Turbulence on the furniture market and shift of consumer demand towards more affordable goods prompted kitchen cabinetry producers to extend their product lines and launch new formats.
Russian kitchen furniture market is relatively stable. As overall furniture sales dropped dramatically, kitchen cabinetry has been enjoying quite good sales in 2015-2016. Almost all federal suppliers managed to maintain decent turnover level. The strongest players were trying to expand production volumes and shopping spaces.
For instance, Moscow-based “Kuchenberg” increased the number of its dealer and retail outlets to 90. Kitchen cabinetry factory “Nasha Marka” launched its own retail project in Moscow, opening eight retails outlets in leading furniture stores. “Maria” factory gave a kick start to a new retailer format — kitchen cabinetry studio “Edim Doma!” “Kuhonny dvor” launched new franchise “Küchen Нof”. “Anons” strengthened its position in the regions thanks to its growing dealer network. “Lyubimy dom” has made kitchen cabinetry its strategic line, introducing an updated version of its signature format “Lyubimy dom Kitchen”. Ural factory “Lorena” showed incredible results: it increased its retail network by opening 25 stores at ones.
Moreover, many retailers admit that they managed to stay afloat thanks to kitchen furniture.
Moscow-based “Grand” — one of top 5 furniture retailers in Russia — invested in the renovation of the kitchen zone. The territory has increased from 3 to 5 thousand square meters. Kitchen cabinetry producers got a chance to present their products in the best light: display became more large-scale and stylistically sophisticated. Companies now could present combinational possibilities and functionality of their kitchens.
At the same time, kitchen cabinetry producers are not idealizing the situation. The market has experienced serious turbulence due to fluctuation of Russian currency exchange rate.
“The situation was unfolding in a certain pattern”, “Anons” Director Ekaterina Zaikina says, “Dependancy on the currency exchange rate is evident. Euro rising — market plummeting. Rouble rising — market reviving. One thing is clear: our clients are still ready to spend money on kitchen furniture, but just under certain conditions. One of them is understanding their price expectations, adeqaute price-quality balance”.
Exhibition held in Expocentre in November 2015 and 2016 proves that Russian kitchen cabinetry producers are ready to face economic turbulence. The space where kitchen furniture manufacturers are showcasing their products produces a very nice, one can say “European-style”, impression. It’s obvious that difficult market environment did not influence the sector significantly. By the number of newly introduced products, one can say that investment into product development did not decrease. Also, there is no significant saving on materials and construction.
In actual fact, Russian kitchen cabinetry suppliers became leaders on the domestic market even before the crisis. Modern technologies, well-functioning business processes, design level and product quality, service structure and variety of services — all these factors helped leading Russian kitchen cabinetry companies increase their market share.
In recent years kitchen furniture producers have been modernizing their technical capacities. Most of them were aiming to introduce production of full circle. Today such kitchen cabinetry retailers as “Maria”, “Kuhonny dvor”, “Vardek”, “Lyubimy dom”, “Driada”, “Kuchenberg”, “Anons”, “Medyn”, “Ecomebel”, “Stilnye kuchni”, “Sputnik stil”, “Yulis”, “Evita”, “Pervaya mebelnaya fabrika” and many other companies are putting this scheme into practice. They are actively developing their product lines of different price range.
There has been significant progress in marketing as well. Kitchen cabinetry producers are more media-oriented than other furniture producers, they co-operate with players from other sectors to launch promo-campaigns more often. Partnership with well-known producers of home appliances and equipment, co-operation with showmen from the culinary sphere, product chains, cafes and restaurants leads to significant brand awareness of some kitchen cabinetry producers.
Close cooperation with developers of specialized furniture components and accessories enables Russian producers to promote new consumer philosophy, when a kitchen becomes the centre of the interior concept of home.
Last but not least, players of the kitchen furniture market are paying special attention to the retail sector: introducing new sales technologies, developing business formats. And today the most interesting events are connected with the retail sector. Both producers and vendors go an extra mile to maintain and expand market outlets.
Competition in the sector of less expensive, mass product has become more fierce. Federal companies, which used to specialize on kitchen cabinetry of middle and middle plus segments, are aiming to cover new – and wider – consumer groups.
“Expanding to new markets was part of our strategic plan, “Maria” CEO Efim Katz says, ”In the last couple of years our production capacities have tripled. We realize that in mid-range — premium segment, where our brand is presented, we have limited potential at this stage. That’s why we are interested in new distribution channels. I am quite confident that eventually the volume of production of mass segment will exceed results of our main brand”.
“Kukhonny dvor” is heading in the same direction. In addition to its main brand of mainly middle-premium segment, the company has started developing a new brand – “Küchen Hof”, selling inexpensive kitchen cabinetry.
“We do not save on materials, but aim to get the most favorable terms from suppliers and constantly improving our technological processes”, “Kukhonny dvor” CEO Yury Titov says, “And this enables us to offer more reasonable prices to our customers”.
Branded presentation is standard for individual custom-made kitchen furniture. Selling expensive products presupposes brand-sections, salons and studios.
There are not many multibrand players on the kitchen cabinetry market. These are either chain hypermarkets or big regional companies, who are confident enough and have significant resources. As a rule, they display kitchen cabinetry anonymously in big spaces, offering a big variety of products and a wide price range.
However, in recent years there has been a surge of interest in brand formats in the multibrand retail sector. The initiative comes from suppliers and there is no doubt that this trend will be supported. This is in the interest of factories, which learned how to conduct dealer control, support brand standards and teach staff.
At the same time many kitchen furniture producers admit that introduction of brand requirements doesn’t always go smoothly.
“It’s difficult to persuade your business partner, everybody wants to make their own mistakes”, “Küchenberg” Wholesale Department Director Artem Korolev says, “Sometimes you think that developing retail at your own expense is the only possible way to succeed. But in fact this is a self-defeating strategy. One needs to keep persuading”.
Currency rate fluctuation has had a dramatic negative influence on trade, although well-known brands continue to fight for their place on the Russian market. The most active players find ways of boosting sales. Well-known Western brands are not planning to lose ground. They are determined to remain present at least on markets in capitals. For example, Sсavolini continues to invest in Moscow retail market.
German producers’ sales volumes in Russia dropped, but not as significantly as Italians’.
“In 2015 sales of Nolte Küchen retail chain dropped by 15-20 percent on average”, Director of Nolte Küchen Russian Office Alexander Malinovsky says, “In actual fact, sales are good in cities where Nolte Küchen representatives were active and held promo events. For example, our studios in Vladivastok, Tula, St. Petersburg and Togliatti showed great results. Our Moscow show rooms are expanding their client base every month.
According to Alexander Malinovsky, there are more and more fans of German kitchen cabinetry in Russia. Dealers’ main aim is to show a sophisticated customer what overwhelming technological possibilities genuine German cuisine has to offer: “The days when Italians were mostly known for their aesthetics and Germans for their functionality are gone. German kitchen cabinetry production, in my opinion, has made a breakthrough in recent years, offering a balance between technical perfection and appealing design”.
Nobilia also continues to show impressive results in Russia, German №1 brand in kitchen cabinetry manages to expand its network in Russia.
“On the market of private orders the format of branded studio is the only clear and possible form of effective promotion of the brand”, says Tatiana Rubinov, head of Premiumwerk, presenting Nobilia interests in Russia, “In the last years Russian dealer network has improved its performance thanks to regular programmes of staff education and introduction of automated system of order management. Interest to Nobilia among professionals is quite high: each year more than 300 Russian buyers come to our annual exhibition in Gütersloh”.
A sector explored by Western producers of kitchen cabinetry — project supplies to elite housing market. Germans are the most active in this sector. In terms of project business they are ahead of Russian companies, which are mostly focused on retail sector.
“Since we started working in Russia we have taken part in four similar projects”, Nolte Küchen’s Alexander Malinovsky says, “These were big orders — from 130 to 300 kitchens for a residential building. Of course, we are interested in continuing to develop this work in future”.
Big contract with a Moscow real estate developer was realized by a St. Petersburg importer FTF Holding. The company has organized delivery of 300 Leicht kitchens to St. Nickolas apartment complex in Moscow. The project was conducted in co-operation with Miele CIS. Companies’ top managers are confident that object supplies is a very promising business line, which should be promoted by all members of the furniture sector.