Boston, MA -- (SBWIRE) -- 08/19/2014 -- Home furnishings continues to be negatively impacted by the local inflationary context and policies aimed at reducing demand for foreign exchange. Both demand and supply have been impacted reducing category activity. After the imposition of imports barriers in 2012, many international brands experienced large product shortages, with local players not being able to fully substitute imported products. On the other hand, the regulation banning foreign exchange purchases for individuals imposed in 2012 and further strengthened in 2013, severely impacted construction and improvement activity as new and existing home sales were denominated in US dollars.

Competitive Landscape:

With a highly fragmented home furnishings category, other local brands continue to lead sales in 2013, followed by private label. In Argentina, there are virtually three groups of furniture enterprises. The first encompasses small and micro enterprises producing low quality products with high informality in their manufacturing processes and below average investments in technology and design. The second are small and medium companies that use more technology in their process and have their own design or transferred from international companies, selling their products to more demanding local clients. The third group of companies produces low quality products yet on a large production scale applying advanced technology and selling their products through the largest retailers, according to a study performed by the local institute of industrial technology.

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Industry Prospects:

During the years prior to 2011 imports of ready-to-assemble furniture grew strongly. However from 2011 onwards the situation was reversed as the Secretary of Commerce imposed quotas on furniture imports. This favoured the local industry as in 2012 imports of wooden furniture and their parts fell 40% while exports fell less than 10%, according to INDEC, the official statistics institute, helping the trade balance to go from a trade deficit of US$15 million to US$3 million.