China Furniture and Decor Market

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Furniture and Home Decor Market Size - China

In China, the furniture and home decor market is worth $68 billion and is projected to grow to $116 billion by 2022. Key drivers of this market include a high rate of urbanization, improvements in living standards, and growth of the e-commerce segment. According to market research, 53% of consumers in China prefer to buy furniture and home decor online over other channels.

findings

According to this report from Statista, the furniture and home decor market in China is worth $68 billion as of 2018. The market is projected to grow at a rate of 13.9% to reach $116 billion by 2022. Furniture alone accounts for $35 billion of this total market.

Despite extensive searching through industry reports, market research, trusted media sites, and other sources, solid data is not available in the public domain providing a breakdown of this market by online sales vs. brick-and-mortar sales. However, e-commerce is projected to account for 28% of total retail sales in China overall. Moreover, 53% of consumers in China are most likely to purchase furniture and homeware products online over other channels.

Key drivers of growth in this market include the high urbanization rate in the country, which is creating a new group of consumers for brands to target. Another key market driver is the overall improvement in living standards in China, which has led consumers to be more willing to invest in home decoration while giving consumers more purchasing power. E-commerce is another key driver of market growth, as more consumers in the country gain internet access and digital tools make it easier to make purchasing decisions online.

conclusion

The furniture and home decor market in China is worth $68 billion as of 2018, and is projected to grow at a rate of 13.9% CAGR through 2022. While data breaking down retail sales by channel was not available, we do know that e-commerce accounts for 28% of overall retail sales in China.
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Furniture and Home Decor Market Overview - China

China is the largest manufacturer and consumer of furniture and home decor products in the world. Consumers are found mostly in rapidly urbanizing areas where disposable income is increasing. By 2020 furniture and home decor are expected to hold a 3.3% share in the total retail market sales.

The large demand for furniture and home decor products in China arises from three key factors; rapid economic growth, a rapid furniture replacement cycle and an increasing demand for housing. Rapid economic growth has increased prosperity and urbanization increasing disposable income available to spend on furniture and home decor products. A rapid furniture replacement cycle of between 6-8 years and an increasing demand for housing both maintain the demand for furniture and home decor products at high levels. There is evidence to suggest that the increased prosperity of many Chinese nationals leads to a consumption upgrade (consumers are now willing to pay higher prices for better quality furniture and home decor).

Average spend per person

Per capita annual expenditure on furniture in China is expected to reach RMB 1,568 in 2018. Due to a rapid refurbishment cycle which sees households replacing their furniture on a 6-8 year cycle the furniture replacement market is considered to be worth up to RMB 63 billion based upon an average expenditure of RMB 1,000 per household.

The increased per capita expenditure on furniture and home decor products is partly due to the increase in disposable income of many Chinese nationals. China's per capita disposable income increased from RMB 11760 in 2006 to RMB 33616 in 2016. At the same time the proportion of furniture consumption in the total retail sales also increased from 0.21% in 2006 to 0.84% in 2016.

Demographics/customer type

On the Chinese mainland, furniture and home decor consumers can be divided in to 3 groups; avid consumers, branded good consumers and average-wage earning consumers. Avid consumers are an extremely wealthy market who favor expensive, western style, Chinese style or avant-garde style furniture. Branded good consumers are at the forefront of trends in lifestyle concepts, they like furniture to reflect their tastes and styles. Average-wage earning consumers represent the majority of consumers with price and value for money dominating purchasing decisions.

Key players in the market

Domestic brands are well-supported in China with eight of the top 10 furniture brands in 2016 being local ones. There are a number of key players within the Chinese furniture market, home furniture and homeware retailers contributed 76.4% of spending on furniture and floor coverings in 2015.

QuanU Furniture was founded in 1986 and is one of the most famous brands in China alongside QM Furniture and M&Z Furniture. Royal Furniture is a Hong Kong listed company which sells products to more than 20 countries and areas. Red Apple Furniture was founded in 1981 and also has headquarters in Hong Kong. Within the home decor market the biggest domestic brands are Nabel ceramic tile, Power Dekor floor and Oppein cupboard, these offer brands such as Macalline, Easyhome, B&Q and Ikea. Production volume of furniture in China has been relatively stable at 77 million units annually between 2010 and 2018.

Current and future trends

In 2016, the total sales of furniture manufacturing enterprises grew 8.6% year-on-year to RMB 855.95 billion, while total profits grew 7.9% year-on-year to RMB 53.75 billion. The retail market of furniture and floor coverings is expected to experience annual growth of 13.09% over the forecast period of 2016-2020. By 2020, the furniture market is expected to have a share of 3.3% in total retail sales by 2020.

The national urbanization rate was at 57% in 2016 and is predicted to continue to increase in coming years. The growth of prosperity among many urbanized Chinese nationals has led to the increase in demand for high quality and personalized furniture. However, there has also been growth in the low cost furniture market as rural-urban migration brings a large low yield population in to many urban areas in China. Furthermore, it is estimated that by 2020, 37.6 million houses will have been renovated under the country's shanty town reconstruction project which will generate an increased demand for furniture.

With the number of children below the age of 15 in China increasing to 230 million in 2016, the children's furniture market is growing rapidly, with beds, desks and chairs making up the biggest share.

Online spending on overall furniture and floor coverings is forecast to reach 11.9% by 2020. The online furniture market is fragmented but highly competitive. Of a survey which polled more than 1000 consumers across China, more than 60% said that they are willing to use internet based platforms to purchase furniture and home decor products. However, the online reputation of a brand is by far the most important decision-making factor for Chinese customers.

According to a survey by HKTDC, over 90% of respondents are interested in green and eco-friendly furniture and home decor and are willing to pay a premium of 14% extra for such items. Due to the increasing presence of young couples in smaller properties there is a growing demand for multi-function furniture. Sofa bed sales amounted to 32% of total seating furniture sales in 2016, around RMB 19 billion. Custom made furniture is expected to increase at an annual rate of 18% and be valued at 160.6 billion by 2020.

Conclusion

The demand for furniture and home decor products in China is vast and can be expected to continue to grow due to the large emerging middle class in this country. While domestic retailers such as QuanU Furniture and Red Apple Furniture currently dominate the market, there is expected to be increases in both the online furniture and home decor markets as well as the demand for green and eco-friendly products.

Sources
Sources