Furniture industry struggling to compete in shrinking market
Sato is the last surviving large Greek company that produces and sells home furniture and rivals the big multinational chains that are active in the local market, making Sato and its counterpart in office furniture, Dromeas, the “last of the mohicans” in the Greek furniture industry.
Back in 2007, when the Greek economic bubble was at its peak, the furniture sector conducted sales of more than 1 billion euros. Largely funded by credit, some 50 percent of that has now turned into bad loans, according to bank sources. It is now estimated that the market barely reaches 500 million euros per annum.
The broader market of furniture for home and professional use includes a considerable number of enterprises that vary in size and organization, as well as range of products.
Competition has always been very intense due to the great number of companies and sales points. In the last few years, though, it has become even more acute due to reduced demand (as disposable incomes fell, taxes rose etc).
The main features of the last few years have been the shutdown of manufacturers (led by Neoset), the reduction in the activities of some enterprises, and numerous closures in small local furniture retailers.
The contraction in furniture sales over time, as reflected in the Hellenic Statistical Authority’s industrial output index for furniture, is quite impressive: From a reading of 173.12 points in 2007, the index crumbled to 50.91 in 2016, or a drop of 70 percent.
Several firms in the sector active in manufacturing – and in some cases importing of other types of furniture – have opened their own outlets due to the considerable decline in the number of clients (i.e. furniture retailers which have shut down).
Demand for furniture is directly and indirectly affected by construction activity and the number of new homes. The shift in the last decade is telling: From 57,001 private construction permits in Greece in 2009, the figure fell to 10,106 last year, according to the statistical authority.
The turnover of the furnitureelectricals-homeware sector has continued to shrink this year. In the first quarter it fell 7.9 percent and in the second 7.4 percent annually, data from the Foundation for Economic and Industrial Research (IOBE) indicate.