The German kitchen industry, renowned globally, is experiencing a sharp drop in sales both domestically and internationally over the past two years. With high energy costs and a skilled labor shortage, the situation has become increasingly tense.
Challenges for the German kitchen industry
The once-thriving German kitchen industry is facing difficult times, as shown by recent data from the Association of the German Furniture Industry (VDM). According to Jan Kurth, Managing Director of VDM, the sector’s sales dropped by 9.8% in the first half of 2024, amounting to approximately €2.9 billion. The decline comes after years of strong growth, and the reasons behind it are multifaceted. In addition to rising energy and food prices, political uncertainty surrounding the current government is contributing to the crisis. Kurth expressed concerns that many have lost faith in the government’s ability to address the nation’s problems.
The industry is also struggling with international sales. While nearly 46% of revenue in the first half of 2024 came from exports, demand in key markets like Poland, France, Austria, and Switzerland has stagnated. In contrast, the United States saw a 5.2% increase in German kitchen exports, which Kurth attributed to a special trade fair effect. China also showed a slight rise in demand. Despite these successes, overall foreign sales fell by 8.8% in the first six months of the year.
Domestic challenges and workforce cuts
The domestic situation has also become more challenging, with the decline in housing construction in Germany exacerbating the industry’s difficulties. This slowdown has affected the entire furniture and kitchen manufacturing sector. As Michael Lehmkuhl, Managing Director of Hettich, a key supplier to many kitchen manufacturers, noted, the crisis in the construction industry has directly impacted the demand for their furniture fittings. Hettich’s revenues dropped by €200 million in 2023, reaching €1.3 billion.
Many kitchen manufacturers have responded to the weakened market by introducing short-time work. Over one-third of the companies in the sector have taken advantage of this measure. Some, like luxury kitchen manufacturer Siematic, have also announced layoffs. Siematic, which is headquartered in Löhne, plans to reduce its workforce by around 20 employees, particularly in administrative roles.
Construction crisis and industry outlook
The ongoing housing construction crisis in Germany is a major concern for the kitchen industry. The slowdown in new housing projects means fewer opportunities for kitchen sales, as each new build typically triggers subsequent moves and additional furniture purchases. Kurth warned that this drop in demand could have long-term effects on the industry, extending into the coming decades. He urged the government to take action to stimulate the housing market and prevent further job losses in the industry.
Despite these challenges, there are some signs of hope. Kurth noted that as summer fades, people tend to shift their focus back to home improvement, which could provide a boost to the kitchen industry in the autumn. However, this uptick is unlikely to fully compensate for the losses recorded in the first half of the year. Kurth predicted an overall decline in revenue for the industry of 7% to 9% by the end of 2024.
Optimism ahead of Löhne trade fair
Amid these difficulties, the kitchen industry is preparing for the Area 30 trade fair in Löhne, starting on September 21. The event, which attracts manufacturers, suppliers, and buyers from around the world, remains a key moment for the industry. Despite the current market challenges, interest in the trade fair is stable, with exhibitors hoping for strong business results.
Talks and presentations during the event will offer insights on how to address declining demand. One such discussion will be led by consultant Ralph Steffens, who will speak on strategies to counter shrinking kitchen sales. Given the current market conditions, the session is expected to draw significant attention.
