The challenges of the new normal at the Pambianco 2023 Design Summit

Where is the design furniture market going in 2023?

From a geographical point of view, explained Alessio Candi, Consulting and M&A Director Pambianco, the global market (581 billion in total) is supported by 39% from Asia, still the main source of revenue despite the setback in 2022 of the Chinese sector due to the Covid closures. In second place are the United States (+7% compared to 2022) and then Europe, which instead slows down its growth.

But the most interesting insights for Made in Italy companies come from the analysis of this market situation.

The growing luxury market

The first news is that the high range is still worth little in absolute terms: only 8% of the total. But the meta-trend of consumer polarization leads to predictions of a transformation of what is currently a pyramid into an hourglass, with luxury growing more substantially than the sector as a whole.

The luxury market is 85% un-branded

The second piece of news, linked to the first, is that most of this luxury market (85%) is still un-branded, therefore potentially affordable by Italian brands that will be able to position themselves and enter the heart of consumers attentive to this segment.

The question is: how to do it?

According to Candi, Italy is very well positioned to succeed in this endeavor. On the one hand, because the made in Italy brand is still highly appreciated internationally (+25% growth in the USA in 2022 with a small furnishing joke for the beginning of 2023, +21% in China in the first quarter of 2023 after reopening).
On the other hand because, with total exports of 15 billion, Italy already has a fairly significant, if not predominant presence in this sector.

To grow, however, a change of focus is necessary: from wholesale and contract to retail and e-commerce dedicated to the final consumer, preferably through on and offline multi-channel strategies.

Growing e-commerce

Another important insight concerns e-commerce.

Overall, furniture e-commerce is worth about 100 billion, +18% compared to 2019. And only 1% of this market is managed by manufacturers, while 99% is controlled by retailers and non-specialist chains and e- specialized tailers, with 70% generated in the USA and Asia. Stefano Leccese Renzetti, Manager, Multichannel Programs, Google Customer Solutions Italy then spoke on how to face this challenge (see below).

Private Equity in the world of furniture

The interest from the world of equity in design furniture is also growing, as reported by Walter Ricciotti, CEO of Quadrivio Group.

Private Equity likes the world of high-end Italian furniture for 4 reasons:

* in Italy there are excellences recognized in the world in terms of design and production
* made in Italy as a brand continues to grow in the hearts of the international public
* the use of digital channels is still limited, so it has enormous growth potential
* the panorama is, despite the recent acquisitions in the sector, still substantially fragmented

All this translates, from the point of view of investors, into enormous spaces for growth and opportunities.

The results of Private Equity in the furniture sector

Ricciotti underlined the advantages of introducing Private Equity in furniture companies and the gap that exists between perception and reality.

Data in hand, in fact, it is not so much the production synergies and savings in terms of costs nor the commercial and organizational ones that make the difference as much as the possibility of working at group level on image, positioning and communication and on sharing know-how -how, so about innovation.

Both fundamental factors in addressing the final consumer.

Trends in other sectors

Looking at other sectors in which Private Equity operates, Ricciotti has identified 10 trends that have made the fortune of large groups in other sectors (fashion in primis). And that could also make a difference in the world of Made in Italy furniture.

* strong internationalization of brands
* global pricing
* growth of quality single-brand and multi-brand stores
* great managerialization of companies
* greater mixing between different sectors
* very strong expansion of the online channel
* production reshoring
* outsourcing but also re-internalizing production (pursuing quality)
* communication evolution
* great approach to the consumer