Sunday,18 November, 2018
Current issue | Issue 1334, (2 - 8 March 2017)
Sunday,18 November, 2018
Issue 1334, (2 - 8 March 2017)

Ahram Weekly

Furniture industry hurdles

Al-Ahram Weekly listens to furniture-makers voicing their concerns about the industry after the floatation of the pound

Furniture industry
Furniture industry

Karim Abdel-Hadi, a 32-year-old sales employee, is getting married soon and is in the process of furnishing his apartment. He has decided that instead of shopping at furniture shops, he will go the old-fashioned way and have a carpenter fit out his bedroom “because it is much cheaper”, he says.

Many others might follow in Abdel-Hadi’s path following hikes in prices because of the depreciation of the pound. Over recent years, Egyptians have taken to furnishing their homes from furniture shops selling imported as well as locally made products, but over the last few months prices have doubled.

“We are not concerned about the origin of the furniture. What we care about is its prices,” Nada Kotb, a 26-year-old web content developer said.

Kotb said that she had bought a set of bedroom furniture for LE42,000 last month because she was afraid of another wave of price hikes. “One of my friends purchased a similar set early last year for LE20,000,” she said.

The depreciation of the value of the pound has caused a dilemma not only for consumers, but also for local manufacturers who are apprehensive about production inputs and the purchasing power of consumers.

Local furniture manufacturers import production inputs such as wood and the chemical materials used to polish and finish their products.

Marketing Manager at Kabbani Furniture Mohamed Essam Shehata told Al-Ahram Weekly that the company had increased its prices by 20 to 30 per cent after the currency floatation.

The increases were fuelled by increased wood prices, he said, adding that the company had introduced “increases that are less than those of other local manufacturers because we want to maintain our clients”.

The high prices of imported furniture have helped local manufacturers attract customers who cannot afford to purchase at more expensive prices, Shehata said. “We took the floatation as an opportunity to further engage with the market and prove the good quality of Egyptian furniture,” Shehata said.

Other furniture companies have opted for reducing their profit margins. Chairman of local furniture firm Banquet Furniture Mariam Hussein told the Weekly that the company had suffered losses as it had had to sell products at prices contracted with clients before the floatation.

Hussein explained that her company, founded in 2011, had had no option but to reduce its profit margins in order to be able to compete in the market.

Egyptians buy LE15 billion worth of furniture annually. Sixty per cent is locally produced, while the remaining 40 per cent is imported, according to deputy head of the Chamber of Woodworking and Furniture Sherif Abdel-Hadi.

But Egypt is also looking to promote the export of locally manufactured furniture. In 2016, Egypt exported $370 million worth of furniture, according to head of the chamber Ahmed Helmi, and it aims to raise this figure to $450 million in 2017.

“The currency floatation has been positive for exporters in general, but furniture companies still have to get access to international exhibitions in order to have their products noticed,” Ziad Ismail, marketing manager at Room Furniture, said.

Head of the Egyptian Export Council Ihab Derias said earlier this month that the council would participate in exhibitions in Milan and Dubai in April and October this year to promote Egyptian products.

He said the council had received export offers from Russia and South Africa, in addition to $20 million export deals signed at the Furniture and the Home Exhibition recently held in Cairo.

Egypt is aiming to develop the furniture industry, and the government has launched a project to establish a “furniture city” in Damietta in order to help to do so. However, the sector is still crippled by various issues.

Hossam Al-Shafei, head of Creative Egypt, an outlet supported by the state Industrial Modernisation Centre with the aim of promoting Egyptian handicrafts, told the Weekly that local manufacturers should consider raising the salaries of workers “to attract more skilled labour”.

He said further adjustments to market prices were necessary. “If an increase is in the price of one material by a specific percentage, the manufacturer has to adjust his prices by the same percentage, meaning that this one increase contributes to the whole production process,” he said.

“The issue of high production costs cannot only be fixed by raising prices. There have to be boosts in production to maintain high sales,” Al-Shafei added.

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