Polish furniture industry seems to be untroubled by the economic slowdown caused by COVID-19. This year's production may come close to a record PLN 52 bn (EUR 11.62 bn).
The Polish furniture industry is experiencing an unexpected boom. The industry, which until spring seemed to be one of the most affected by the coronavirus pandemic, is now improving. According to the latest forecast of the industry analytic company R&D Studio, in 2020 the value of sold production in this sector is to increase by as much as 2.5 percent compared to last year, that is PLN 1.3 bn (EUR 291 mln) more than last year's PLN 50.5 bn (EUR 11.29 bn).
Since June, furniture manufacturers have recorded a high level of orders. Of those surveyed 91 percent of companies work with more than 60 percent of their capacity, and as much as 82 percent of them declare that they use 80 percent of their production capacity.
Although employment in the industry in the period between February and July fell by 7,000, it has begun to rise again. Furthermore, 17% of the surveyed companies declared an increase in employment in September, compared to the same period last year, as stated by R&D Studio in the report.
Paradoxically, the pandemic has been helping the furniture industry from a certain stage. One of the key benefits turned out to be the decrease European’s taking holidays. Some have instead decided to increase spending on furnishing their homes. This trend is bolstered by the growing number of people working remotely. Polish manufacturers (furniture is one of the largest sectors in the Polish economy, with exports reaching a record EUR 11.2 bn in 2019) are also helped by the weakening zloty against the euro.
As a result, the dramatic forecasts from the first half of 2020 did not materialise. There had been understandable initial fear, given the closure of stores in Poland in March and recommendations to stay at home, most furniture companies started to report a very drastic drop in orders, ranging from 70 to 90 per cent. Payment bottlenecks grew rapidly as many recipients stopped paying for already completed orders overnight. The situation got even worse when retail chains all over Europe, the main recipients of production from Poland, suspended their operations.
However, since the resumption of operations of stores and retail chains, the situation has started to improve. In June, the value of furniture produced exceeded PLN 4 bn (EUR 895 mln), which meant an increase by one third compared to May 2020. According to DNB Bank Polska, some companies made efforts to adapt to the changing expectations of the market in terms of assortment and ways of doing business. For example, a certain group of companies manufacturing upholstered furniture switched production to sewing masks or protective suits. Some companies also decided to strengthen their online sales. It is estimated that this is an increasingly prospective direction for the furniture industry.
Despite demand for residential furniture increasing, orders from contract customers, especially from the hotel industry remain low. Dramatic falls in hostel custom caused by the pandemic forced hoteliers to make radical cuts in expenses by ceasing or postponing renovations.
However, the current revised forecasts for the Polish furniture industry may be changed by the rapidly growing second wave of the pandemic. If there were trade restrictions, demand would start to fall again. In addition, the worsening condition of the economy would further limit orders from companies.