Any German who wants to buy a new kitchen, SOFA or bed may soon have to dig deeper. German furniture makers, which have a combined annual turnover of 17.5 billion euros, or about $125.4 billion, are understood to have made clear on Monday that they expect retailers to pay higher prices for their goods. Since global supply chain problems have significantly increased the cost of components and logistics, affecting all European manufacturers, including Austria, they may have to raise the price of their products to shift some of the difficulties. “Any diversion of these extreme price increases is almost a commercial necessity,”said Jan Kurth, managing director of the German Furniture Industry Association in the German city of Bad Honnef, who also predicted a 10 per cent increase in sales this year -- due, of course, to the price effect, not because of increased sales by German furniture companies.

So will the price of furniture go up by 10% for German consumers? Not necessarily, since the retailer’s purchase price accounts for only about 50 per cent of the final price, and the remainder consists of the dealer’s additional costs and profit margins. For example, if the manufacturing cost component of industry increases by an average of 10% while the rest of the price component remains unchanged, the retail price will increase by only 5% . “Individual retailers have seen single-digit price increases,”says Christian Heather McCartney, general manager of the German furniture and kitchen association (BVDM) . If shortages and delivery difficulties persist, prices could rise further,”he said, adding that at least one thing is clear: Many furniture makers are in trouble. Although they benefited from the “Cocooning”trend during the pandemic, people did not travel or spend money on other leisure activities, instead investing in their homes or gardens to improve the quality of their living. But at the same time, the temporary closure of some branches has caused damage to enterprises, supply chain problems still exist. A recent industry survey found that 44 percent of furniture companies cut or delayed production because of material shortages. While the situation of foam upholstery and other supplier products has stabilized recently, bottlenecks in packaging and electronic components have intensified. Industry Rep. Coors cited an example of “Exploding raw material costs”: in 2021, prices of wood materials such as particleboard rose 40.2% year on year in December! And the rise in raw material costs is far from over. “It is an inescapable fact that manufacturers tend to bear more costs than retailers,”he added.

From an industry expert’s point of view, however, a 10% increase in prices is a very high number. Ralph Niederdrenk of PWC questioned whether the industry would be able to drive such a strong price rise. For End customers, the price developments in each market segment will be very different: as material prices rise, low-priced discounted goods may be more expensive than high-quality designer branded furniture or personalized furniture solutions. Germany is not the only country to announce price increases in the furniture industry. Swedish furniture giant Ikea also announced earlier that it plans to raise prices by 9% due to rising costs. Ralph, an expert at pricewaterhousecoopers, said other foreign manufacturers were also likely to raise their prices because of higher raw material and logistics costs. But he reckons German manufacturers will not be at a disadvantage in the competition for consumer favour, as furniture products are becoming more expensive -- in fact, a common trend in the furniture market. Because many furniture stores offer time-limited discounts, end customers may sometimes not even notice a price increase. That may still be the case in the future -- though retailers may have to offer lower discounts to attract customers.