COVID-19 IMPACT ON GDP

KSA’s GDP & FORECAST

Due to COVID-19 the impact on the GDP is quite significant and will lead to changes in the actual value prediction for VISION 2030 of KSA govt

WORLD ECONOMIC OUTLOOK 1

 Real GDP growth will shrink by -2.3% as compared to the

2020 F -2.3 0.9 6 -3.1 previous year due to reduced economic activities resulting from
COVID-19
 The unemployment rate is expected to be constant due to govt
-0.9 2 6 -3.4 plans on the infusion of money in infrastructure projects, which
2021 F counterbalances the job losses due to COVID
 As around 70% of govt revenue comes from the Oil and its
Real GDP growth* Inflation rate* Unemployment Current account export, the current account balance is expected to fall due to
rate* balance as % of GDP stagnation in the oil market for the short term
*Annual percentage change

FISCAL MONITOR 1

 There will be an increase in net borrowing in the year 2020 and

2019 -4.5 31.2 35.6 22.8 the trend will continue in 2021 due to the following factors:

• Nearly 67% of the total exports of the country is related to oil and
2020 F -12.6 26 37.6 34 hence revenue will get impacted due to pandemic prevention
measures followed across the globe
2021 F -9 28.6 35.7 38.6 • Declining per capital GDP of the country will lead to decline in
expected expenditures levels of 40%. Hence, the net debt will also
Net Lending/ Revenue as Expenditure as Gross Debt as have to rise to keep the economy running.
borrowing** % of GDP % of GDP % of GDP

** Amount of money the country spend (+) / borrow(-) to keep the economy running it is calculated as % of GDP F= Forecasted
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 MARKET OVERVIEW

KSA FURNITURE MARKET (1/2)

7
Global trend is stagnant but KSA market is expected to grow at the rate of 10% on an average over the next 5 years.

BASIC DYNAMICS
2
Statistics for KSA furniture and homeware market** Market Drivers 3

2019 82.2 4.2 12.2 1 Demographic Factors

 Disposable incomes: Income that remains after cutting the taxes
 Growth of real estate & hospitality industries: The industry is ever
2020 F* 103 5.2 15 growing with a good tourism base in KSA
 Demand for luxury and premium furniture: City specific demands

2021 F* 116 6.5 18.4 2 Government Projects

 Al-Faisaliah City project: 2450 Sq Km city project. It is being developed
with respect to the VISION 2030
Revenue (in USD) Users (in Mn) Penetration Rate (in %)  Jeddah Downtown ($5 Bn Investment): Project to create unique
tourist residential and commercial destination
KSA Furniture market concentration
KSA furniture market is 3 Technological Implementation
composed of several  Integration of internet of things into furniture products is projected to
international as well as further escalate the market growth.
Low High regional players  Online sales is driven by smartphone penetration

4
GOVERNMENT 2030 VISION

Predicted commercial Predicted residential To diversify from the oil based economy govt of KSA is planning to make contributions in
$9.7 $7.9
construction market by construction market by different non oil sectors. The current investments in commercial and residential construction
Bn Bn
2024 (5.26% CAGR) 2024 (5.15% CAGR) markets is going to improve business of furniture market as no of users will increase.

* F= Forecasted ** All the figures mentioned are adjusted for the impact of COVID-19. © 2019 Copyright Acuvon. All Rights Reserved. 2
 MARKET OVERVIEW

KSA FURNITURE MARKET (2/2)

7
Global trend is stagnant but KSA market is expected to grow at the rate of 10% on an average over the next 5 years.
8
PRODUCT CATEGORIZATION AND INFLUENCING FACTOR IN MTO
Quality
Bedroom Dinning room Livingroom Office
Furnitures Furnitures Furnitures Furnitures
Design

Generally It primarily is used It is 2nd largest It is 2nd most major Material Price
accounts for the for dinning segment in category of the
largest share in purposes and have commercial furniture market.
commercial the following major market of Mostly influenced 17
Service Furniture attributes
furniture market. products: furniture by the presence of
It primarily • Dinning Table industry. It IT/ITeS, BPO’s, sorted with
include the • Dinning Chairs primarily includes KPO’s, LPO’s etc decreasing of
Material Price importance of the
following following and it is majorly
products: Kitchen Furnitures products: demanded in the attribute in a choice
metropolitan situation for the
• Beds • Sofa sets cities. The consumer
Domestic
• Wardrobes • Recliners following items are
• Dressers It includes mainly • Accent Chairs included generally:
• Chests modular segments • Wing chairs • Chairs Environmental
• Side Tables of the furniture’s: • Side Tables • Office tables
• Book Shelves • Cabinets • TV units • Cabinets
• Nightstands • Sideboards • Bookshelves • Executive sofa Style
• Vanities • Display Units • Lobby sets
• Trunks • Kitchen stands • Console Tables
Advertising
COMMERCIAL MARKET OFFICE
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 COMPETITOR OVERVIEW

KSA FURNITURE MARKET PLAYERS

Players in the KSA furniture market are analyzed to understand their positioning in the market
International * The companies personalize the furniture for their clients
players 9
High
Herman Miller*
KSA regional
15
players creative closest*
16
Habitat*
 The key competitors are divided into major
segments of International and KSA Specific
10
based on their region of operations.
Kinnarps  Herman Miller is the only international player to
offer customized products to customers
Personalization  Most of the regional players operate in MTO
Yes 13 No category
Saudi Modern Factory*  There is clearly a gap in terms of making
customized furniture of the low income group
as well as targeting mid income group for both
14
the segments.
Riyadh Furniture Industries  All the companies have online presence.
11
Currently the total business of the online
HOF Furnitures platform is around 0.5% to 0.6% of the total
furniture market of KSA
12

IKEA

Low

INCOME GROUP
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 Market Overview

TMRAD MARKET POTENTIAL

TMRAD has a high potential to capture relevant market share and scale up existing business

2
82 Mn 64 Mn 45 Mn 4.5 Mn
USD USD USD USD

Total Furniture and
Homeware market (KSA)
Total Furniture market (KSA)
Assumption: Furniture
accounts for 80% revenue of
Furniture and Homeware
market
Total MTO Furniture market
(KSA)
Assumption: MTO accounts
for 70% revenue of
Furniture market owing to
high ticket size
Potential market for TMRAD
Assumption: TMRAD is able
to grab a market share of
10% owing to presence of
large set of players and
geography of operations of
TMRAD

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 APPENDIX

APPENDIX (1/2)
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MARKET ACTIVITIES

Pre-Production Raw material and Production and Distribution: Retailing:

There are broadly 5 market
service: components: Assembly
activities in the furniture
market. These activities
starts from making the
design of the product and
ends at delivering the
furniture to the retail Focus on designing Focus on acquisition, Focus on furniture Focus on Focus on selling of the
outlets, which is mostly the and not storage and transport manufacturing transportation, products through
point of contact for the manufacturing (to manufacturing warehousing and online or company
consumers. units) of raw wholesaling of owned store.
materials manufactured furniture

5
CONSUMER SENTIMENT IN MTO FURNITURE MARKET

1 Major Consumers 2 Willingness to pay 3 Brand loyalty

In make to order business furniture market
most of the customer belongs to age group
of 25-39
Now a days consumers are willing to pay a
premium price for their own customised
furniture to showcase their lifestyle. Nearly
55% people are willing to pay more than
20% as premium.
Consumers are generally loyal to a particular
brand. It is a common psychology that can
not be denied when it comes to purchasing
lifestyle items. It is found that almost 4 out
of 10 who like to buy customized furniture
still gives importance to brands.

< 25 25-39 > 39

The size of the icon shows the market share they influence

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 APPENDIX

APPENDIX (2/2)

Sl No. Sources Links Sl No. Sources Links

International Monetary
1 13 Saudi Modern Factory
Fund

2 Statista 14 Riyad Furniture Industry

3 GM Insights 15 Creative closets

4 VISION 2030 – Govt of KSA 16 Habitat

5 Deloitte Report 17 Springer research paper

6 Researchgate.net

7 Kenresearch

8 Furniture market outllook

9 Herman Miller

10 Kinnarps

11 HOF Furnitures

12 IKEA
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