Biz OpportunityNEWSLETTER

How to Participate in the $350 billion Global Furniture Industry

While world production of furniture is worth a whopping $350 billion and creates huge employment opportunities and foreign exchange in developed economies, many people in Nigerian see the business as activity for the uneducated. Furniture making is left in the hands of carpenters and semi-skilled craftsmen who often churn out poorly finished products.

The Nigerian middle and upper class is expanding rapidly with a growing population of generation X and Y who are either starting a family in a new house, moving houses, or replacing old furniture. The growing economy also means businesses are opening or expanding and require furniture to meet office needs.   All these leave a wide demand gap for quality products for offices and individuals, which some foreigners have been profiting from. The economy thereby loses plenty foreign exchange to foreign companies who export furniture to service the Nigerian market. Local entrepreneurs who can make or assemble quality furniture therefore have a vast market to play.

Many argue that we do not have the raw materials locally to produce good furniture but research carried out by A.A Ogunwusi of the Raw Materials Research and Development Council (RMRDC) showed that in the 1960s and early 1970s, the country’s exports of wood products and agricultural commodities provided more than 70 percent of the Gross Domestic Product (GDP).

The research pointed out that capacity utilization is still high despite over exploitation of wood, overemphasis on oil, among other factors which stifled the huge output. It has reached 326,172m3 of round log equivalent, according to the research. This was 217,700m in 1988 and 250,714m3 in 1992. This means that, just like the trend in many other sectors of the economy, we still export a lot of wood but buy back the finished product at an exorbitant amount.

Statistics show that more than 400 furniture companies of various sizes exist in the country, but over 85% of them are cottage furniture makers. “Deficiencies in technologies and finance, lack of qualified manpower and their rapid turnover are major problems militating against optimal development of this sector. Thus, technical training is a priority to promote production to international standard and customers’ requirements,” said Ogunwusi.

Furniture makers are big global brands like Ashley Furniture Industries Ltd., IKEA International Group, Sears Holdings Corp., and Steelcase Inc, Haworth Inc., Herman Miller Inc., HNI Corp., Kimball International, Knoll Inc., Kokuyo Furniture Co. Ltd., and Masco Corp and they employ hundreds of workers and pay good salaries.

The global furniture market is rising, with analysts forecasting the compounded annual growth rate (CAGR) estimate of 3.53 percent over the period of 2012 and 2016. Information from Reuters showed that one of the key factors contributing to this market growth is the boom in real estate industry. The global furniture market has also been witnessing the production of eco-friendly furniture. However, the shortage of timber supply often poses a challenge to the growth of this market says Reuters.

Common furniture products moving the market include seats, mattresses, metal office furniture, other metal furniture, wooden bedroom furniture, wooden kitchen furniture, wooden office furniture, other wooden furniture, other plastic furniture, furniture parts, and other furniture. What can help stand you out in the market is making it possible for the middle class to afford high-end furniture of the super-rich, while also making it possible for people to get animal skin leather sofa in the country. There should be a unique blend of quality, competitive pricing and excellent customer service delivery.

But there are lots of other businesses along the value chain to participate in and make money.  Selling furniture, especially second hand furniture, is booming. You do not have to produce or import furniture to sell. Just identify a manufacturer or importer and buy off them at a discount. You can then resell, especially in locations far away from the source. For instance, Lagos is the hub of furniture imports, so you can buy from importers at a discount and transport to other major cities like Port Harcourt, Abuja, Kaduna, and others where you will sell at marked up prices. Fairly used or second hand furniture is also a lucrative business as many people have good taste but cannot afford the cost of buying new furniture, so neatly used furniture comes very handy. Just get a show room on a busy route of the city, and you will be amazed at enquiries and business you can do.

Most components needed to make raw materials available are in abundance in the country such as saw dust, wood and so on. We discard thousands of kilos of saw dust in Nigeria whereas in some other countries, saw dust is a good source of raw material locally and for export. This is another very important area entrepreneurs can capitalize on to make profit.

Another business opportunity we can suggest lies in solving one of the challenges the industry is facing in Nigeria which is that no single company produces MDF and HDF boards in the country up till date, and it is the major component in the production of tables, doors and claddings an so on. Unfortunately, we import over ten million boards annually, and that consumes millions in foreign exchange. Only serious entrepreneurs can intervene in this process because of resources and technical skill required to set up such an outfit. But the numbers should be enough motivation for any serious entrepreneur.

There is also no organized market for furniture raw materials in Nigeria. Local manufacturers have to run from one market to the other in search of raw materials with its attendant risk of harassment by hoodlums, bad roads to transport raw materials and poor quality.  There is an opportunity to create wealth from organizing the market, setting standards and providing some form of regulation.

For every house erected, every construction going on, every new office opened, every school opened, every hotel opened, every new appointment and so on, there is need for furniture so it is imperative we start looking at how to tap into the vast opportunities which mostly foreigners have been enjoying from the colonial era till date.

About Author

Victor Okeh is a graduate of Economics from Lagos State University. He is versatile in reporting business and economy, politics and finance, and entrepreneurship articles. He can be reached via – [email protected]

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