The profitability of the office furniture segment reaches a level of 30%. Initial investment in the business is about $ 200, 000, a payback of two to three years.
Office furniture classification
The range of office furniture includes desks and computer tables, chairs, cabinets, racks, cabinets, consoles, chairs for directors and managers, cabinet sets, tables for conference rooms and much more. Typically, manufacturers produce collections that are united by a common design, but differ in style and type of decoration. The assortment of one factory may include several thousand items, which are divided into three groups according to their functional purpose.
The first is called operational furniture for ordinary office staff and occupies the largest market share - 70%. Usually a set of operational furniture includes a desk, a chair, a cupboard and a shelf and costs $ 200-500. Such furniture is distinguished by simplicity and the absence of unnecessary details.
The second group is offices for managers and middle managers. This furniture is made of high-quality particle board, trimmed with PVC or veneer, as well as from inexpensive wood. Such kits cost $ 1000-10000. They account for approximately 20% of sales.
The third group, covering the last 10% of the market, includes offices for top managers. Usually, expensive materials are used in their production - valuable wood and genuine leather. Prices for executive classrooms start at $ 20 thousand, and for exclusive models - from $ 60 thousand.
Most stores specialize in selling all three furniture groups, otherwise they risk losing customers who prefer to order the entire set of furniture in one place and are interested in receiving discounts for a large volume of purchases.
Furniture business: Premise
To place a full-fledged exposition of office furniture, a store with an area of at least 200 square meters is required. m. According to the experience of trading companies, it is optimal if the client will be presented 6-12 collections of "RAM" of different price categories. As well as 10-15 collections of manager's offices: 2-5 in each style - "classic", "modern" and "hi-tech".
Such a collection of furniture is not always possible to exhibit on the trading floor, especially since the rent “eats” up to 30-60% of the monthly profit of a furniture store. Therefore, often seller companies actively use a visual demonstration: color catalogs, wall photo posters demonstrating the advantages of furniture collections, or projects already implemented in customer offices.
Having your own warehouse is a moot point for a furniture trading company. According to some market participants, it will be hard to work without a warehouse, because customers usually tend to get furniture immediately after transferring money. And do not wait for weeks for a finished order.
According to others, the contents of a large warehouse are not always justified. It is enough to have a small warehouse, which houses the most popular and popular positions. And if the client makes a non-standard order, then you can work on a partial prepayment. Usually the waiting period is no more than a week. The main thing here is to establish interaction with suppliers.
And if the manufacturer or his warehouse is in the same city as the buyer, you can supply directly from the factory. The main thing is to have constant access to an information base reflecting the availability of necessary furniture in a warehouse.
As a rule, stores work with several manufacturers. And usually furniture factories provide goods for sale or on a loan basis. Only demo samples have to be redeemed.
Furniture Business: Costs and Profits
Initial investments in organizing a business for the sale of office furniture are about $ 200 thousand. As a rule, a store begins to earn profit only in its second year of existence. The costs of promoting a business usually pay off after three to four years of active work.
Retail margins for goods sold depend on the factory, furniture class and customer demand. On average, they range from 20-60%, and in some cases can reach up to 100%.
Actively dumping only young companies and regional manufacturers seeking to win a place in the capital's market.
Depending on the season, rental conditions and established clientele, the profitability of office furniture trade ranges from 10-30%.
Furniture business: Promotion channels
The traditional ways of attracting clients for office furniture salons are advertising in print media, telemarketing, direct mailing of booklets with offers, participation in exhibitions, as well as placing the collection on their own websites. Each method has its pros and cons.
According to market participants, direct mailing gives the highest return. But only if it falls into its intended purpose, directly to the person responsible in the company for the arrangement of the office.
As for telephone marketing, it can be useful for establishing initial contact. Moreover, it is important not to send price lists, but to inform the client about the possibilities. In the West, it was estimated that a properly selected interior can increase employee productivity by up to 40%. It is important to convey this thought to our businessmen.
The most effective way is to participate in exhibitions. At the exhibition, the client has the opportunity to see the collections of many manufacturers and sellers, compare them, ask the price and choose what suits his tastes, financial capabilities and needs.
According to experts, to create a customer base, it takes from six months to three years. The “rumor” begins to work further: the circle of new customers expands due to the recommendations of the old ones.
Furniture Business: Service Expansion
Today, in the conditions of fierce competition in the market, the struggle for the client is conducted through the expansion of the range of services. Free furniture delivery, assembly, warranty service, cumulative discounts, discount cards - today these are mandatory components of the service of any company.
Almost all firms make projects for arranging workplaces for the office with the help of computer programs for clients. But there are still few stores with design bureaus capable of developing a project of an interior and selecting furniture for it at a high professional level. Practice shows that such design services are becoming more popular.
According to experts, the future lies with those companies that offer customers comprehensive subscription services, that is, solving all issues related to office furniture equipment, from a design project to disassembling, transporting and assembling furniture when the company moves to a new office.
The article used materials from the magazine My Business
* The article is more than 8 years old. May contain outdated data