After the era of double-digit growth, design companies are entering the era of the new normality: to be faced by designing strategies, synergies and technologies

It is useless to get around it: the pandemic, and the consequent greater attention to our homes, has brought great prosperity to the world of furniture.

The period of double-digit growth, however, with the wind solidly in its sails, is over and it is time to face the new normality: planning strategies, creating synergies and making the most of digital technologies and Artificial Intelligence.

This is the key message that the 9th Pambianco Design Summit (at Palazzo Mezzanotte today 28 June) led to the enterprises of design, also reiterated by the director of Interni Gilda Bojardi in her opening speech: "we need multi-disciplinary approaches, capable of creating creative connections between companies and designers, voted to the development of human-focused solutions, supported by the intelligent use of new technologies: from digital to AI to VR”.

But what are the tools to arrive at the definition of new strategies?

As always, the Pambianco Summit has provided some, all extremely interesting.

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

M&A activity will remain strong in the furniture design sector

In short, Italian design companies are "back in fashion" according to Ricciotti in the hearts of foreign investors. And the injection of funds by Private Equity represents a huge opportunity to create sustainable growth for the entire sector.

"Making a transaction with a Private Equity fund", he said in conclusion of his speech, "does not mean selling your company".

Who buys design online?

Great space was given during the Pambianco Design Summit to digital and Artificial Intelligence.

Because the answer to the question Who buys design online is: more and more people, all over the world. And the numbers say it, as already mentioned above: "Furniture is the third most purchased category in the online world", explained Stefano Leccese Renzetti, Manager, Multichannel Programs, Google Customer Solutions Italy.

The sector, almost non-existent before the pandemic, in fact experienced an acceleration in the three-year period 2020-2023 that would normally have required years of development and which, according to Google, will lead to an aggregate growth rate of 10.5%.

E-commerce therefore represents an opportunity not to be missed but which, to be exploited, requires a total understanding of the consumer and the use of artificial intelligence to address one's audience in a tailor-made way.

How does the public looking for design online behave?

Users who are looking for design online go there to find:

* inspiration on how to best furnish or manage the house
* research and discovery of products to buy
* direct purchase

Leccese Renzetti has always explained that of all the users who have purchased a design furniture product in the last six months, 44% were actively looking for something they needed at that precise moment, 28% were engaged in experiential activities in the home and furniture sector and the rest needed information aimed at a purchase in the coming months.

It is a scenario that offers great opportunities both for 28% who start from an online experience and end it with an unexpected purchase but also for 44% given that, again according to the Google report, for two thirds the search was totally un-branded.

What convinces a user to buy in e-commerce?

According to data collected by Google, there are three critical factors for success in the design sector e-commerce:

* products that arrive directly at home 55%
* simplicity in the shopping experience compared to the physical store 52%
* the possibility to compare different products 40%

How can a digital opportunity be seized?

According to Leccese Renzetti, the opportunities offered by e-commerce in the furniture design sector can best be seized through three strategic approaches:

* creating integrated online and offline experiences that do not conflict with each other
* interacting with users even when they are not looking for a product, offering inspirational or interesting content
* using the data, always in compliance with privacy rules, in campaigns and in the construction of taylor made messages

The other guests of the Pambianco Design Summit 2023

During the rich morning of work, in addition to the aforementioned, Roberto Gavazzi, CEO Boffi|DePadova took turns; Barbara Lunghi, Head of Listing Sales Italy Borsa Italiana; Andrea Sasso, Chairman and CEO of Italian Design Brands; Graziano Verdi, Chief Executive Officer and Co-Founder of Italcer Group; Lorenzo Pascucci, Founder and CEO Contract District Group; Francesco Zurlo, Dean of the Design School of the Milan Polytechnic; Sergio Nava, Director of Education Istituto Marangoni Milano • The School of Design; Cesare Chichi, Partner Architect and Co-Founder of 967arch; Michele Rossi, Co-founding Partner Park Associati; Marco Piscitelli, Molteni&C CEO | Managing Director Molteni Group; Daniel Lalonde, CEO Design Holding; Dario Rinero, CEO Lifestyle Design.

To see all the slides of the presentations (starting June 29)