players

to optimize the manufacturing and apply the better practices of European and US markets as

manufacturing process optimization, loyalty programs and branding improvement, all these

measures lead to the positive effect on the domestic furniture market. The domestic manufacturers

are confirming that the highest growth potential for them is centered in these 2 segments.

- Opportunities in children furniture sectors. Lack of interesting solutions, for example baby beds for

prolonged period from 3 till 16 years with interesting construction elements as well as additional

accessories for children´s room.

- Complex furnishing of public spaces or working directly with designers in frames of the concrete

design project manufacturing unique furniture. There are perspectives for foreign manufacturers in

co-operation development with architect and interior design studios.

Promotion opportunities:

- Taking part in Art-Bazars or Master klass. The big show rooms or special furniture trade center (as

Twinstore) are arranging this kind of events to promote their current or potential clients, new

interesting projects or young designers.

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pagina 16 van 16 Furniture market in Russia

10. SOURCES

Statistics

http://ru-stat.com

https://fedstat.ru/

http://www.gks.ru/

Articles:

http://amedoro.com/ru/

https://rb.ru/analytics/rbc-furniture/

https://mebel-news.pro/

http://www.diy.ru/post/9388/

https://www.promebel.com

https://www.kommersant.ru/doc/3466126

https://www.meb-expo.ru

https://thekomod.ru

Disclaimer

The information in this publication is provided for background information that should enable you to get a picture of the subject treated in this

document. It is collected with the greatest care based on all data and documentation available at the moment of publication. Thus this publication

was never intended to be the perfect and correct answer to your specific situation. Consequently it can never be considered a legal, financial or

other specialized advice. Flanders Investment & Trade (FIT) accepts no liability for any errors, omissions or incompleteness, and no warranty is given

or responsibility accepted as to the standing of any individual, firm, company or other organization mentioned.

Date of publication: January 2019