Following a downturn in furniture sales, the Federation of Furniture Associations (MOSFED) took action by sending a letter to Fatih Karahan, President of the Central Bank of the Republic of Turkey (CBRT). Signed by MOSFED President Ahmet Güleç, the letter outlined sectoral challenges and proposed an increase in the number of installments permitted for credit card sales as a potential solution. Additionally, the letter underscored that expanding installment options for furniture purchases would deter informal transactions and aid in resolving tax-related issues.

While escalating costs attributed to high inflation persistently drive up prices of goods and services, the furniture sector demonstrates its commitment to supporting the implemented financial policies by refraining from engaging in aggressive pricing tactics, avoiding layoffs, and not passing on the discrepancies in maturity levels of card sales to consumers. Conversely, the sector faces challenging times marked by dwindling sales figures in both domestic and international markets. Responding to alleviate the sector’s plight, the Federation of Furniture Associations (MOSFED) took action by sending a letter to Fatih Karahan, President of the Central Bank of the Republic of Turkey (CBRT), following the release of the first inflation report of the year.

In the correspondence penned by MOSFED President Ahmet Güleç, a request was made to extend the number of installments permitted for credit card transactions involving furniture purchases—a necessity for individuals across all income brackets, given the product’s essentiality and long service life spanning between 10 to 20 years. Addressing the escalation in raw material and working capital costs fueled by inflation, Ahmet Güleç highlighted the sector’s commitment to maintaining stable prices until the conclusion of 2023, in support of fiscal policies and to alleviate the burden on consumers grappling with the cost of living. He emphasized the avoidance of aggressive price hikes thereafter. Güleç remarked, “According to TURKSTAT data, the furniture industry, comprising nearly 50 thousand manufacturers, generates approximately 250 thousand direct employment opportunities. Furthermore, our furniture exports, which amounted to around $250 million during the 2001 crisis, have surged by 21-fold, reaching $5.2 billion. However, our sector, with a production volume of $12 billion, has started feeling adverse effects stemming from the rising exchange rates and escalating labor and material costs due to interest rate reductions since the autumn of 2021. Declining real estate transactions and an escalating cost of living have contributed to a downturn in furniture demand. In 2023, there was a 15 percent decline in domestic market sales, with exports experiencing a 3.3 percent decrease compared to the previous year. Our competitiveness in export markets has been eroded due to our relatively high prices. To maintain sustainable growth momentum, it’s imperative that we mitigate the losses in both export and domestic markets, ensuring our producers can manage costs effectively. Enhancing installment options for credit card transactions emerges as a viable solution to alleviate pressures on the furniture sector.”

Difficult purchase decision, credit card instalments are a must

Ahmet Güleç highlighted the significant challenges faced by the furniture sector in the domestic market, yet underscored its resilience in maintaining employment and investments amidst adversity. He expressed, “The decision to invest in furniture, being a durable consumer good, isn’t taken lightly by consumers, considering its utility and price. However, with the pervasive impact of high inflation, the decision-making process and subsequent purchases have notably slowed down. Recent months have witnessed a steep 15 percent decline in domestic furniture sales. Failure to regulate the number of credit card installments in the near future will exacerbate the existing challenges faced by our sector. Furthermore, this could lead to a surge in informal transactions.” Güleç emphasized the necessity of increasing installment options for furniture purchases, stating, “Over the past five years, producers and sellers in our sector have refrained from passing on maturity differences to prices, absorbing much of the associated losses. However, measures impeding purchase accessibility could inflict irreversible damage on our sector. Despite the strains posed by cost of living and currency fluctuations, companies in our sector have demonstrated resilience by refraining from layoffs. Additionally, many businesses have begun offering installment plans at cash prices. Any measures further dampening demand within our sector would thwart these commendable efforts that deserve recognition.”