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New survey values furniture market at J$107b

Published:Friday | June 8, 2012 | 12:00 AM

Avia Collinder, Business Writer

A new market study commissioned by the Jamaica Business Development Corporation (JBDC) Limited indicates that Jamaican householders are thinking of spending some J$94.7 billion on wood and furniture products this year.

In contrast, planned spend by businesses - inclusive of the hotel sector - was projected at J$12 billion, primarily, researchers noted, for desks, chairs and tables.

Combined, the survey of the two groups of buyers price the market at J$107 billion. The survey estimated planned spending between January 2012 and January 2013.

The survey and analysis of the market for wood and furniture products is part of a multi-pronged effort to revive the sector, which the JBDC indicates includes at least 300 local enterprises employing over 600 workers on a full-time and part-time basis.

In September 2011, the Government allotted J$100 million to product and market development in the sector. The aim was to improve local producer participation in a market equated to J$15 billion in furnishings imported annually.

Exports of local furnishings and wood products were valued at J$10 million in 2010.

However, the most recent JBDC survey, done by marketing consultants Rohan Bell and Lincoln Prince, shows that the demand is vastly untapped, especially on the local market.

The survey was done between December 2011 and February 2012, and wrapped up in March, included focus-group activity and interviews of 500 individuals. Results were segmented into demand from business and that from householders.

"Our consumer survey shows that there is market demand for 700 items among business, while among householders items in demand number 1.6 million for the next 12 months," said Bell.

Surprised by market structure

Market demand for both householders and businesses were based on the reserve price for items proposed by individuals inter-viewed, and also the indication of what they actually intended to buy, he said.

Bell said that the structure of the market also delivered some surprises, with consumers expressing specific preferences for shopping outlets.

The survey results, released Thursday, show that preferred buying points are the dominant chains, Singer Furnishing Limited and Courts Jamaica, which together represent 50 per cent of preferred buying locations.

While consumers interviewed mentioned 120 different shopping locations where wood and furniture items were actually bought, their stated preference were the large chains.

The result, Bell said, had implications for manufacturers who might need to tap into these existing structures.

Outside of the dominant retailers, Bell said that the preferences were fragmented between formal and informal local manufacturers, none of whom were mentioned by brand, or who appear to have little brand identity.

The survey shows that market demand is further concentrated in a few products which include desks, chairs and tables for businesses.

"These account for 30 per cent of items in demand," Bell noted.

For householders, demand is
focused on bedroom furniture, including dressing tables, beds and bed
heads. However, when householders were asked what they really intended
to buy, both living room suites and bedroom furnishings were listed as
priorities.

In terms of spending tolerance, the
researcher said that householders were prepared to spend more than
businesses over a shorter time period. "Householders indicated a maximum
spend of J$350,000 for a basket of products. Businesses said they would
spend no more than J$300,000."

Meanwhile, it was
deduced that householders go shopping every 24 months for furniture,
while business reflect a 36-month cycle.

"The consumer
in the household looks at furnishings as a durable and capital good.
The purchase is a high-involvement decision, involving research and
planning akin to that used to purchase a motor vehicle," the research
noted.

Bell said, however, that in the case of
businesses, there was no asset maintenance plan for furniture and it was
rarely replaced unless it was broken down.

The
results of the study run in contrast to the result of a supply-side
survey, also done by the JBDC, where over 50 per cent of manufacturers
say low demand for their product is their biggest
problem.

The JBDC is running a number of design and
product development workshops targeting 100 producers, with executive
head Harold Davis noting that there was a disconnect between producers
and existing demand in the
marketplace.

business@gleanerjm.com