Market Intelligence

Study on "Green" Home Furnishings Buying in the US

The Sustainable Furnishings Council and sponsor World Market Center Las Vegas released findings of  their third annual Green Home Furnishings Consumer Study.

High awareness of "sustainability issues at consumers
As in prior years, about 2 in 4 consumers rate themselves as very or extremely aware and concerned about a range of environmental issues from toxic pollution to using up natural resources to deforestation with no clear winner, meaning the “engaged” population has been holding steady at about 50%. Most are taking action in a variety of ways from recycling at home to switching to CFL light bulbs, and over half have purchased green products in a variety of categories, but purchasing of green home furnishings specifically remains very low at 4%. The main obstacles continue to be lack of awareness/availability. This indicates a supply and marketing problem more than concept or product dissatisfaction. Additionally, there is an ongoing expectation that green products will cost more. “Environmentally safe” is the preferred term for green products, suggesting health & wellness or safety claims may be most compelling.

US consumers more aprehensive about spending in general
Overall, findings are consistent with prior years showing significant interest in buying green home furnishings, though actual purchasing remaining very low due to lack of awareness and/or availability of options. However, findings appear this year to have been strongly influenced by ongoing consumer concerns about the economy or respondent’s own financial well being. This is observed in a number of different places in the study, beginning with the incidence of qualified respondents. It proved to be twice as difficult to find people who had spent at least $500 on home furnishings in the past year. There is also a consistently more negative response pattern to questions related to pricing, price expectations, purchasing, etc. This suggests that consumers at the present time may be less home involved and more apprehensive about any spending which in turn could depress all reactions, and in fact there is a moderate erosion in most measures throughout the study vs. prior years. This may well reflect some legitimate plateauing of consumer interest and motivation, but it is difficult to discern vs. the clear sense of exhaustion with economic worries.

Trial rate for green home furnishings is high
Despite these issues, the projected trial rate for green home furnishings is high at 37%, a drop of 10 points from 2009 but comparable to 2008. Importantly, this interest is qualified as a style they would like and priced about the same as other options. Before this year, this has meant pricing up to 10% more. In 2010, there is a significant shift toward no more than 5%, underscoring market price sensitivity. This is not to say that better quality goods cannot carry a premium, simply that there is little pricing or margin opportunity on the sole basis of an environmental benefit. Instead, it is a second tier tie breaker, something that can sway people only after they have been satisfied on style, quality and price.

Germany is the largest Market for Furniture and Furnishings in Europe

* Market volumes in Europe decreased in 2009
* German market approx. 30 bn. Euro
* Purchasing intentions for f&f 2010 rising
* Average spending per household are highest in Germany and Italy

According to a study of BIPE (FR) prepared for Dresdner-Cetelem Kreditbank (Munich, DE) the furniture & furnishings markets in selected European countries decreased substantially. While Spain and Slovacia decreased by 36% and 41 % in 2009, Germany (-2,3 % and France 5,6 %) were less badly hit.

Source: Europa Konsumbarometer 2010/Dresdner-Cetelem Kreditbank

Largest market for furniture in Germany
The furniture market has been hit by the crisis. However, the large markets Germany, France and Italy suffered under lower negative growth rates than other countries. Germany remained by far the largest market with 30 bn. €, followed by Italy with 16 bn. € and France with 9 bn. €.

Source: Europa Konsumbarometer 2010/Dresdner-Cetelem Kreditbank

Average spending vey high in Germany
The German household spent in 2009 100 € more for furniture and furnishings than the running up Italian average household, and 410 € more than the average French household, which is on 3rd. position of selected European countries.

Source: Europa Konsumbarometer 2010/Dresdner-Cetelem Kreditbank

Purchasing intentions look good for 2010
Purchasing intentions for home furnishings products in 2010 were rising late December 2009, when the field research was done. All of the analysed countries report a significant growth in plans for expenditures. It needs to be seen, if these plans materialize, however, the climate for the furniture and home furnishings sector in Europe has improved.

Source: Europa Konsumbarometer 2010/Dresdner-Cetelem Kreditbank

Hotel Growth Continues Worldwide

Despite global economic challenges, hotel developments continue to progress, with 423,000 new rooms injected into global supply by both independent hotels and groups.

International hotel supply records a 2.7% growth to reach almost 20 million classified rooms. Much of this growth is fuelled by hotel groups, alone recording an increase of 4.2%, says an analysis presented by MKG Group, Paris, which is specialized on consulting in tourism and hospitality.

“Although much the world’s hotel growth is a result of projects already launched before the crisis, it is still a positive indication of the commitment, endurance and potential from developers, investors and of course hoteliers," states CEO, MKG Group, Georges Panayotis.

Dynamics in Mature Markets
Renewed dynamism in mature market-continents is most apparent, with 170,000 new rooms in North America an 138,000 in Europe, an increase of 3.1% and 2.2%, respectively. Asia-Pacific is somewhat subdued during this particular period, managing 98,000 rooms, a growth of only 1.9%.
Other regions also show development resilience during the global economic challenge, with Latin America registering 63,600 new rooms (+4.8%), Middle East and Africa 52,700 (+4.2%).

Source: MKG Group, Paris

2010’s World Hotel Ranking has remains largely unchanged. Only Hilton Worldwide manages to move into third position with an 8% increase in room supply, pushing out Marriott International. Hilton’s extensive franchise development programme in the US being the driving factor.

The year’s growth is also marked by consolidations, though more was actually expected. Most notable is Groupe du Louvre (+28.8%) and NH Hoteles (+18.6%), both taking over other groups and expanding their portfolio with Golden Tulip and Hesperia, respectively. Exceptional supply growth also came from Australian-based Mantra Group (+89.2%), 7 Days Group Holdings Limited (+51.8%), Barcelo Hotels (+33.8%) and Merrylin Hotel Management (+23.8%).

“Moderate growth and reduced pipeline developments are anticipated for the coming years however, given the number of cancellations, postponements and of course the difficulties in obtaining financing,” continued Panayotis. “As a result, we can expect greater popularity in hotel franchising, widely considered to be the best way to expand internationally.”