The State Statistics Service of Ukraine counts 7,329 enterprises and entrepreneurs in the furniture industry of Ukraine as of the end of 2022. Among them, 85.1% are individual entrepreneurs, and accordingly, representatives of small and medium-sized businesses.

INVESTMENTS

According to surveys conducted by the Ukrainian Association of Furniture Manufacturers, as a result of military operations on the territory of Ukraine, about 5% of furniture enterprises were completely destroyed. According to the same State Statistics Committee, for 2022 the number of registered enterprises and entrepreneurs with NACE code 31 “furniture production” decreased by 12.9%, i.e. ⅛ of the industry ceased operations.

At the same time, according to the State Statistics Committee, the amount of capital investments for 2022 was 32.8 million USD, of which more than 60% was invested in equipment and facilities and more than 30% in construction. In total, for the period from 2012 to 2022, furniture makers invested 418.7 million USD. During the same period, woodworking enterprises invested 1.9 billion US dollars, of which 212 million US dollars fall on 2022. The specific weight of capital investments of the woodworking and furniture industries in the total amount of capital investments in Ukraine was 2.26%. It is worth noting that the stimulation became possible thanks to grant programs from the government of Ukraine, USAID, GIZ and other partners.

“At the beginning of 2023, together with a partner, we invested in the production of furniture panels. The need has been brewing for a long time, and the increase in requests from partners for export motivated us to open another factory”, says the owner of the Pavlyk factory, Yosyf Pavlyk. – “My experience in working with grant givers suggested that during the war it is definitely worth taking advantage of the opportunities to receive grants. To open a new production facility, we received funding within the YeRobota grant program”.

Since individual entrepreneurs on the simplified taxation system do not submit financial statements, and more than 85% of them in the industry, it can be imagined that the real amount of investment in production is much higher than can be seen in the data of the State Committee of Statistics.

DOMESTIC MARKET

Before the beginning of the full-scale invasion of the Russian Federation on the territory of Ukraine, experts estimated the volume of the domestic furniture market at 1-1.2 billion US dollars.

As of today, such retailers as Epicenter, Jysk, MebelOK.com claim that they reached the pre-war level in certain months or have already exceeded it, at least in hryvnia equivalent. The drop in the market by 20-35% coincides with the opinion of suppliers of raw materials (chipboard, PPU). So, according to different opinions, the domestic furniture market in 2023 is estimated at the level of 700-800 million dollars USA.

According to the estimate of the co-founder of MebelOK.com, the share of online sales of furniture is about 12-15%. And although the decline in 2023 has reduced to -10-20% from 2021, competition on the Internet has increased.

“This caused an increase in the cost of attracting customers while the margin fell for objective reasons. The biggest drop in demand was felt in the categories of living room furniture and outdoor furniture. The buyer currently prefers furniture with a cheaper price. However, the number of orders from charitable organizations and foundations that take care of forcibly displaced persons issues has increased significantly”, Svyatoslav Amelin shares his thoughts on the state of affairs.

In 2022-2023, Ukrainian manufacturers were able to replace more expensive imported analogues with their products and gain a larger market share. After all, the volume of furniture imports decreased from USD 582.3 million in 2021 to USD 311.6 million in 2022, and USD 315.4 million was imported in 11 months of 2023.

Indirectly, the drop in demand for furniture in Ukraine also confirms the interest in search queries of this industry. So, in November 2021, the same Cyrillic word “диван” (sofa) was searched for in Ukrainian and Russian with a conditional mark of 100 (the highest index for the period December 2020 – November 2023). Before the start of the full-scale invasion, the average interest in the word in Ukraine was 54. During the war, this figure averaged 35.

According to the same word, the TOP 5 regions where buyers searched for sites to purchase a sofa for the period from December 2020 to February 2022 are: Sumy, Chernihiv, Donetsk, Poltava, Kharkiv. After the beginning of the full-scale invasion of the Russian Federation and until November 2023, the TOP 5 regions in terms of interest in buying a sofa are as follows: Kirovohrad, Kharkiv, Kyiv, Chernivtsi, Sumy.

*and we are also very surprised why Crimea and Luhansk region are marked in gray on the map of Ukraine from Google trends.

Market redistribution also took place among brands and major players. While IKEA closed the only offline store in Ukraine, Jysk increased the number of stores in Ukraine to 90 and increased sales by 35.5% in 2022 compared to the previous year in hryvnia equivalent and at the NBU exchange rate for the corresponding period, the increase was 0.27 % – from 127.9 to 128.3 million US dollars, according to the published financial statements of Yusk Ukraine LLC. At the end of 2023, Epicenter opened a new format store in Kyiv – “Grand Furniture Center” with medium and premium products, currently there are 40 furniture centers in the network, due to a full-scale invasion, the company lost 3 stores, but in 2022-2023, 3 were built and 1 was completely renovated .

 

EXPORT POTENTIAL OF THE FURNITURE INDUSTRY

From 2009-2021, the export of Ukrainian furniture (product group 94) grew by an average of 13.5% annually from 0.2 billion USD to a record high of 1.1 billion USD in 2021. For 2022, we managed to keep exports at the level of 0.8 billion US dollars, of which 91.1% went to EU countries.

During the 11 months of 2023, exports amounted to USD 0.73 billion. The specific weight of furniture exports in the total volume of exports of goods from Ukraine during this period was 2.2%.

“If we compare the volumes of purchases of JYSK in Ukraine in 2023 with 2021, the company has increased the volumes of purchases in natural units, and in monetary terms by almost 20% in euros”, – reports Iryna Romanchuk, manager of purchases of Yusk Ukraine LLC. – “JYSK is ready to support Ukraine in the future and increase the volume of purchases, if Ukrainian manufacturers are ready to switch to European work standards and implement environmental and social initiatives at their production facilities”.

For 2023, the structure of exports by partner countries has changed. Thus, compared to the same period in 2022, the share of exports to Poland decreased from 35.1% (US$264.6 million) to 29.5% (US$215.2 million). at the same time, the volume of exports to Germany increased significantly by 17% from 129.3 million US dollars to 151.3 with corresponding changes in the specific weight from 17.2% to 20.7%.

The total volume of exports for January-November 2023 is 3.2% less than the similar indicator of 2022, and the main reason for the drop is the blocking of the Polish-Ukrainian border. Trucks with furniture stood in line at the border for weeks in November 2023, and a small portion was delivered by cars with a carrying capacity of up to 3 tons. It is expected that the delayed demand in November and the lifting of the blocking of the borders with Poland will allow orders to be shipped and to reach the level of exports for 2023 of 810 million USD and to significantly increase the volume of exports already next year.

Author of the article: Oksana Donska – member of the Board of the UAFM, CEO of the FUBE exhibition.