The research included the West Bank market and covered many relevant aspects like supply and demand, target groups of potential customers, competition, promotion, and marketing, and the end consumer's behavior in the Palestinian markets. 

The research adopted qualitative and quantitative analysis approach, and is based on secondary and primary research information that was collected through more than one field survey conducted by Mazaya's research team. The field survey covered the following areas: 

1. Survey of a sample of end consumers segment which is represented by Palestinian families. The segment included 504 Palestinian families from all Palestinian governorates in the West Bank.
2. Survey of furniture showrooms segment which represents the bigger segment of potential customers. This segment included 92 furniture showrooms equally distributed between the north, middle and south of the West Bank. 
3. Survey of young couples segment which included 76 newly created households in order to estimate how much this segment spends on furniture in order to estimate the demand size. 
4. Structured interviews and meetings with many related organizations and furniture market competitors in different areas in the West Bank and Gaza. The Union of Wood Industry is more active in Gaza than in the West Bank. 

Palestinian Furniture Sector Indicators

The furniture sector is of great significance in the Palestinian manufacturing sector for it is considered a promising sector in terms of job opportunities as well as exportation. 

The furniture industry was created in Palestine since over 60 years. The sector witnessed large growth after year 2000 due to an increase in the number of companies working in this field and the production doubled and many indicators witnessed clear growth. Below is a summary of the major economic and market indicators related to the Palestinian furniture sector. 

• Most of the establishments (97%) of those working in the furniture sector are categorized as small businesses with an average of 3 employees. 
• The total number of establishments in the furniture industry exceeds 4900 company, 3117 of which are industrial or complementary of industrial companies while the rest are trade companies. Of the 3117, there are 2511 companies are households manufacturing, 496 work in furniture finishing, 66 work in the kitchen furniture industry while the rest work in other different sub-sectors. 
• The number of industrial companies working in Palestine increased from 2050 in 2000 to 3117 in 2013, which is 52% increase over 13 years. 
• In 2013, 10,000 employees were working in this sector which is an increase of 51.6% from the numbers of 2000. The percentage of paid employees of the total number reached 68% in 2013 while it was only 49% in 2000 of the total number of employees in the sector.
• The Palestinian furniture sector's production size reached US$ 302 Million. In 2013, the sector’s exports reached US$ 82 Million, most of which were sold to Israel. Salfeet governorate market share makes up 9% of the Palestinian furniture production. 
• The Palestinian household average monthly spending on furniture and home products is approximately US$ 56.
• The furniture industry is historically focused in Gaza and Nablus. In Gaza, there are over 800 companies in the sector. In Nablus, there are 345 industrial businesses. This sector witnessed huge growth in Salfeet governorate during the last 15 years which made it a major competitor in the field. 
• Before 2007, the size of furniture exports from Gaza reached US$ 30 Million annually, but the exports decreased significantly since then until a point was reached when there was no "ability" to export at all in most years. 
• The furniture industry in Nablus makes up approximately half of the Palestinian furniture exports which amounts to approximately US$ 40 Million, most of which are exported to Israeli markets through subcontracting with Israeli companies.
• Exports from Salfeet governorate to Israel reached approximately US$ 24 Million in 2013. 

Market Analysis

The study resulted with an in- depth analysis of the Palestinian furniture market in terms of the supply chain, potential customer segments, competition, prices, marketing offers, promotions and payment methods. 

The supply chain is usually divided into three main parts: supplies, production and distribution to reach the end consumer. Usually, there's a logical sequence of these parts in many industries. However, this is not the case for the furniture industry because there can be a direct connection between the producer and the end consumers of all segments. This is due to the nature of the products and the customer's ability to demand directly from the producer custom made furniture according to their specific needs or measures or internal decoration or design of placing furniture. 

Despite the large interference in the supply chain, where the producers themselves may be possible customers or competitors at the same time, the research team analyzed possible customer segments as furniture showrooms or retail stores which are considered the main link between the end consumer and the furniture producers. The customer segments reached were as follows:

1. Factory Showrooms:
   These are points of sale for the end consumer that are owned by a factory or a specific producer and thus sell only the products of that factory.
    
2. Showrooms and Producers at the same time:
   These are showrooms that produce some of their products and depend on other producers to provide different kinds and styles of furniture for end consumers.
    
3. Showrooms, Producers and Importers: 
   Showrooms that produce part of their exhibited products and import other kinds and styles and also depend on local suppliers who are producers to provide diverse products for consumers.
    
4. Showrooms and Importers
   These showrooms offer the biggest portion of directly imported and exhibited products and they also depend on local factories and producers in providing specific types of products.
    
5. Showrooms only:
   This segment does not produce or import its products but depend totally on local producers and importers to provide different products and styles of furniture for its end consumers.  

In the case of Salfeet governorate furniture cluster, four of the aforementioned potential customers can be found in the cluster despite the fact that they may be also competitors. The study will provide an analysis of all possible customers' segments represented by furniture showrooms or intermediaries between the cluster and the end consumer, it also outlines the other segments of customers represented by the end consumer: Palestinian families and private and public sector organizations. 

Competition is a major factor of market analysis. Based on both field surveys, the study found that there are two main segments for competition which are the imported furniture but not the importers themselves. The importers according to the analysis included in the study can be one of the potential target customer segments of the business cluster. The second segment is represented by the local furniture production, and this segment can be divided into two types of competitors as follows:

1. Organized furniture sector: these are the local furniture producers who possess production lines and large capacity that enables them to produce furniture in an organized way within production lines for different types of furniture products. This segment is highly concentrated in Nablus, followed by Ramallah. As for the other areas, the other type of local production is more prevalent. 
2. Unorganized furniture sector: they are the producers who target the end consumer directly and usually produce according to the end consumers specific demands. Thus, they produce what is already sold and they don't produce furniture to showcase it like the organized sector. 

The organized furniture sector is considered the main competition for Salfeet furniture cluster. It targets the same potential customer segments as previously analyzed. As for the other competitor segments, they don't represent a large threat for the cluster because importers are part of the potential customers of the sector. Moreover, the unorganized sector doesn't possess large capabilities that may form a threat to the cluster's work in the domestic market. . 

The main players in the supply chain cooperate in marketing and advertising. The relation between them is the basis for the marketing process and they usually carry out joint campaigns where every party covers part of the cost. The payment and discount method offered to the end consumer through showrooms is the main marketing tool for the furniture sector in the local market.