Factors continuing to growth
The major factors contributing to the sustained growth of the furniture industry is listed below:
Growing Domestic Demand: According to the latest BCG report of growth consumer class, Middle and Affluent Class (MAC) population currently stands at 11.7M and, is expected to triple within 2015. These emerging classes have growing disposable income which is spent on consumer durables, including furniture. Access to Credit: 60 and more banks of Bangladesh are competing to capture the retail banking segment. Many of these banks offer credit cards and consumer loans which are easily accessible to MAC segment. Preferential credit card terms make purchase decisions simpler users planning to buy furniture.
Improving Supply-side Capabilities: Bangladeshi consumers are becoming keen on adopting new trends in interior designing. To meet demands, Bangladeshi carpenters have recently begun incorporating styles from foreign counterparts, increasing the range of options available for consumers. The stylistic shift in the furniture design contributes much to this growth.
Inexpensive Labour: The shift can also be attributed to the presence of inexpensive labor in the industry, an industry which is labor intensive. Laborers in most countries where furniture is produced are paid more than $120 a month, while Bangladeshi laborers are paid between $37-120 a month (EU Technical Report). Backward Linkage: According to the EU study, 40per cent of the raw materials used by the industry come from domestic sources. Forests in Chittagong Hills and the Sundarbans are the largest provider of quality timber in the country, with forests covering areas over 10,600 Sq Km.
36 cities already have more than 100,000 in the Middle and Affluent Consumer (MAC) class, with the number of cities expected to rise to 63 in the next 10 years. As income level rise people substitute their durables with ones that are more convenient and provide greater comfort. Bangladesh is expected to capture 2% of the ship building market within the next 4 years.
The industry is very competitive. Due to the sheer number of SMEs, price of furniture is highly competitive at the middle and lower segments of the market. The larger firms have captured a small segment mostly catering to MAC consumers who dont mind paying a premium for quality and brand. The industry is very competitive. Due to the sheer number of SMEs, price of furniture is highly competitive at the middle and lower segments of the market.
The larger firms have captured a small segment mostly catering to MAC consumers who dont mind paying a premium for quality and brand.
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