Cocooning: this is how Corona affects hardware stores and the furniture industry

If you sit for a long time at home, it leaves its mark: bacon rolls long thought to have been lost; Business jackets have a powder shadow on their shoulders; the dishwasher drain filter, used twice as often, threatens to clog. On the other hand, the garden looks like picobello, several rooms are freshly papered or painted, the basement plot has been in order for years.

In March and April, people need to stay within their own four walls as much as possible to stop the rapid rise in corona infections. Those who could work in the central office, schools had to close, as well as many stores and service providers. A time of insecurity, resignation and piracy because work and school moved to the house itself without anyone asking. After all, people made their homes look beautiful, perhaps because their eyes fell more often on the yellowish paint in the hallway.

Who benefited from it? Is it a one-time thing or will it be much more home-based in the future? If so, what are the financial consequences?

One winner from this crisis is Ikea. “Overall, we are very satisfied with the sales development in the corresponding fiscal year,” said a spokeswoman (the fiscal year just ended at Ikea on August 31). Sure, when all the furniture stores had to close, it was also a shock to the group. But what followed made up for the losses, and more. The business result will be even higher than last year.

At first, customers had a lot to do with the reopening, but the demand continues: “At the beginning of the closing, it was mainly office furniture and balcony accessories that were in demand, now all product segments, including items from the market hall, are in demand again. ” Stores were tasked with managing customers’ online orders during closing. Ikea expects an online business increase of 45 percent compared to the previous year.

Furniture: many online sales, few commercial clients

But is that representative of the industry? Christian Haeser from Handelsverband Wohnen und Büro is less enthusiastic. “Unfortunately, pent-up customer demand could not fully compensate for the inconvenience,” he says. “We’ve seen a boom in office chairs; the connection to the home office is obvious. However, the decline in business orders was relatively strong, so it was a difficult time for the industry.”

It certainly plays a role that many small and medium furniture retailers rely heavily on their business premises. The business closing cost them 30 to 40 percent of their turnover in the respective months compared to the previous year, according to Haeser: “Many companies then quickly set up their own mail order or offer ‘Click and Collect'” . With “Click and Collect”, customers prepare their delivery online and collect it at the store themselves; something like this was often allowed long before the store could reopen. As a result of these efforts, online share in the furniture industry increased by 25 percent compared to the previous year.

“Our distributors report that many clients have invested time and money in beautifying their homes because they had to cancel their vacations this year,” says Haeser. In the high-price segment, the VAT reduction also helps, especially in built-in kitchens: “With such large investments, the savings are remarkably beneficial.” So it happens that the spring losses don’t have much of an impact: “If there is no more lockdown, the end result in 2020 will be a hit,” says Haeser.

Hardware stores: pools sold out

Hardware stores were soon considered winners as well. In many federal states they were allowed to reopen earlier than other industries because home repairs and supplies for craftsmen’s services are considered basic necessities. The long lines of customers that formed in the parking lots of the hardware stores were notorious. “But after the reopening, the business was not as lucrative as it used to seem because of it,” says Frank Roth, press spokesman for the Hagebau markets headquarters, which organizes the purchase of around 360 hardware stores in Germany. . “The queues were also created because we allow fewer customers to enter our sales areas so that they can comply with distance regulations.”

In the industry they are said to have made about a third more sales than in an average spring, a good time for hardware stores anyway. Spring was also “exceptional” for the Hagebau markets, if only because the spring high lasted longer than usual, “seven to eight weeks”.

Normally, the spring business is mainly based on typical garden products: seeds, grills, lawn mowers. “This year, other product groups were also stronger than usual, for example, wall paint,” says Roth. “Obviously for many clients it wasn’t just about renovating their homes in the spring. Many first bought basic equipment for that job.”

Roth thinks it’s plausible that many other people would make up for what they lacked in their own homes this year: “The pools were sold out early and of all sizes. For many, that was a substitute for the summer vacation they missed.” The bottom line is that his group “will get away with it because we were able to recoup many of the initial losses afterward.”

Garden designer: deadlines are the biggest problem

Escaping into your own garden was also good business for the garden designers. Lutze von Wurmb is president of the Federal Association for Gardening, Landscaping and Construction of Playgrounds and says, “In the area of ​​private gardens, our industry has had virtually no crown dent.” Given that the industry works mainly for private clients, “almost no company has serious problems due to the crisis.”

Clients are more likely to have problems if they want to make an appointment this year. “One of my clients wanted their front and back garden to be redesigned in the previous year,” says von Wurmb, who runs a horticulture business in Uetersen in northern Germany. “But we only created the front yard.” Landscapers also benefit from reduced VAT, individual customers prefer orders, says von Wurmb: “With order volumes of 30,000 to 50,000 euros, which is not unusual for private gardens, it is also worth a difference from the three per cent”.

And in the future?

The balance is decent to positive in the business areas that revolve around beautiful living. But can we also draw conclusions about the future of this?

A few weeks ago, the management consultancy Accenture published a survey of 15 industrialized countries, including Germany. Now a “decade of home” could be approaching. Almost 70 percent of those surveyed said they would maintain the majority of their social contacts whether at home, with a friend or virtually in the next six months. More than half of those who had never worked from home before the pandemic want to do so more often in the future.