COVID-19 and the furniture business

The outbreak and spread of the coronavirus is primarily a human tragedy that has affected hundreds of thousands of people around the world. The virus has also affected the global economy.

he Ukrainian Association of Furniture Manufacturers has recently conducted a survey among its members about the impact of the coronavirus epidemic on their businesses and the possible ways out of consequences that no one can predict. Still, what the field is thinking about in these stormy days is finding out now.

Quarantine was officially introduced on March 14, 2020, and businessmen have been claiming a 50 per cent cut in revenue within a week. There are also those who claim that there is no influence on business matters or absolutely minimal influence. Among those surveyed, there are companies for which this time, on the contrary, will turn out to be a growing business.
What are the challenges facing businesses and furniture makers in particular?
In the survey, entrepreneurs were already offered the first options for answering the challenges that their quarantine business would face. Mainly, these are the main threats that go into the business along with preventive measures to spread COVID-19.

TOP-5 threats:

  • a fall in the hryvnia to $ 30 (77%);
  • shortage of materials and components (59%);
  • contractual default of contractors (59%);
  • the occurrence of a cash gap (55%);
  • reduction or closure of sales channels (52%).

In addition, furniture manufacturers see that quarantine will lead to a reduction or limitation of exports, loss of important business personnel, activation of regulatory bodies.

Open opportunities for furniture business

The economic crisis is a time to review business processes, evaluate opportunities for threats to business, and once again weigh the competitiveness of the enterprise. According to the survey, 42% of respondents believe that competitors will close their business, while only 11% of respondents believe that they will close their own business.
Entrepreneurs have started the process of optimization of the existing business. Most furniture makers think about moving to new sales channels, implementing e-commerce, and as such, maximizing business transfer to digital. Some see that creative thinking and changing the design of furniture can keep them afloat.
A large percentage of those who believe that quarantine may result in entering new export markets. For example, the answer to the quarantine business opportunities of the owner of the company Mirt Alexander Yushchenko is:

“To occupy a niche of European (Italian) suppliers in the local market”.

In general, most furniture manufacturers are optimistic about the situation, considering that it is time to increase the market share held by the company, to review the cost structure of the company and to increase efficiency.

What are the prospects and forecasts

Most of the respondents believe that in the next few weeks after the introduction of quarantine, there will be some chaos and misunderstanding of the processes, but after that people and business should become accustomed to new requirements. 62% of UAM survey respondents believe that their purchases will be less than their quarantine, 7% say that their revenue will increase, and 31% of respondents believe that they will not buy anything during the quarantine.

Still, according to many, in the near future, the furniture business may change the main players – some companies will leave this field, some will change their profile. After a certain shock state – the economy will start to grow. Moreover, the Verkhovna Rada of Ukraine has adopted a number of measures that should reduce the impact on business from the effects of the spread of the virus. And work is underway to develop a list of measures that will help Ukraine’s economy overcome the crisis.

Proposals of the Ukrainian Association of Furniture Manufacturers

The Ukrainian Association of Furniture Manufacturers does not stay away from this process and is actively involved in discussing priority and strategic changes to legislation to protect the public and business. Among the main proposals that have been submitted to the Verkhovna Rada Committees and executive bodies of Ukraine are the following:

  • providing the possibility of payment of assistance to employees during the idle time during the quarantine period from the State Social Insurance Fund;
  • abolition of taxation of payments to employees during the quarantine period;
    providing opportunities for cooperation of private entrepreneurs on 1-2 groups of a single tax on providing services to enterprises on the general tax system;
  • recognition of quarantine by force majeure;
  • optimization of the process of checking at customs of truck drivers;
  • speeding up and simplifying the procedure for VAT refund to exporters.

At the same time, most furniture makers are convinced that non-government involvement in doing business would be the best help.

“The state is away from the business. That’s all,” says Vitaliy Ivakhov, owner of 100% Interior Company and a member of the UAFM Board.

Ukrainian Association of Furniture Manufacturers supported the initiative of business associations by addressing the President of Ukraine, the Cabinet of Ministers of Ukraine and the Verkhovna Rada of Ukraine with arguments against the imposition of a state of emergency and demanding:

  • immediately involve the business community in the development of step-by-step actions to reduce the negative impact of the pandemic on the economy, both at the state level and in the regions;
  • make and implement decisions only after discussing and agreeing with the business community.

The Association continues its cooperation with donor and partner organizations, from which we expect in particular to provide consulting support to furniture manufacturers on optimization of business processes, re-profile production to the range relevant during the pandemic, and to provide free legal support to members of the Ukrainian Furniture Association.

“What loses any army is the loss of morale. Winning the one who does not lower his hands and takes every opportunity – does not lose any chance. “ – emphasizes the President of the Ukrainian Association of Furniture Manufacturers Volodymyr Patis.

It is obvious that nowadays businesses need to make every effort to maintain market position, because after every storm there is a calm.

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