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Austin, TX (ZPRYME NEWS) – 07/08/08 – The furniture retail market in the United States reached its peak at $13.3 billion in 2000, including major leaders driving the growth, Ashley, Lane, Haverty and global leader, Ikea.   Ever since then, it has shown signs of a maturing and declining market where only the top tier furniture manufacturers have maintained profitability in recent months. In 2007, estimates of market size in dollar value ranged between $11 and $13 billion.

Thirty-two percent of US office retail sales come from California, Texas, New York, and Florida in 2005 and 2007.   In 2007, California occupied the top spot for the largest market in the US which accounted for $1.4 million, followed by Texas, New York, and Florida.  These states accounted for $3.6 million, which is almost one-third of the US market. In 2007, office furniture purchases advanced by 5.5%, and sales are expected to accelerate to 6.8% in 2008.  Such a high growth rate is surprising given the slowing US economy, but can be explained by pre-committed orders to fill newly constructed office space that will reach completion this year. More conservatively, another research study expects the compound annual growth rate (CAGR) for the furniture industry to be close to 4% between 2004 and 2006 versus the CAGR of 2.6% for GDP durable goods in the same time period.

But growth for office furniture shipments for 2009 and 2010 is expected to grow only between 2.2% and 2.7%.  This strongly implies more fierce competition, more re-organizations, more layoff announcements, and more bankruptcy filings, as industry experts have reported in recent months.  Chomcraft Furniture, for instance, announced in April of this year that it will be laying off 150 workers and closing its manufacturing facilities in Delphi, Indiana.   Vaughan Furniture announced that it will be closing its plant in Galax, Virginia, and 275 workers will lose their jobs.

Despite these dire market conditions, market opportunities exist for customer-focused companies, exports, and ergonomic furniture. First, the top four furniture retailers reported record sales for 2007 even with the US economy’s state of stagnation with high inflation and a deceleration of economic activity. Office furniture producers, such as Versa Tables who manufacture high quality furniture products and provide excellent customer service, continue to thrive. Secondly, consumers and businesses alike with tight budgets have refrained from purchasing furniture imports, especially from Europe with the strong Euro. Consequently, the malaise of the US economy has been reducing furniture imports in the last two years, but market opportunities exist in exportation of US manufactured furniture which has been increasing at about 3% according to The PIERS group.   These export opportunities exist especially in Japan, Great Britain, and China. Thirdly, with federal regulations, such as those from the Occupational Safety and Health Administration (OSHA), market opportunities might exist for ergonomic furniture to comply with worker safety and productivity.  The regulatory driver stems from concerns about musculoskeletal disorders and Carpal Tunnel Syndrome which is a condition in which the median nerve in the wrist becomes pinched causing pain and loss of feeling.  In April 2002, Secretary of Labor Elaine Chao introduced a comprehensive approach to ergonomics designed to effectively address musculoskeletal disorders in the workplace.  As a result, OSHA developed a four-pronged ergonomics strategy to obtain this goal through a combination of industry-specific and task-specific guidelines, outreach, enforcement, and research. Since 2002, many milestones have been accomplished, such as when OSHA released its first ergonomic guidelines on March 13, 2003 that covered the nursing home industry.  As for enforcement, between January 1, 2002 and December 31, 2007, OSHA conducted 4,138 ergonomics inspections encompassing a variety of industries.  Of these, 1,225 inspections were conducted in nursing and personal care facilities.

According to XTENSION Intelligent Furniture, the total market size of the retail furniture market was $13.5 billion in 2006 which includes $1 billion in ergonomics add-on and $500 million for adjustable height desking.   Given the increasing regulatory and compliance of worker safety, ergonomic furniture will likely be a high growth market segment area within the larger, mature office furniture market.

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Zpryme: Emerging Markets Group

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