Furniture Industry in Germany: Navigating Challenges and Glimmer of Hope
Market Downturn amidst Rising Costs
The furniture industry in Germany has faced a turbulent period, with sales taking a significant hit. According to the industry associations VDM and BVDM, nominal sales (not adjusted for price changes) for German furniture manufacturers declined by 7.4% to 16.4 billion euros in 2024. Furniture retailers experienced a decline in sales of approximately six to eight percent. This marks a continuation of the revenue decline seen in the previous year.
Household budgets are being strained by rising living costs, making furniture purchases less of a priority. Food and energy expenses take precedence, leaving less room for discretionary spending on furniture. The industry also grapples with the lingering effects of the COVID-19 pandemic. During lockdowns, furniture purchases surged as people invested in their homes.
However, that demand has now been saturated. Consumers are delaying new furniture purchases, resulting in a shift in spending towards travel and leisure activities.
Gloomy Sentiment and Corporate Distress
The industry’s mood is bleak. The IMM Cologne, one of the world’s leading furniture trade fairs, was canceled due to the challenging conditions. A recent economic survey by the German Retail Association revealed that only 4% of businesses in the furniture, home furnishings, and home textiles sector rated their business situation as good, while 44% saw it as satisfactory and one-third as poor. Only 22% expect higher sales revenue in 2025 compared to 2024.
The situation has had tangible consequences for the workforce. Employment in the German furniture industry fell by 5.4% to 71,231 in 2024. The number of companies with over 50 employees declined by 3.8% to 414. A survey conducted by the association indicated that 44% of businesses applied for short-time work in the first quarter of 2025.
Several companies have faced severe financial difficulties. Opti-Wohnwelt, Möbelhaus Loddenkemper, Schröder, and Hülsta have all filed for insolvency. According to an analysis by Allianz Trade, insolvencies in the industry reached a ten-year high in 2024, exceeding 230 cases. Maxime Lemerle, Head of Insolvency Research, predicts that the trend is likely to continue.
Exceptions and Glimmers of Hope
Despite the overall downturn, industry giant IKEA has fared comparatively well. Nonetheless, it has not been immune to the declining consumer sentiment. In the 2023/2024 financial year, the furniture retailer experienced a 5% decline in revenue and a drop in store traffic. IKEA attributed this partly to recent price reductions on its products.
The sector has also been affected by the slowdown in residential construction. The German Federal Statistical Office reported that only 215,900 new apartments were approved in 2024, a 17% decrease year-over-year and the lowest level since 2010. Christoph Lamsfuß, furniture expert at the IFH Cologne retail research institute, notes that the declining number of new homes has impacted kitchen sales, which have been a driving force for the furniture industry in recent years.
Cautious Optimism and Future Prospects
Looking ahead to 2025, the industry is cautiously optimistic. Jan Kurth, Managing Director of the German Furniture Industry Association (VDM), anticipates a small, single-digit percentage growth in sales. He expresses hope that inflation will ease and real wages will rise.
Kitchen manufacturer Rotpunkt from Bünde is also confident. Andreas Wagner, Managing Director, says that the company entered the new year with momentum, boosted by a significant increase in order intake since November 2024.
Experts believe that the industry can tap into opportunities by catering to the demand for flexible furniture. "When living space is expensive and apartments are in short supply, people will move less, and existing apartments will need to be utilized optimally," says Lamsfuß. Space-saving, multi-purpose furniture and modular systems that can be expanded or reduced in size will likely be in high demand.
