Furniture manufacturers have been shown a path

Majority of largest soft furniture manufacturing companies have raised their prices by 30% this year, which resulted in decrease of their sales in the capital. However the overall sales amounts have increased due to small businesses and importers. Experts say, that in order to stay in business, companies will need to work with regions more effectively.

Price increase have broken the records of past years. As МЕВ's (Boyarka) sales manager Alexander Semko said, his company's products have grown in price by 20% since the beginning of the year. In March, a leather set from this firm cost around $3000, and now - $3500. «Average rent price on commercial premises on outskirts of the city is around $100 per sq. meter, which is about 30-40% of the product price. Because appetites of owners of commercial real estate are increasing, we are forced to compensate out losses», - he says.

According to the founder of «Ekmi-furniture» Dmitriy Dyachuk, their products have increased in price by 12-25%. «We were forced to take this step because of the increase in prices on parts from EU countries», - he explained. Alexander Belyaev, the President of Association of furniture manufacturers says that most companies have increased their prices at least by 30%. This has happened suddenly, whereas price changes of retailers and manufacturers have always occurred in several stages, at which prices were changed by 5-10%. «Parts have increased in prices very much this year, for example a spring costs 80% more now», - Mr. Belyaev says.

Largest manufacturers admit that price jump has led to substantial fall of their sales. For example, Dmitriy Dyachuk says that in past two month sales of «Ekmi-furniture» products have decreased by 10-15%. Yuri Shapovalov, the director of salon «Home walls», which is specialized on sales of «Amati» factory's products, also confirms that their sales amounts have decreased, however he thinks that this has happened due to season fall of customer activity.

Officials in Association of furniture manufacturers say that even though a seasonality is present in this type of business, overall sales of soft furniture in the capital have increased and now exceed last year's rates. «Inflationary expectations have come true: on the background of sudden increase in price of  food supplies and nonfood products, most people don't want to postpone furniture purchase», - they say.

Experts say that a reason for such different evaluations  of market condition is toughening of competition among large manufacturers and small firms, which are now taking over a large part of the market. «I know cases of opening businesses in garages by experienced members of our staff. Simplest sofas can be manufactured after investing just $10000 in equipment», - Alexander Semko says.

Alexander Belyaev agrees with him, saying that soft furniture is very easy to produce and high skill is not needed. He also says that competition with importers, who increased the amounts of export to our country by 20% in the past four month, have strengthened  . «Manufacturers form China, Italy, Germany and Finland have become more active», - Yuri Shapovalov says, adding that furniture from China is 1,5 times cheaper than Ukrainian, which makes it more popular.

As experts predict, after Ukraine joined the WTO last week, cheap import flow may increase by several times, which will toughen the competition even more, giving hard time to large furniture manufacturing businesses. In order to keep their amounts of production, manufacturers will need to redirect their sales to less sated regional markets, including Kiev oblast. For example, Alexander Semko announced about the intention of his company to open their own store on the factory premises in Boyarka with total area of about 200 sq. meters. «It will be opened this year», - officials in МЕВ say.

In one of the firms at «DC» possibility of refusal to work with dealers in Kiev with expansion of sales amounts in other regions of the country is also considered.

Source: meblevyk.info