What is the demand for home decoration and home textiles in the European market?

The European market for home decoration and home textiles (HDHT) peaked in 2022, after bouncing back from an import dip due to international trade disruptions. However, increased prices and low consumer confidence pose a challenge. Many imports come directly from developing countries. Because European importers often re-export products, you should focus on segments rather than countries. The mid- to high-end markets are particularly promising. If you can meet the need for sustainability and add unique value, there is potential across the sector.

1. What makes Europe an interesting market for home decoration and home textiles?

European HDHT imports peaked in 2022, following strong recovery from previous trade disruptions. Consumers’ renewed focus on the home and garden is expected to keep driving demand, with sustainability becoming more and more important. At the same time, relatively high prices and low consumer confidence make consumers less eager to spend. Developing countries play a key role in the market. The mid- to high-end segments offer opportunities and allow you to avoid competing with mass production from countries like China in the low-end segment.

European imports peaked in 2022

Marketing and services for the European HDHT market generally take place within Europe. However, a lot of production takes place in lower-cost (developing) countries outside of Europe.

Source: UN Comtrade

Europe’s HDHT imports grew from €156 billion in 2019 to €162 billion in 2023, at an average annual growth rate (CAGR) of 0.9%. This modest overall growth included considerable fluctuations. The COVID-19 pandemic led to a -6.2% drop in 2020, after which imports bounced back with 20% growth in 2021. This large increase was most likely due to delayed shipments from 2020. Modest growth followed in 2022, before imports returned to values comparable to pre-pandemic levels in 2023.

The worldwide HDHT import market showed the same pattern. With a stable global market share of about 39%, Europe is a key market for HDHT products.

Similarly, Europe’s direct HDHT imports from developing countries grew from €66 billion in 2019 to €67 billion in 2023, at a CAGR of 0.4%. This translated to a market share of 41% in 2023. However, the actual market share is probably much higher because a lot of intra-European trade consists of re-exported products from developing countries. This makes Europe a particularly interesting market for you.

These overall data mainly reflect home decoration imports, which generally account for 88% of total European HDHT imports. However, a closer look at home textile imports reveals a different pattern.

Source: UN Comtrade

Unlike in home decoration, most of Europe’s home textile imports come directly from developing countries – about 60% on average. This translated to €11 billion worth of home textiles out of a total value of €18 billion in 2023.

Rising prices and low consumer confidence challenge the market

The recent fluctuations in HDHT imports had various causes. The effects of the COVID-19 pandemic and the war in Ukraine have disrupted international trade. First, the pandemic caused costs of raw materials, energy and transport to rise. In January/February 2022, key HDHT stakeholders estimated their costs to be 19% higher compared to the year prior.

Figure 3: Impact of cost increases on HDHT companies, Jan-Feb 2022

Source: Maison et Objet Barometer – Issue 3

After that, costs rose further due to the war in Ukraine. By October 2022, 42% of the HDHT companies were strongly impacted in their business by the energy crisis. These longer-term cost increases forced HDHT companies to raise their prices, also leading to higher prices that may deter consumers from purchasing. As some costs have come back down again, such as freight rates, some companies have responded by lowering their prices again too. However, consumer prices generally continue to be higher than before the pandemic.

Consumer spending and confidence are under pressure

The HDHT sector is sensitive to economic cycles. When economic circumstances and prospects are down, consumers postpone buying items that they do not urgently ’need’. When economic conditions are good, purchases of such non-essential products tend to rise.

European consumer confidence fell sharply in March 2022 due to the situation in Ukraine and the subsequent energy crisis. This reflected a large drop in households’ expectations about the general economic situation in their country, and their own future financial situation. Consumers’ intent to make major purchases also declined. An Autumn 2022 survey revealed that about half of European consumers planned to spend less on home and furniture. Although consumer confidence has improved since then, it remains below the long-term average. In line with this, in February 2024 about half of European consumers still intended to spend less on home decoration and furniture.

Source: OECD

Before the pandemic, consumer spending (‘private consumption expenditure’) in the leading European HDHT markets (Germany, France, UK, Netherlands, Italy and Spain) grew by about 1-3% per year. 2020 broke this trend, with decreases across Europe. In 2021, growth bounced back. Forecasts for 2024-2025 are modest, in line with consumer confidence. This seems to be reflected in the April 2024 Maison&Objet Barometer. For most HDHT professionals, sales were either the same (36%) or went up (25%) in the previous six months compared to the same period in the previous year. For April-September 2024, 45% of HDHT professionals expect their sales outlook to be neutral. Prospects are positive for 34% of the HDHT professionals.

The combination of high prices and low consumer confidence may lead consumers to trade down towards lower-end products, or save up for more timeless items as offered by the mid-high to premium segments. At the same time, pandemic-related lockdowns have led to an increased focus on the home and garden, and rise of  trends like wellness and ‘home sweet home’. The importance of the home and garden is generally expected to stay high and drive demand for HDHT products. This may partially compensate for the pressure that the cost-of-living crisis puts on consumer spending.

Demand for sustainable HDHT is growing

Sustainability is becoming a must in the European HDHT market. The new European Green Deal includes both environmental and social requirements. In this context, many European laws are under revision and new legislation is being developed. Some of this legislation will apply to you directly, some indirectly via your buyers. If you prepare well and can meet the requirements, this new legislation can create opportunities.

In addition to these legal developments, European consumers are also increasingly adopting more sustainable lifestyles. The COVID-19 pandemic has boosted this trend. An impressive 86% of consumers in various European markets consider sustainability (very) important, and 29% deliberately and consciously buy sustainable products. At the same time, the current cost-of-living crisis drives the need for sustainable products to be affordable.

Although there are no official trade data on sustainable HDHT products, HDHT retailers have previously noticed growing interest from their customers in ethical products – including items made with natural or recycled/recyclable materials, using socially responsible modes of production. Despite the cost-of-living crisis, 55% of British adults in a 2024 survey say it is important that their HDHT products are made sustainably. Retailers have also noted increased demand for recycled products, upcycled products and second-hand/pre-owned items. Interest in these products is likewise reflected in British consumer behaviour, for example.

* in the previous 12 months

Source: Deloitte

China is becoming less dominant in the European HDHT market

China is Europe’s main HDHT supplier, but its dominance is declining. The country’s large-scale and highly mechanised production systems, combined with the availability of (especially man-made) raw materials make it a competitive supplier. However, rising labour costs have affected its price competitiveness, and trade disruptions impact exports. European importers are increasingly looking for suppliers in other (developing) countries. They want to diversify their collection, become less dependent on China as a single supplier, and/or order shorter runs to reduce stock risk.

* Excluding China

Source: UN Comtrade

In this context, China’s HDHT exports to Europe declined from €47 billion in 2019 to €46 billion in 2023. As a result, the country’s direct market share dropped from 30% to 28%. The other leading suppliers are all European countries, trading (and often re-exporting) within Europe. Germany is the largest, with €16 billion in 2023. Poland follows with €11 billion, Italy with €10 billion, France with €7.2 billion, and the Netherlands with €6.9 billion.

In general, your focus should be on the mid- to high-end market. These segments offer you good opportunities if you can add value to your products, for example via design, craftsmanship, and sustainable aspects. This allows you to avoid competition from mass-producing low-cost countries at the lower ends of the market, like China.

Developing countries outside of China are performing relatively well

The interest in finding alternatives to Chinese suppliers could benefit companies from other developing countries, like you. Their combined supplies of HDHT products to Europe grew from €19 billion in 2019 to €21 billion in 2023, at a CAGR of 2.6%. This added up to a market share of 13% in 2023.

Out of these countries, the 6 leading suppliers are:

1. Türkiye - €3.9 billion
2. India - €3.7 billion
3. Vietnam - €3.4 billion
4. Pakistan - €2.6 billion
5. Indonesia - €1.3 billion
6. Bangladesh - €1.1 billion

Categorising these imports reveals that China almost completely focuses on home decoration (93%). The supply from other developing countries is more balanced, with 64% home decoration products and 36% home textiles. Individual countries clearly differ in their focus category.

Home decoration supplies from developing countries other than China

Source: UN Comtrade

When it comes to home decoration exports from developing countries other than China to Europe, Vietnam is leading. The country directly supplied 2.4% of Europe’s home decoration imports in 2023. India and Türkiye followed with direct market shares of 1.5% each, and Indonesia supplied a further 1%. Thailand and Serbia accounted for about 0.4% each.

Vietnam mainly specialises in home decoration (85%), rather than home textiles (15%). Like producers from China, Vietnamese suppliers are very productive and can deliver at low cost. They generally have a good idea of what is commercial and trendy, and effectively combine handmade and mechanised production. As a result, they can be an effective (second- or dual-sourcing) alternative to China. Although there are exceptions, Vietnam mainly produces for the lower-end segments with limited design value. This should generally not be your focus.

Manufacturers from India, Indonesia and Thailand tend to be more of a direct competition for you. These producers often have access to a wide range of natural materials and skilled craftsmanship. This allows them to compete in the mid- to high-end segments of the European market. These countries each have their own offering and established place in the market. For example, Indonesia is Europe’s leading supplier of rattan furniture, as the country is estimated to produce up to 80% of the world’s rattan.

Turkish suppliers provide a mix of industrial and handmade production at relatively low costs. They benefit from their location close to Europe, which allows them to offer short delivery times. Eastern European countries also offer a convenient location and relatively low labour costs. In 2022 Serbia joined the top-6 suppliers from developing countries other than China – overtaking Ukraine, which now comes 7^th. Bosnia-Herzegovina is in 9^th position.

Home textile supplies from developing countries other than China