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HomeNEWSFurniture retailers predicted to struggle over the next year

Furniture retailers predicted to struggle over the next year

Among all New Zealand’s industries, only beekeeping will see a bigger boost over the 2020 financial year than motor vehicle parts retail, says IbisWorld. Revenue from the category will rise from $677.4 million across the 2018-19 financial year to $725.6 million.

This growth is supported by the continued popularity of imported secondhand motor vehicles in New Zealand, Ibisworld senior industry analyst Bao Vuong.

“The average age of the vehicle fleet in New Zealand is higher than in most developed countries, and second-hand motor vehicles often go through more wear and tear. This in turn leads to more repair and maintenance, which drives greater demand for industry products.”

Vuong says the increasing number of registered motor vehicles is also growing the pool of potential customers and vehicles needing parts and accessories. Higher disposable incomes among households is also expected to boost demand for more expensive parts and accessories, generating greater revenue for motor vehicle parts retailers.

Revenue from furniture retailing is expected to drop from 2018-19’s $920.4 million to $890 million across 2019-20. Without naming Ikea’s looming entry, Vuong puts this down to “mounting internal and external competition”.

The Swedish homewares and furniture giant announced in January 2019 it would launch into New Zealand before 2024.

“The rising volume of low-cost furniture imported into New Zealand is also forecast to hinder the industry’s performance in the current year. The availability of low-cost furniture imports is projected to heighten industry competition,” says Vuong. 

Industry revenue is also likely to be suppressed by slower growth in residential building construction, which will reduce retail demand for furniture items. 

Product and priceare likely to remain key, but operators are anticipated to increasingly seek niche markets or areas where they can offer value-added services to differentiate themselves from their competitors.

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