"General State of Interior Fabrics Business Market Size Determitation"1995

Nippon Interior Fabrics Association, JAPAN

General Remarks

Current State of the Interior Fabrics Product Market

Window treatment products 307.2 billion yen

Floor covering products 338.1 billion yen

Wall covering products 211.5 billion yen

It was determined that the market size for interior fabric products in fiscal year 1995 (wholesale conversion base, hereafter the same) was 307.19 billion yen (year-on-year increase of 2.7%) for window treatment products, 338.1 billion yen for floor covering products (3.8% decrease), and 211.5 billion yen (0.9% increase) for wall covering products.

The interior market in fiscal year 1995, continuing the trend from the previous fiscal year, generally remained sluggish. This can be blamed on a major change in construction that accounts for much of interior demand: housing starts fell for the first time in four years. While there was sizable demand among stores, nonresidential construction also struggled to recover.

Window treatment products overall managed to inch past previous year's figure. Although the market size for blinds fell for the third consecutive year, strong performance by screens, combined with steady sales of curtains and curtain rails contributed to the gain.

Floor covering products, both carpet and plastic floor covering products, continued to wane. There are signs, however, that carpet is beginning to bottom out.

As for wall covering products, wallpaper production and shipment recorded highest figures ever due to the increase in demand for wall renovation. Due to the fall in prices, however, the wall covering product market realized only a small gain in terms of value from the previous fiscal year.

Window treatment products

The market size for window treatment products in fiscal year 1995 was determined to be 187.5 billion yen for curtains (year-on-year increase of 3.6%), 48.71 billion yen for blinds (4.1% decrease), 29.21 billion yen for screens and shades (8.6% increase), and 41.77 billion yen for curtain rails (3.6% increase). Therefore, the total market size was 307.19 billion yen (2.7% increase).

Despite the fall in housing starts, curtains recorded second consecutive year of increase due to the strong demand. Some prominent trends in the curtain market are that the percentage of yarn dyed products has fell while that of cloth dyed products rose and that imports, primarily from Asia, continued to increase.

Blinds continued to struggle as it saw its market size fall below the 50 billion yen mark. Screens and shades remained strong. Although roll screens (year-on-year increase of 2.6%) and pleated screens (1.0% increase) experienced slower growth, Roman shades soared 50% from last fiscal year to give a big boost to the market.

Decorative rails, which produce higher profit margins, continued a double-digit growth. Curtain rails overall, however, slightly exceeded previous year's figure.

Floor covering products

While there is great diversity in floor covering products, they can generally be categorized into fabrics (carpet), plastics, and wooden. As in the past, we determined the market sizes of carpet and plastic floor products as these are the products that NIF (Nippon Interior Fabrics Association) members handle the most.

The market size for floor coverings in fiscal year 1995 was 293.5 billion yen for carpet (year-on-year decrease of 3.7%) and 44.6 billion yen for plastic flooring material (4.3% decrease), bringing total market size to 338.1 billion yen (3.8% decrease).

Among carpet products, regular use tufted carpet and automotive use needle punch carpet posted the first year-on-year increases since the Association began statistics work on market size. As a predominant share of carpet imports were low-priced products, carpet imports in terms of value dropped 5% despite their increased volume.

The Association determines market size for three types of plastic flooring materials for which data are available: composition tiles, regular vinyl sheets, and cushioned flooring. Due to the slowdown in residential investment, cushion floor marked a year-on-year decrease for the first time in two years. Composition tiles and regular vinyl sheets also suffered continuing setbacks due to the sluggish contract market.

Wall covering products

The Association again used wall paper as a yardstick to determine the size of the wall covering market. In determining the market size, Wallpaper Production and Shipment Statistics prepared by the Wall covering Association of Japan was used as reference material. As for other wallpaper products sold in such stores as do-it-yourself stores that are not included in the aforementioned statistics, the Association took an excerpt on wallpaper statistics from the Volumes and Values of Merchandise statistics from the Household Fusuma and Wallpaper Association.

The market size for wallpaper in fiscal year 1995 was determined to have posted year-on-year growth of 0.9% to reach 211.49 billion yen. While the rate of growth slowed in fiscal year 1995, both production and shipment volumes posted the highest figures ever for the third consecutive year. Cloth wallpaper suffered the seventh consecutive year of double-digit dip, falling to one-third of the ten-year peak in 1988. Vinyl wallpaper moved in the same fashion as the entire market. Since vinyl wallpaper accounts for some 90% of the wallpaper market, the trend of vinyl wallpaper affects the entire wallpaper market.

Note: The total figures that appear in the tables are slightly different from the sum of the individual figures due to rounding.

Window Treatment Products

<Curtains>

Despite the severe environment as exemplified by the fall in housing starts (4.9% decrease) for the first time in four years in fiscal year 1995, the curtain market size in this fiscal year increased for the second consecutive year due to firm demand.

It was determined that the curtain market size in fiscal year 1995 posted year-on-year growth of 3.5% to 187.5 billion yen. A breakdown by domestic and imported products reveals that both types of products posted year-on-year increases for the second consecutive year. Domestic products rose 2.5% (increase of 4.3 billion yen) from the previous fiscal year to 170 billion yen and imported products rose 14.3% (increase of 2.2 billion yen) from the previous fiscal year to 17.5 billion yen (refer to Table 1).

A look at the domestic product market size by type reveals that the market for order-made products grew 2.1% to 129.6 billion yen and that for ready-made products grew 4.1% to 40.4 billion yen. While there was little change in the overall shares of order-made products and that of ready-made products (order-made: 76.2%, ready-made: 23.8%), there was an increase in the share of cloth dyed order-made products. On the other hand, the share of yarn dyed order-made products fell. There was little change in the market size for lace casement products from last fiscal year.

Reviewing domestic product market size by product category, we see that while yarn dyed products dropped 2.8% from last fiscal year in terms of production volume, due to a slight increase in the average unit price, market size declined only slightly (decrease of 0.2 %) to 90.9 billion yen.

While cloth dyed products increased in terms of production volume (year-on-year increase of 10.8%), due to the ongoing popularity of low-priced products from last fiscal year, the average unit price dropped somewhat. As a result, the market size for ready-made products amounted to 10.1 billion yen and that for order-made products to 29.7 billion yen, or a total of 39.8 billion yen (year-on-year increase of 8.1%).

The production of lace casement products rose 7.2% from last fiscal year. As for market size, order-made products accounted for the greater share, rising 3.8% to 29.9 billion yen, while ready-made products rose 3.2% to amount to 9.4 billion yen. Combined, the market size grew 3.6% to 39.3 billion yen (refer to Table 2).

Imported products increased for four consecutive years.

Fueled by the popularity of low-priced products on the market, imports, particularly from Asia, surged (refer to Table 1).

Total production of curtain products rose 3.4% (increase of 5,770,000m2) from last fiscal year to 177,455,000m2. In particular, cloth dyed products recorded a two-digit growth, 10.9%, and lace casement products 7.0%. On the other hand, yarn dyed products continued to decline from last fiscal year (decrease of 2.8%).

Statistical data used in determining market size

1) Domestic products: The average unit price was determined through a fact-finding survey of NIF members and the ratio of order-made and ready-made products through the NIF Member Shipment Survey Report which were respectively based on the curtain production volume results of the Japan Chemical Fibres Association's "Survey Report of the Consumed Volume of Fibers in Interior Goods" (excluding accordion and blind cloth).

2) Imported products: Due to a lack of official data, the market size was determined by estimating the share in the import curtain market held by NIF members based on a fact- finding survey concerning imports of NIF members.

◆ The market size of both domestic and imported products are based on the average unit price of NIF members and any difference between this price and the actual average price in the market cannot be verified.

<Blinds>

In the fiscal year 1995 blind market, the demand for Venetian blinds waned due to the sluggish contract market. Combined with a fierce price competition, the market environment was severe. Weakness of Venetian blinds in the home use market can be blamed on the sluggish demand as well as the shift in preference to other elements.

Perhaps because of the unchanging perception of how vertical blinds should be used, there has been no significant change in its demand. Its growth has been hampered and as there is a trend for offices to renovate their interior, it is possible that demand could shift to other elements.

The market size of blinds in fiscal year 1995 was determined to be 40.32 billion yen (year-on-year decrease of 4.4%) for Venetian blinds, 8.39 billion yen (decrease of 2.8%) for vertical blinds, or a total of 48.71 billion yen (decrease of 4.1%). (Refer to Table 3.)

Statistical data used in determining market size

1) Market size was determined by using "Report on the Shipment of Interior Fabrics, Etc." issued by Textile and Apparel Products Division, Consumer Goods Industries Bureau, Ministry of International Trade and Industry and a fact-finding survey of NIF members.

<Screens>

In the fiscal year 1995 screen market, roll screens once again demonstrated their popularity, but not the remarkable growth rates of the past. Combined with the additional functionality offered by "mecha" fabrics, roll screens have secured a firm foothold in the marketplace. Roll screens now hold a commanding share in the construction of offices and stores.

The market for Roman shades is expanding. Additional value offered by mecha fabrics and the greater variety of styles have helped Roman shades gain acceptance as a window element. The market for Roman shades is expected to remain firm in the future. While pleated screens have been recognized as a new element that is essential to adding the Japanese flavor, its market has failed to grow.

It was determined that the size of the screens and shades market in fiscal year 1995 was 23.01 billion yen (year-on-year increase of 2.6%) for roll screens, 5.14 billion yen (increase of 50.7%) for Roman shades, 1.06 billion yen (increase of 1.0%) for pleated screens, or a total of 29.21 billion yen (increase of 8.6%). (Refer to Table 4.)

Statistical data used in determining market size

1) Market size was determined by using "Report on the Shipment of Interior Fabrics, Etc." issued by Textile and Apparel Products Division, Consumer Goods Industries Bureau, Ministry of International Trade and Industry and a fact-finding survey of NIF members.

<Curtain Rails>

The curtain rail market size in fiscal year 1995 increased, albeit by a small margin, despite the 4.9% year-on-year decrease in housing starts, which is an indicator for demand for curtain rails. Market size was determined to be 37.65 billion yen (year-on-year increase of 3.8%) for curtain rails, 3.42 billion (increase of 1.5%) for related parts, and 700 million yen (increase of 6.1%) for others, or a total of 41.77 billion yen (increase of 3.6%). (Refer to Table 5.)

A review of curtain rails by product category reveals that while the growth of decorative curtain rails has slowed, it is still a strong pace. This trend can be seen for window elements as a whole and can be attributed to consumers who are interested in decorating their windows and are aiming for unique decorations with fashionable elements that offer high additional value. On the other hand, in the functional curtain rail market, demand focused on low-priced products due to the severe price competition that was waged in the name of "price destruction." This trend is expected to continue both for decorative curtain rails and functional curtain rails.

It was determined that market size for curtain rails by category was 27.32 billion yen (year-on-year increase of 1.3%) for functional rails and 10.33 billion yen (increase of 11.1%) for decorative rails.

Statistical data used in determining market size

1) Market size was determined by using data by Japan Curtain Rail Industry Association.

Floor Covering Products

<Carpeting>

The market size for carpeting in fiscal year 1995 was determined to be 293.5 billion yen (year-on-year decrease of 3.7%). A breakdown of this figure shows that the market for domestic products amounted to 155.2 billion (decrease of 2.6%) and that for imported products to 138.3 billion (decrease of 5.0%). In other words, both domestic and imported product markets shrunk from last fiscal year. In determining market size, the Association used wholesale unit prices derived by taking into account the situation at each company based on fact-finding survey of NIF members as well as figures from other statistical data.

Of the domestically produced carpets, in terms of volume, regular use tufted carpet posted a 5.1% year-on-year gain and needle punch carpet a 9.8% increase, or a 1.4% overall increase. Due to the fall in unit price over the last three years or so, however, market size in terms of value shrunk by some 4 billion yen from last fiscal year.

However, unit prices of regular use tufted carpet and needle punch automotive carpet bottomed out and their markets recorded a year-on-year increase for the first time. Other carpets also suffered market shrinkage more due to the drop in volume rather than in unit price. This trend was especially evident in tile carpets, woven carpets, and hooked rugs, which are used primarily by businesses. Consequently, the market appeared to be more promising than it was last fiscal year.

As for imported carpeting, massive volumes of various products were brought into Japan last fiscal year as an attempt to alleviate the price difference between domestic and foreign products caused by the strong yen. Perhaps the market was correcting itself this fiscal year as its size fell 5.0% in value, despite an increase in volume by 9.0%. Consequently, the market appeared to have regained stability this fiscal year.

Statistical data used in determining market size

1) Average unit price: NIF fact-finding survey

2) Domestic products: Japan Chemical Fibres Association's "Survey Report of the Consumed Volume of Fibers in Interior Goods" and Japan Carpet Association's "Tufted Carpet Production Monthly Report"

3) Imported products: Ministry of Finance's "Japanese Trade Monthly"

<Plastic Floor Covering Materials>

Plastic floor covering materials can be classified into floor tiles, which may be either composition tiles or homogeneous tiles, and long-sized sheets, which maybe either vinyl sheets without a foam layer (e.g., regular vinyl sheets) and vinyl sheets with a foam layer (e.g., cushioned flooring). Since there is no data available for plastic floor covering materials other than composition tiles, regular vinyl sheets, and cushioned flooring, the market sizes of these three products were determined.

The market size for plastic floor covering materials by product category in fiscal year 1995 was 7.6 billion yen (year-on-year decrease of 3.8%) for composition tiles, 11.5 billion yen (decrease of 3.4%) for regular vinyl sheets, and 25.5 billion yen (decrease of 4.9%) for cushioned flooring, or a total of 44.6 billion yen (decrease of 4.3%). (Refer to Table 8.)

Composition tiles are being used in a variety of areas, particularly in the contract market. Although composition tiles regained some ground in commercial facilities in fiscal year 1995, the persistence of the sluggish office market has caused the market size to shrink from last fiscal year.

Regular vinyl sheets have been used consistently by schools, hospitals, factories, etc. In the future, an increasing demand can be anticipated from health welfare facilities. Because businesses failed to make full-fledged capital investments in fiscal year 1995, however, the market continued its downturn during the year.

Cushioned flooring achieved a remarkable growth since its production was domesticated in 1971. Its use took a downturn over the last few years, however, due to the emergence of wood flooring in homes and tiles and stone flooring in stores. Last fiscal year, however, cushioned flooring posted a slight increase due to the boom in housing. In fiscal year 1995, the fall in the housing market caused cushioned flooring market to take another dip.

Statistical data used in determining market size

1) Average unit price: NIF fact-finding survey

2) Production volume: Statistical materials of the Interior Floor Industrial Association

Wall Covering Products

<Wallpaper>

The wallpaper market in fiscal year 1995 recorded a sound growth despite the year-on-year decrease of 4.9% in housing starts. The growth, albeit slower than last fiscal year, is believed to have been supported by the recovery in non-residential market and the increase in renovation demand.

The market size for wallpaper in fiscal year 1995 was determined to have posted a year-on-year increase of 0.9% to 211.49 billion yen. A breakdown of this by category reveals that the figures were 6.72 billion for paper wallpaper (year-on-year increase of 17.7%), 8.98 billion yen (decrease of 12.6%) for cloth wallpaper, 178.25 billion yen (increase of 1.3%) for vinyl wallpaper, 750 million yen (increase of 15.4%) for chemical fiber wallpaper, 14.97 billion yen (decrease of 9.8%) for inorganic wallpaper, 920 million yen (increase of 2.56 times) for special wallpaper, and 900 million m2 yen (increase of 15 times) for other wallpaper.

In terms of volume, total production of wallpaper increased 5.5% from last fiscal year to 743.78 million m2 and total shipment increased 6.2% to 744.92 million Cloth wallpaper experienced the seventh consecutive year of two-digit decline.

Inorganic wallpaper, which boasts the unique feature of fire retardant, recorded a tow-digit year-on-year increase in fiscal year 1994. Perhaps due to the market's low-price trend, the product's rapid growth of more than five times in ten years has slowed.

Vinyl wallpaper marked a growth rate equal to that of the entire wallpaper market, both in terms of volume and value. Because vinyl wallpaper commands a 90% share of the wallpaper market, its trend affects the entire wallpaper market. The low growth of value despite the high growth of volume can be blamed on the shift toward mass-produced vinyl wallpaper, which no accounts for some 60% of all vinyl wallpaper products.

The market for paper wallpaper had declined in terms of volume for four consecutive years until last fiscal year. In fiscal year 1995, however, it posted a two-digit growth to exceed 1,200m2 In terms of shipment, paper wallpaper recorded the highest figure ever. In terms of share (production volume), paper wallpaper now accounts for 1.64%, exceeding cloth wallpaper's 1.25%.

Special wallpaper increased by some seven times from last fiscal year in terms of shipment and other wallpaper by 28 times. Although the absolute volume is small, the rate of increase is remarkable. The growth in special wallpaper came from growth in olefin and acrylic wallpaper, or non-PVC and painted wallpaper. This market trend is indicative of the increasing awareness of environment and health in the home. The data also shows the emergence of products that offer new values.

Statistical data used in determining market size

1) Since there is no official data on imported products, the Association used "Report on Imports of Interior Fabrics" of NIF members to estimate the share of imported products in the markets of NIF members.

2) "Produced and Shipped Volume of Wallpaper" of the Wall Decoration Material Association was used. The Wall Decoration Material Association is the largest domestic organization consisting of approximately 100 domestic wallpaper manufacturers. To control fire retardant wall decoration materials in accordance with the enforcement regulations of the Building Standards Law, the Association requires member companies to compile a monthly report on both production and shipments which are compiled into the "Produced and Shipped Volume of Wallpaper." Therefore, this report was used as it is recognized to be sufficiently reliable.

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