Design Firms to See Steady Sales; Consolidation in 2023
MILAN — No doubt, the pandemic era was a time to concentrate on one’s living and personal working space. This renewed sense of pride in the home and office fueled substantial growth and consolidation for the design sector’s players across the globe last year, a trend that is expected to persist throughout 2023.
“We see potential for a 5 to 7 percent CAGR (compound annual growth rate) as a stable range of growth in the future,” Claudia D’Arpizio, a Bain & Co. partner and Global Consumer Products and Retail lead told WWD. “In the short term, we see headwinds emerging in the U.S. and Nordic countries, mostly linked with rising mortgage rates slowing down real estate. At the same time, the Middle East market is accelerating, fueled by capital inflows [from an influx of Russian citizens] and a flourishing real estate market,” she added.
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Italy’s Molteni Group, which booked a sales rise of 25 percent to 460 million euros in 2022, explained that the post-COVID-19 increase was higher than normal and 2023 revenues should be in line with last year’s levels, as the central role of the home garners increased importance.
“For the past 40 years we have had an average growth rate of about 10 percent,” said Giulia Molteni, Molteni Group’s chief marketing officer and granddaughter of Angelo Molteni, the group’s founder, who was also a key figure in the inception of Salone del Mobile in 1961.
For the 61st edition of the fair, which will run from Tuesday to April 23, home, kitchen and furniture label Molteni & C will debut its first outdoor collection designed by artist Vincent Van Duysen, who re-envisaged the famed Palinfrasca couch first designed by legendary Molteni designer Luca Meda in the ‘80s.
Giussano-based Molteni Group also owns office furnishing companies UniFor and Citterio. Geographically, the U.S. and China are among the family-run company’s top markets.
“We see China as a long-term investment. We were one of the first to arrive in Greater China and they are passionate about our custom-made designs,” Molteni said.
By category, Bain & Co. sees living and bedroom lighting growth driven by new consumer trends. In its last report published in 2022, the firm said sales are expected to increase to 50 billion euros to 60 billion euros by 2026 from 40 billion euros recorded in 2021, with the living and bedroom and lighting categories expected to maintain positive momentum.
While the cost of raw materials and energy prices are stabilizing, furniture makers in the high-end segment have passed on the price increases onto the consumer. A large share of 2022’s growth, up 13 percent year-on-year, have been driven by price increases rather than volume, D’Arpizio explained.
Poltrona Frau chief executive officer Nicola Coropulis, described 2023 as a “complex” year due to inflation, uncertainty in China and supply chain disruptions.
Poltrona Frau, which is owned by Haworth Lifestyle Brands (formerly known as Poltrona Frau Group), will unfurl a wide range of categories in the residential and custom interiors areas, so as to offer its clients a variety of solutions for their spaces.
The Italy-based firm is now part of Michigan-based Haworth Inc., which took control of Poltrona Frau in 2014 and whose portfolio also includes Cappellini, Cassina, Kvadrat and Janus et Cie, to name a few.
Into 2023, Poltrona Frau will concentrate on a more effective penetration in strategic geographies coupled with channel expansion. This year, a further focus on the U.S. market will see an all-new retail concept and store in the heart of New York City on 181 Madison Avenue due to open its doors this fall; a relocation to a new and larger space of its retail store within Harrods of London, and a new store in Shanghai — the latter two both set to be ready in the third quarter.
Supporting its multichannel approach to meet customer needs, Poltrona Frau will roll out its direct e-commerce channel by launching its e-shop to all major European markets including Scandinavia.
“It would be difficult for me to predict with certainty how we will end the year; however, I can say that our previous efforts have helped us achieve record performance in 2022,” Coropulis added.
According to D’Arpizio, a wave of consolidation is expected to sweep through the sector in the near term.
“There are plenty of ‘hidden gems’ that have started consolidating within larger holding groups, and there is [for sure] an overarching consolidating direction that will continue in the years to come, with the objective to join forces and adapt more quickly to ever-evolving market dynamics,” D’Arpizio added, explaining that more targeted investments in innovation, digital and business model advancement are key to advancing the sector as a whole.
Given Design Holding’s strong sales momentum, the company’s CEO Daniel Lalonde said the company is well-poised to make even more acquisitions as it inches toward its long-term goal of becoming the LVMH Moët Hennessy Louis Vuitton of design.
Founded in November 2018, Design Holding already comprises leading brands B&B Italia, Flos, Menu, by Lassen, Lumens, Louis Poulsen, Arclinea, Maxalto and Azucena and produces Fendi Casa through a joint venture with the Roman fashion house. Design Holding has a presence in more than 130 countries.
Italian Design Brands, one of the nation’s largest high-end furniture and design holdings, recently confirmed its initial public offering will go ahead as planned before the first half of the year, despite market volatility.
In total, IDB’s portfolio encompasses 10 companies and 13 brands including upscale furniture brands Saba Italia, Gervasoni, and Meridiani; lighting companies Davide Groppi, Axolight and Flexalighting in North America, as well as luxury contract companies like Modar and Cenacchi International, which makes installation of luxury furnishings for stores, showrooms, offices, hotels and prestigious homes in the world.
According to the most recent design sector report released by Fondazione Symbola, Deloitte Private and Poli, Italy’s sector is the world’s largest, driven by 30,000 companies and 61,000 employees in 2020.
Italy’s wood furnishing sector saw a 12.7 percent rise in 2022 versus 2021, increasing its value to 57 billion euros versus 43 billion euros in 2019, according to preliminary figures for 2022, released by wood furnishings consortium Federlegno Arredo Eventi Study Centre. Despite rising energy and transport costs, market leaders remain optimistic about 2023, as design firms pulled through the pandemic years, fueled by consumer demand to renovate, and update their personal and commercial spaces, the consortium said in a statement.
Salone del Mobile’s organizers said that the main event that will unfurl at the Rho trade grounds will bring together 1,962 exhibitors, including more than 550 young talents under age 35 and 27 design schools. This year, the Salone will include the 31st edition of the Euroluce lighting biennial.
“For sure we expect more visitors than last year when the Salone was in June and still in a global situation not completely settled down after the pandemic and in full war,” the fair’s president Maria Porro said.
Geographically, markets like the United Arab Emirates and the U.S. are rising among top markets, along with Spain, Portugal and France. New regions have begun to show interest in Salone del Mobile, among them India, South-East Asian countries like Vietnam, as well as South Korea. Porro added that the fair has sold a solid number of tickets to trade operators from China, “confirming that the country is back to its full normality.”
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