Touch Iran Furniture Market & Industry

Contents IRAN FURNITURE HISTORY ....................................................................................................................................... 3

FURNITURE CATEGORIES ...................................................................................................................................... 6

1-Home Furniture ...................................................................................................................................................... 6

1-1-Panel Based (Surfaces) Furniture ................................................................................................................... 6

1-2-Modern Home Furniture .................................................................................................................................... 6

1-3-Classic Home Furniture ..................................................................................................................................... 7

2-Office Furniture ...................................................................................................................................................... 8

2-1 Panel Based Office Furniture ........................................................................................................................... 8

2-2 Metal-Plastic furniture ........................................................................................................................................ 8

2-3 Modern Office Furniture .................................................................................................................................... 9

2-4 Classic Office Furniture ................................................................................................................................... 10

3-Public seating ....................................................................................................................................................... 10

IRAN FURNITURE INDUSTRY............................................................................................................................... 11

Furniture clusters .................................................................................................................................................... 11

EMPLOYMENT ....................................................................................................................................................... 15

IRAN FURNITURE MARKET ................................................................................................................................. 16

Iranian Preferences for Furniture .......................................................................................................................... 16

Iran Import of Furniture........................................................................................................................................... 17

Distribution of Furniture Exporters to Iran ........................................................................................................... 17

Iran Furniture Export ............................................................................................................................................... 18

Iran`s Furniture Export Market Distribution ......................................................................................................... 18

Import and Export fluctuations .............................................................................................................................. 18

SALES AND DISTRIBUTION CHANNEL .............................................................................................................. 20

Iran Furniture Bazar and Retail Stores: ............................................................................................................... 20

Final Points ................................................................................................................................................................... 23

IRAN FURNITURE HISTORY

In 1934, Erich Schmidt (archaeologist), excavated a chair that dates back to 6,000 BC in Rey,

Iran. This piece of art is the oldest furniture that has been found in Iran so far. Wood products

were first introduced in Iran history around 4200 BC when ancient Iranians began crafting

wooden agricultural and hunting tools, wheels and gharries.

By the time of Achaemenid Empire, 550 BC–330 BC, woodworking had been turned to an

extensive industry including construction and infrastructure, shipbuilding, weaponry and so on.

For centuries woodworking was merely limited to traditional handcrafting methods and despite

remarkable innovations it wasn’t until 1900`s that first industrial woodworking machineries got

installed for match and lumber manufacturing.

Dominant climate of Iran is characterized as hot and dry. Unlike many other parts of the world,

thanks to low humidity and lack of floor moisture carpets, the Iranian globally well-known

artifact, could easily provide comfortable sitting and laying in almost every Iranian household for

centuries. Along with modernism in 19th century, using furniture became a fashion among elite

families. By the mid-twentieth, home furnishing was widely adapted and wealthy and educated

classes had joined the growing trend of using furniture as a complement to carpets.

In line with the emerging furniture market, many domestic entrepreneurs started producing high

quality and competitive products. To name a few MOBILRAN, SADEGHI, JAVAN, SABORI

and CENTRAL DÉCOR were among pioneers that propelled the domestic furniture industry to

form a business cluster.

Facing an eight-year long war right after Iran Islamic revolution in 1979, many industries

including furniture got hindered from technological advancements and global design competition.

The second transition in furniture industry thus occurred around 1990s when newly

imported machineries introduced a larger selection for raw materials such as MDF, polywood,

laminated boards, chipboard and hard board.

FURNITURE CATEGORIES

In Iran , furniture is assorted in three main categories :

1-Home Furniture 1-1-Panel Based (Surfaces) Furniture

Made of different kinds of panels including MDF, Multi Fiber, Polywood, Hard Board, and the

like. They are mostly used for sleeping or lying, storage and surface furniture such as tables,

cabinets, shelves, drawer, bookcase, and so on. Their applications cover Livingroom furniture,

bedroom furniture, and kitchen and bathroom furniture.

1-2-Modern Home Furniture

Mostly used in living room and dining room furniture. The main frame could be of wooden or

metal type. They are usually stuffed by foam and covered by upholstery fabric or leather.

1-3-Classic Home Furniture

Used in living room and dining room. Composed of wood and fabric, and further luxurified by

inlays, wood craving, carpeting and Persian wooden mosaic. Classic home furniture ranges from

sitting furniture, tables, book case, drawers, desk, TV set and alike.

2-Office Furniture 2-1 Panel Based Office Furniture

Usually panel-based with different applications such as table, office desk, computer desk,

bookcase, file case, drawer, divider and so on.

2-2 Metal-Plastic furniture

Metal and plastic cover the main categories of materials used in producing office seating furniture

such as swivel chair where metal and plastic parts support swiveling function.

2-3 Modern Office Furniture

Mostly used in lobbies, waiting and meeting room. The main frame could be of wooden or metal

type. They are usually stuffed by foam and covered by upholstery fabric or leather.

2-4 Classic Office Furniture

Includes sitting, storage and surfaces furniture upholstered on metal or wooden frames by fabric

or leather. Their application is mostly limited to management offices, guest room, lobby,

conference hall and the like.

3-Public seating

Including modern and classic furniture mostly used in public areas such as hotel, theater and

cinema, educational institutions and learning spaces, transport hubs and etc.

.

IRAN FURNITURE INDUSTRY

Furniture clusters

Since 2007 furniture supply chains have been unified in to clusters in cities with most value

creation capacity. Despite lack of precise data about production and sales volume, as depicted in

the clusters distribution map Yaftabad and Qom seemingly have denser and more organized

contribution in furniture market supply.

Cities of Furniture

Even though furniture producers are dispersed across the country, but there are some cities where

aggregation of numerous producers has created a hub. Tehran, Qom and Malayer, Mashhad,

Tabriz, and Marand are among cities with the major hubs.

In addition to the cities the producers are also diversified in terms of their size and their

production methods by which they can be classified into three main groups:

In addition to the cities the producers are also diversified in terms of their size and their

production methods by which they can be classified into three main groups:

Large Industrial Producers: Legally registered and licensed plants with more than

100 employee, manufacturing mostly panel based furniture. There are around 30 producers with

such specifications. Being equipped with modern machineries, technology deployment, hiring

innovative designers and professional engineers are their success factors in offering high-quality

products. In contrast to other classes, outsourcing is a key strategy to large industrial producers.

Small and Medium Size Producers: Around 430 producers with 10 to 99 employees have been

categorized in this class. Given the fact that “A to Z” of the production process take places in

their workshops, there is no room for outsourcing strategy. Direct sale in owned showrooms or

stores represents most of this class sales strategy in pursuit of creating higher value in both

production and sales section.

Micro Producers: There are more than 27000 small workshops, mostly using traditional skills

and instruments. Despite the national respect for keeping the traditional craftsmanship alive,

inherited from father to son or master to apprentice, but at some point lack of improvement in

production techniques such as optimization or industrial machineries deployment threatens the

competitive capacity of micro producers which further down the line makes them to either

outsource some parts of their production or to turn in to giving outsource service to large or

medium size producers.

EMPLOYMENT

In 2012–13, Iran employment rate was measured as 87.8% covering 24 million people across all

sectors in Iran. The largest employment share of 48.8% was in service sector followed by industry

sector of 34.4% and finally 16.8% of employment share in agriculture.

Today, furniture supply chain is composed of 1600 industrial and non-industrial producers as well

as 50,000 SMEs, all together holding about 10% of total employment in Iran industrial and

service sectors. Therefore, regardless of furniture sector’s economic prosperity, government is

incentivized to support its survival. The supportive actions are addressed as bundle of regulatory

preferences, infrastructural investments and fiscal policies. For instance, very recently, Iran and

Turkey signed a mutual contract to boost up bilateral import-export transactions in form of tariff

preferences. Among the products listed in the contract, Turkish furniture import had been

facilitated by means of 40% discount on customs tax & duties, which later got revised to 10% in

order to support domestic production. Regardless of how differently these two discount rates

could have impacted the industry, it implies the significant role of furniture industry from policy

making perspective.

IRAN FURNITURE MARKET

With the total population of 80 million, surrounded by potential export market of 130 million

people in neighbor countries, Iran is considered as not only one of the most appealing emerging

markets but also as one of the most promising ones that has been attracting growing number of

foreign commercial delegations and investments specially after The Joint Comprehensive Plan of

Action (JCPOA). According to the “Director of National Council of Furniture, Decoration, &

Correlated Industries”, Iran Furniture Market turnover has exceeded 5.7 Billion USD per year.

Iranian Preferences for Furniture

As mentioned earlier in old days, spacious houses with separate and large living, dining and guest

rooms were decorated with carpets and “classic furniture”. Later smaller houses or apartment

lifestyle called for a different furnishing style which itself went through a transition phase to

adapt to modern TV & Digital technology-centered lifestyles by introducing creative and

comfortable designs. Multi-purpose and transforming furniture, e.g. combo bed and sofa, are a

part of the answer to space saving and technology-driven demands.

Carpet, furniture, curtain and chandelier (Lusteri) are the main elements in depicting Iranian

interior design scheme with the women as the key players in purchase decision making process

ranging from need recognition to choice assessment and final purchase.

Discarding old household goods and replacing them with new ones is a part of an Iranian culture

in welcoming and celebrating New Year (Nowrooz) in March. The same trend also applies for

September right before starting school year when families prepare themselves for the change by

reorganizing their environments. Thus non-surprisingly during these two periods, furniture sale

grows double in size. Another share of Iranian furniture purchase behavior is related to

marriage, where as a traditional custom the bride’s family provides the newlyweds with a

complete set of household goods including furniture, carpet, home appliances and so on. These

cultural factors have provided a dynamic ambient for the furniture market to evolve and grow

profitably.

Iran Import of Furniture

Figure No.1 shows that import volume to Iran for all furniture types falls under HS Coded 9401,

9402, 9403 and 9404 in years 2008 to 2013.

For more information, HS Codes are described as below:

9401  seats (except barber, dental, etc.), and parts.

9402  medical, surgical, dental or veterinary furn etc.

9403  furniture nesoi and parts thereof.

9404  mattress supports, articles of bedding etc.

Distribution of Furniture Exporters to Iran

China, Turkey, UAE, Italy, France, Germany, Malaysia, and Japan are the main exporters to Iran

9404 in years 2008 to 2013.

Iran Furniture Export

Figure No.2 shows export volume to Iran for all furniture falls under HS Code 9401, 9402, 9403,

9404 in years 2008 to 2013.

Iran`s Furniture Export Market Distribution

Iraq, Kazakhstan, Armenia, Georgia, Afghanistan, Kuwait, UAE, Malaysia, Spain,

USA, Australia and Austria are main targets for Iran furniture export.

Import and Export fluctuations

Iran economy’s lifeblood, oil export, has dropped sharply by imposed sanction over past years,

which caused a slide in Iran's currency (Rial). Rial steeply lost its value against US dollar in the

short period of mid-2011 to early 2012 and remained intact around its final rate afterward. As the

aftermath reaction to the sudden decrease in national currency value, imported goods got

classified and prioritized to 10 main categories based on their impact and urgency. The pursued

goals of the prioritization policy were first to effectively allocate subsidized foreign currency to

importers for their purchases and second to control the demand of open market for foreign

currencies.

As a consequence, luxuries goods including furniture, were ranked in the 10th category, implying

severe restrictions on furniture import due to its domestic supply and luxurious characteristic.

Thereafter the import level collapsed sharply to 230% in 2011 and 330% in 2012. However,

interestingly, domestic production not only supplied Iran market needs but also, export volume

got increased by 230% in 2011 and 140% in 2012.

SALES AND DISTRIBUTION CHANNEL

Sales and distribution channel differ across producer size:

Large Industrial Producers: Supplying high quality and competitive products, large producers

manage their own showrooms, exclusive or contracted stores as the main sales channels. Uniform

sale price in own showroom and stores or even competitive prices in markets that do not enforce

fixed price lists, are the main sales strategy amongst large industrial producers.

Small and Medium Size Producers: SMEs often have their own showroom, or retail stores, but

they are small in numbers. Shoppers keep exploring these producers to enhance their vendor list.

It’s noteworthy to mention that dealers are not advantageous in this market because local

directories or large seasonal exhibitions are the main communication medium between shoppers

and producers.

Micro Producers: Lack of financial power in running their own showroom or store

compels micro producers to distribute and sell their products through sales store which usually

leads to inequality of bargaining power in favor of store owners.

Iran Furniture Bazar and Retail Stores:

Yaftabad Bazar, the most famous furniture bazar, is located in Yaftabad district in the south

center of Tehran. Along both sides of Yaftabad Ave., (figure no.), a wide range of spacious,

luxuries malls to simple small shops and showrooms offer their products and services.

There are at least 10 malls with the total area of 122000 square meters comprised of 1230 stores

and showrooms, serving different target markets. Famous and well-known brands besides most of

furniture producers and suppliers pin their marketing and sales strategy in running showrooms or

shops in Yaftabad Bazaar, particularly in the main malls.

Delavaran Bazar is located in Delavaran Street in east of Tehran where numerous single retail

stores are lined on both sides of the street. However there is no luxuries mall there, and thus

Delavaran products are relatively ranked lower in price and quality than the ones in Yaftabad and

consequently considerable share of Delavaran bazar is supplied by small and micro producers.

Hasanabad Bazar, as suggested by its name, is located in Hasanbad Street, an old business area

in Tehran. In contrast to Yaftabad and Delevaran bazars, Hasanabad targets office furniture

market. There is no modern shopping center in Hasanabad bazar however among ordinary old-

style shops there are many showrooms and stores offering high quality and branded office

furniture products.

Tabriz Permanent Furniture Exhibition, is an under-construction project in the north west of

Iran, with the total area of 43 hectares allocated to permanent exhibitions specifically for

furniture, shoes and automobile. Tabriz exhibition is aimed at strategically meeting the domestic

market needs and export goals. Currently 15 large producers and 250 permanent furniture

exhibition booths are running in an area of 2500 square meters and the rest of the project is under

construction.

Final Points

I hope this article could shed light on major aspects of current Iran furniture market. Furthermore

I welcome all questions or comments about the content of the article as well as requests on

conducting SWOT analysis, Market analysis, Value Chain analysis to design market entry

strategy or positioning. Also if you are interested in commercial tours for Iran furniture market,

I’d be glad to be of any help.