The Philippines is one of the most attractive household goods markets in Asia, a Fitch Group unit said, with spending in the segment expected worth over $5 billion dollars by 2022.
BMI Research, in a report released on Thursday, said household goods spending in the Philippines could grow by an average 6 percent annually over 2018 and 2022, with the segment forecast to be worth P197.5 billion ($4 billion) this year, rising to P249.7 billion ($5.1 billion) in 2022.
“This growth in spending will be driven by rising disposable incomes in the country with a growing middle-income segment (household disposable income of $10,000 to $25,000) capable of spending on ‘big-ticket’ furniture items like sofas and cabinets,” it said.
BMI estimates that households in the middle-income segment and above to grow by 5.3 million over 2018 and 2022, accounting for 37 percent of total households in 2022 — up from 18 percent in 2018.
Growing wealth levels will lend support to spending on larger furniture items, as well as, higher quality furniture and furnishings offered by IKEA for example, compared to locally produced furniture, it added.
The Fitch unit noted that Philippines also offers a high proportion of young adults who are likely looking to furnish their first homes.
The country’s demographics, it said “will be most appealing for household goods retailers that target first-time home buyers (who tend to be younger).”
Those between the ages of 25 to 29 are most likely to be first-time buyers “but we do note that due to rising housing prices, individuals are spending longer renting or living at home with their parents and have thus extended this to include those aged 30 to 34 years old,” BMI said.
The ranks of those aged 25 to 34 years old, it added, are expected to increase to 18.3 million by the end of 2022 from 16.8 million people in 2018.
“The attractiveness of this market has caught the attention of Swedish furniture giant IKEA, which is set to open in the country at an undisclosed date,” BMI pointed out.
IKEA, it added, will be competing with local companies such as the Abensons Group’s Homeplus Furniture and Robinsons Retail’s Handyman, and foreign players such as US firm ACE Hardware and Japan’s Miniso and Muji.
Spending on furniture and furnishings is expected to post robust growth of 8.3 percent per year from 2018 to 2022, while spending on consumer electronics, toys, sports and gardens is expected to decline by 0.9 percent over the same period.