Regions find place at furniture’s bountiful table
By: Pavla Kozáková, 18. 09. 2006, More by this author

The highly competitive office furniture market has seen little consolidation so far, but the myriad of small companies in the sector already see a positive effect from rapid office space development, especially in the regions outside Prague.

There are about 200 major office furniture suppliers on the Czech market, but small furniture suppliers, who offer made-to-order office furniture, constitute the largest portion. “According to our estimates, there are around 3,000 furniture producers in the Czech Republic,” said Tomáš Lukeš, secretary general of the Association of the Czech Furniture Manufacturers (AČN), noting that data on the exact number of active producers is unavailable. Various sources put the number between 2,500 and 4,000. Major players in the Czech furniture market include Ahrend, Interior PFD, Techo, Steelcase, Vitra Koncept and Samas Česká republika.

The market is healthy with net sales and exports both on an upward trend. The production of wooden office furniture grew to Kč 1.38 billion (E 48 million) last year from Kč 1.26 billion in 2004. Metal office furniture production recorded a similar increase to Kč 1.27 billion from Kč 1.15 billion on the year. The Czech Republic exports more office furniture than it imports, and last year imports recorded a slight decrease. On the year, the export of wooden and metal office furniture rose last year to Kč 721 million and Kč 594 million, from Kč 610 million and Kč 500 million, respectively. Imports dropped to Kč 312 million in 2005 from Kč 314 million for wooden office furniture, and to Kč 243 million from Kč 248 million for metal office furniture in 2004.

While there are no results available for this year’s market, there’s no indication that the there will be a drop in production, according to AČN’s Lukeš. Ahrend, for example, has witnessed increased demand. “We’ve already exceeded last year’s results,” said Helena Kudláčková, customer support team leader at Ahrend, adding that the company expects a “big” increase in revenues this year, declining to give specific figures. Last fall Ahrend acquired a 75 percent stake in its rival, Techo, and became the leader in sales on the CEE market. Both brands continue to operate on the market, and the two companies seek to complement each other, with Ahrend offering luxury furniture and Techo catering to mass demand.

Trends and changes

The office furniture market is characterized by a relatively slow development of new trends, with most producers and suppliers updating their product line only once every two years, according to Lukeš.

Current trends that Kudláčková pointed out include the demand for made-to-order furniture, and open plan offices where employees share one large office space. “Open space office is still in demand, but now the number of employees in one such office is no longer 150, but rather in the dozens,” she said.

In high demand are chairs that respect body ergonomics, small chests of drawers, and screens to divide the open office, Kudláčková said.

The growing use of flat monitors, notebook computers and electronic back-up devices has decreased the required space needed for the average employee. “The average work space is getting smaller, and there’s no need for shelves for folders, for example. The required storage facility for offices has dropped dramatically,” said Lukeš.

The industry also expects a significant surge in revenues from the demand created by new tenants in regional office centers. “This is a relatively new thing; some centers have already opened this year, and more are expected to open next year,” Lukeš said, adding that Brno, South Moravia, and Ostrava, North Moravia, will generate the most opportunities outside of Prague.

Ahrend’s Kudláčková said that regional growth of companies is helping furniture markets to expand as well. If the company serves satisfied customers in Prague, those customers often use the same furniture supplier for the new regional offices. She gave Škoda Auto and ING Bank as examples of companies Ahrend now serves in the regions.

Office supplies

The office supply market saw a major change when Czech leading supplier Papirius became part of the American global corporation Office Depot as of Sept. 1, 2006. Jan Černý and Petr Sýkora, the founders of Papirius, sold 100 percent of the company to Office Depot, but will remain at the helm of the Czech branch. “Office Depot is an ideal partner for us from the strategic viewpoint,” said Sýkora, adding that a strong international company will allow Papirius to improve its customer service. Office Depot, with revenues of $15 billion (Kč 336.4 billion / E 11.83 billion), is currently active in 37 countries worldwide and employs around 50,000 people.

Papirius employs over 540 workers, and its Czech revenues increased to Kč 1.17 billion last year from Kč 1.12 billion the previous year. The revenues for the whole Papirius group, including the Slovak, Hungarian and Latvian markets, grew to Kč 1.31 in 2005 from Kč 1.20 billion on the year.

The second-largest supplier on the Czech market, Activa, boosted its revenues to Kč 1.09 billion last year from Kč 862 million in 2004. The company employs over 360 people and caters to almost 15,300 companies and organizations. Activa has an additional branch in Slovakia.

Online orders

The office supply market has also witnessed a steady growth in online shopping, with over one-third of all office supply orders coming through online ordering systems. Last June, to capitalize on the growing demand for online shopping and to make online shopping more user-friendly, Papirius revamped its Internet shop at polo.papirius.cz.

Activa launched its Internet shop in February 2001; currently around 10,000 customers use the online shopping, making it responsible for about 35 percent of the company’s revenues. The share of online shopping for office supplies is expected to further expand because it’s fast, convenient, and allows companies to save money since their stock of supplies can be much lower when using online ordering with quick terms of delivery.

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