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Transcript of - 1 - MARKETING EXECUTIVE 2006 8th May 2006 European and Italian Furniture Industry Executive...
- 1 -
MARKETING EXECUTIVE 20068th May 2006
European and Italian Furniture IndustryExecutive Summary
V D
www.va lentina downeydesign.it
Project made by:• Giovanni Comboni, CEO Just in Case and Professor to Bocconi University, Milan• Eleonora Fanti, Consultant JIC• Federico Luti, Consultant JIC• Chiara Terminelli, Consultant JIC
- 2 -
GoalsGoals
To understand the Italian industry and market profile inside the European context (production, distribution, consumer behaviour).
To understand the most relevant product and market trends.
To understand the most important players’ strategy in production and distribution (benchmark).
To give some suggestions to formulate a general entry strategy.
- 3 -
Italian Economic overviewItalian Economic overview
Italian GDP is estimated to grow in 2006 by just 1,2%.
Private consumption is espected to increase 1 – 1,5% only.
A stronger € in 2006/07 and a tougher competition from firms of Eastern
Asia will continue to hit several Italian price-sensitive export industries
(Textile, Clothing, Leather goods, Household goods, Furniture).
The cyclic position of the typical Italian styling-based industry is still flat,
including Furniture.
- 4 -
Italian economyItalian economy
2004a 2005b 2006c 2007* 2008*
Real GDP growth (%) 1,0 0,1 1,2 2,1 2,1
Consumer price inflation (av; %) 2,2 1,9 2,2 2,4 2,4
Exports of goods fob (€ bn) 296,6 310,7 312,1 331,1 351,7
Imports of goods fob (€ bn) -287,4 -308,7 -312,1 -333,9 -357,0
Current-account balance (€ bn) -12,7 -22,7 -25,6 n.a n.a
Exchange rate (av; €:US$) 0,80 0,80 0,78 n.a n.a
* DPEF forecast data
Forecast summary
c Economist Intelligence Unit forecasts
- General trends -
Sources: The Economist and Italian governement DPEF
- 5 -
Main Industrial sectorsMain Industrial sectors
- Cyclic situation of the main industry sectors -
Industry Cyclic position (Jan 2006)
Textile and clothing industry contraction
Leather and shoes industry stableWood and wood products industry (except furniture)
stable
Metal and metal products industry contractionOther manifacturing industries (included furniture)
stable
Source: Isae processing on Istat data
- 6 -
Furniture IndustryFurniture Industry
• EU represents about the 37% of the world furniture production value (from 1998, when this percentage was about 50%, the new entries from Asia have been constantly increasing the share of general production.).
• Furniture industry represents 2 - 4% of the production value of the European manufacturing industry, the 2% of GDP and the 2,2% of total workforce.
• Italy has been replaced by China as the largest furniture exporter in the world.
• Around 16.000 Italian firms are estimated to be export-oriented (nearly the 45% of total turnover).
• Export increased by 1,5%, import by 12,1%.
- 7 -
Europe furniture production valueEurope furniture production value
[2] Poland, Czech Rep., Slovenia, Hungary, Lithuania, Estonia, Latvia, Cyprus, Malta, Romania, Bulgaria, Norway, Switzerland, Russia.
Source: Union Europeenne De L’Ameublement (UEA), 2005
[1] Austria, Belgium, Danmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Netherlands, Portugal, Sweden, Spain, UK
Countries Mill. Euros - 2003 % on total value
EU 15 ¹ 80.628 37%Nafta 60.064 28%Asia 50.455 23%
Enlarged countries 2 9.230 4%Latin America 4.852 2%Oceania 3.570 2%Other Europe 3.515 2%Efta Countries 2.272 1%Africa 1.845 1%Total 216.431 100%
- 8 -
Furniture firms in EuropeFurniture firms in Europe
Country N. firms% firms on
European total N. empl.% empl. on
European total
Italy 35.877 34% 221.700 25%
Germany 9.777 9% 147.684 17%
Spain 9.139 9% 134.043 15%
UK 7.679 7% 122.000 14%
France 18.084 17% 96.330 11%
Portugal 6.662 6% 32.400 4%
Netherlands 5050 5% 29.200 3%
Greece 2.456 2% 24.000 3%
Sweden 3.035 3% 21.709 2%
Denmark 1.228 1% 21.192 2%
Belgium 1.359 1% 15.354 2%
Finland 1.638 2% 11.302 1%
Austria 3.474 3% 9.400 1%
Ireland 409 0% 6.812 1%
Lux. 45 0% 555 0%
TOTAL 105.912 100% 893.681 100%
Source: Union Europeenne De L’Ameublement (UEA), 2005
EU - 15Around 106.000 companies operate with 893.681 employees. Only 8.800 of them have more than 20 employees. The number of workers decreased of around 7% in the last four years.
German companies (e.g. Schieder, Steinhoff, Welle, Alno) are the largest in terms of turnover, while Italy is not well represented in terms of big-sized companies (only three companies show a high turnover: Snaidero, Natuzzi and Scavolini).
The italian companies are around 36.000 in the furniture industry, mostly small sized and organised in productive territorial systems.
The average number of employees is 6 in Italy, 78 in Germany and 5 in France.
Enterprises with more than 20 people represent the 5% of the total in Italy.
- 9 -
Furniture industry concentrationFurniture industry concentration
< 5% 1 1 1 8 2 3< 10% 7 3 2 24 6 8< 20% 37 9 13 90 16 33< 30% 142 22 45 223 32 93
Number of firms per nation
SpainUnited
KingdomEurope
Cumulated % on total revenues
Italy France Germany
Sources: AIDA and AMADEUS 2003/ 2004
- 10 -
Italian furniture industry dataItalian furniture industry data
Furniture macro-sector(value in mln € at current prices)
2003 def. 2004 Var% 04/03
Production value (a) 22.403 22.806 1,8%Export (b) 10.772 10.934 1,5%Import(c) 1.619 1.841 12,1%Balance (b-c) 9.153 9.093 -0,7%Apparent consumption (a-b+c) 13.250 13.714 3,4%Export/ turnover (%) 48,1% 47,9% -0,4%Employees 231.764 232.963 0,5%Firms 35.487 36.687 3,3%
Source: Federlegno-arredo - 2005
- 11 -
Selected companiesSelected companies
- Thai benchmark -
Source: AIDA 2006
Firms name Division Turnover €/000 2003
Employees
1 NATUZZI S.P.A. Upholstery 753.802 6.6012 NICOLETTI SALOTTI* Upholstery 124.438 3243 CALLIGARIS* Generalist 113.173 3544 CALIA SALOTTI Upholstery 86.265 4255 UNOPIU' S.P.A. Outdoor 62.272 2336 EUROPEO - S.P.A. Generalist 38.059 807 LEMA - S.P.A. Generalist 37.106 2308 MINOTTI SPA Upholstery 32.704 889 CATTELAN ITALIA S.P.A. Generalist 31.999 5310 TISETTANTA* Generalist 31.637 22311 BATTISTELLA S.P.A. Generalist 23.710 14012 BONALDO S.P.A. Upholstery 21.215 6113 MERCURY AR. S.P.A. Generalist 16.878 15014 ESTEL S.P.A. Generalist 13.314 9615 GI.MA.S. SRL Upholstery 12.622 4516 SEGIS -S.P.A. Generalist 12.133 5617 GERVASONI S.P.A. Generalist 11.604 7718 DOIMO SALOTTI - S.P.A. Upholstery 11.009 8519 LIVING DIVANI S.R.L. Upholstery 9.136 4420 ADILE SALOTTI S.P.A. Upholstery 8.944 7121 DOIMO SOFAS - S.R.L. Upholstery 8.677 3622 DOC - MOBILI - S.P.A. Generalist 8.253 8023 RODA S.R.L. Outdoor 7.342 1124 DOIMO DESIGN Generalist 6.531 8025 LAGO - S.R.L. Generalist 5.183 6326 CRISTIAN S.R.L. Upholstery 3.410 2327 BONACINA PIERANT. S.R.L. Generalist 2.751
*= 2002 data
Firms
- 12 -
Selected companiesSelected companies
- Thai benchmark -
Source: AIDA 2006
Firms name Turnover/Employee
2004
Liquidity ratio 2002
Liquidity ratio 2003
Liquidity ratio 2004
Return on Investment (ROI) (%)
2002
Return on Investment (ROI) (%)
2003
Return on Investment (ROI) (%)
2004
Return on Equity
(ROE) (%) 2002
Return on Equity
(ROE) (%) 2003
Return on Equity (ROE)
(%) 2004
1 NATUZZI S.P.A. 114 2,48 2,22 2,05 15,28 5,67 4,96 18,41 7,26 3,77
2 NICOLETTI SALOTTI* 384 0,57 9,63 31,64
3 CALLIGARIS* 320 1,12 29,79 36,41
4 CALIA SALOTTI 203 0,92 0,88 4,54 2,17 4,43 -0,42
5 UNOPIU' S.P.A. 267 0,07 5,54 -2,71
6 EUROPEO - S.P.A. 476 0,74 0,71 0,53 6,34 6,27 4,59 14,62 5,72 2,56
7 LEMA - S.P.A. 161 0,76 0,65 0,72 7,33 -2,57 6,78 11,50 -73,07 23,29
8 MINOTTI SPA 372 1,71 1,63 1,74 26,63 44,23 39,20 30,90
9 CATTELAN ITALIA S.P.A. 604 1,03 0,44 0,63 24,38 25,53 83,50 48,74 63,05
10 TISETTANTA* 142 0,59 10,48 31,36
11 BATTISTELLA S.P.A. 169 0,88 0,81 0,62 4,75 0,54 -1,79 8,89 -13,25 -15,97
12 BONALDO S.P.A. 348 0,76 0,79 0,82 1,89 2,33 2,63 0,65 0,12 0,20
13 MERCURY AR.S.P.A. 113 0,45 0,44 0,33 3,17 -0,86 -3,71 -40,95 -7,18 -2,97
14 ESTEL S.P.A. 139 0,86 0,74 0,68 3,36 1,79 -8,30 3,56 2,66 -3,85
15 GI.MA.S. SRL 280 0,73 0,70 0,73 -25,10 -3,50 -1,46 -93,34
16 SEGIS -S.P.A. 217 0,51 0,43 0,36 3,50 3,44 0,20 6,80 -7,11 43,67
17 GERVASONI S.P.A. 151 0,50 5,23 7,80
18 DOIMO SALOTTI - S.P.A. 130 0,44 0,47 0,48 6,27 1,90 -0,28 15,95 25,99 0,47
19 LIVING DIVANI S.R.L. 208 1,14 1,14 1,21 3,89 1,98 6,46 26,63 -0,97 9,90
20 ADILE SALOTTI S.P.A. 126 0,45 0,46 0,46 3,84 4,93 3,27 2,75 0,57 6,17
21 DOIMO SOFAS - S.R.L. 241 0,53 0,56 0,43 3,22 4,00 5,24 14,08 5,09 10,63
22 DOC - MOBILI - S.P.A. 103 0,38 0,34 0,33 1,73 1,08 -1,33 -15,61 -16,56 -10,33
23 RODA S.R.L. 667 0,22 0,30 0,28 6,09 10,17 12,16 37,74 11,77 25,97
24 DOIMO DESIGN 82 0,46 0,41 0,34 2,78 0,74 -5,35 -2,13 -5,05 -34,16
25 LAGO - S.R.L. 82 0,38 0,26 0,26 3,27 3,66 2,89 9,61 7,72 2,46
26 CRISTIAN S.R.L. 148 0,54 0,63 0,71 13,23 19,07 16,12 27,91 43,92 27,88
27 BONACINA PIERANT.S.R.L. 0,37 -9,39 -112,47
*= 2002 data
Firms
- 13 -
DESIGN BASED COMPANIESMARKET ORIENTED
COMPANIES
• Differentiation
• High brand value
• Trend setter
• “Pull” sales strategy
• Volumes
• Medium quality
• Product Marketing
• “Push” sales strategy
Main business driversMain business drivers
In the Italian furniture industry there are two types of companies:
Main drivers useful to choose the strategic orientation of italian furniture company.
- 14 -
Business models of furniture productorsBusiness models of furniture productors
This box doesn’t represent strategical groups (companies that compete directly on the market), but only a first release of business models. According to this classification, several manifacturers of different furniture products can be included in the same business model cluster.
Micro and small-sized unbranded companies, located in furniture districts, are not included in this first release.
Present
Turnover Internationalization Quality level Business driver Division Integration Delocalization
Big specialists> or = 75 Million
of EurosHigh Medium Market oriented
Mainly kitchens and upholstery
productors
Upstream and downstream
Present
Design Based companies
60 - 130 Million of Euros
High High Design basedGeneralists and
upholstery productors
Downstream (mainly DOS)
Absent
Innovative niche companies
20 - 25 Million of Euros
Medium HighDesign based/ high
innovation
Generalists and upholstery productors
Downstream (FLAGSHIP),
sometimes Upstream
Absent
Commercial companies
10 - 60 Million of Euros
Medium Medium Market orientedGeneralists and
upholstery productors
Absent Sometimes present
Medium quality groups
50 - 160 Million of Euros
Medium/ high Low/ medium Market oriented
Generalist productors (groups such as: Petrovich, Santarossa, Doimo,
Marcolin)
Upstream Present
PRODUCTIONECONOMIC RESULTS PRODUCTTurnover Internationalization Quality level Business driver Division Integration Delocalization
Big specialists> or = 75 Million
of EurosHigh Medium Market oriented
Mainly kitchens and upholstery
productors
Upstream and downstream
Present
Design Based companies
60 - 130 Million of Euros
High High Design basedGeneralists and
upholstery productors
Downstream (mainly DOS)
Absent
Innovative niche companies
20 - 25 Million of Euros
Medium HighDesign based/ high
innovation
Generalists and upholstery productors
Downstream (FLAGSHIP),
sometimes Upstream
Absent
Commercial companies
10 - 60 Million of Euros
Medium Medium Market orientedGeneralists and
upholstery productors
Absent Sometimes present
Medium quality groups
50 - 160 Million of Euros
Medium/ high Low/ medium Market oriented
Generalist productors (groups such as: Petrovich, Santarossa, Doimo,
Marcolin)
Upstream Present
PRODUCTIONECONOMIC RESULTS PRODUCT
Source: JIC 2006
- 15 -
Consumer BehaviourConsumer Behaviour
• Consumer propensity seems to be high in European key-markets, even if general consumptions are flat.
• The quality of products is the first evaluation-criteria of choosing for the end-consumers in Europe and Italy.
• The exhibition of products in POS and the clarity of presentation widely influence the Italian consumer behaviour.
• European customers mainly buy in GDO/ Dept. Stores, while the Italian ones prefer the Independent Shop format (product + service + customization).
• People belonging to medium/ high level represent the most important furniture market segment in Europe.
- 16 -
Furniture consumption - Main European countries
0
5.000
10.000
15.000
20.000
25.000
1995 1996 1997 1998 1999 2000 2001 2002 2003
€ Mln
Germany France Spain United Kingdom Italy
European Furniture ConsumptionEuropean Furniture Consumption
Source: Eurostat, 2005
Population Pro capita furniture Mln €
Germany 83 191Italy 58 189United Kingdom 59 188France 60 145Spain 41 144
Countries 2003
- 17 -
"L'Observateur Cetelem" published for the first time a study about the behaviour and the expectations of the consumer in 8 European countries: France, Italy, Belgium, Spain, The United Kingdom, Portugal, Germany and Poland.
European furniture consumptionEuropean furniture consumption
Positive buying intentions (average)
14% 13% 12% 10% 11% 9% 8% 7% 5% 2%
5%15%
19%24%24%24%26%
33%34%
42%
0%
10%
20%
30%
40%
50%
60%
electricalproducts
(householdappliance)
furniture gardening sportsequipments
housing car TV, Hi-Fi,video
Microcomputer mobile phone motorbike
probably
certainly
- FENA survey -
Source: www.fena-furniture.com, 2005
Housing systemHousing system
- 18 -
Frequentation according to the category of the shop
61%
30% 27%14% 8% 7%
24%
41% 48%
28%31%
19%
2%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Hypermarketand
supermarket
Smallbusinesshouses
Specialisedsupermarket
Popular shops Mail orderselling
Departmentstores
Selling atinternet
now and then
often
- The choice of the shop -
Source: www.fena-furniture.com, 2005
Criteria of European furniture consumptionCriteria of European furniture consumption
- 19 -
Italian Furniture ConsumptionItalian Furniture Consumption
- Profession -
Source: JIC processing on Istat data - 2006
<<Why Italian people buy furniture?>>
To substitute broken furniture
35%
To improve the aesthetics
11%
For the new house3%
For the second house3%
To re-furbish5%
To build a new house
6% To improve functionality
10%
To form a new family
3%
For other reasons4%
Piecemeal furnishing
20%
Monthly average furniture spendings per profession
Managers and employees
19%
Independent workers
18%
Entrepreneurs and freelancers
24%
Labourers and similars
15%
Retired people13%
Others11%
Source: Federmobili 2006
- 20 -
Choice of a shop: ranking of the different criteria according to the importance - Italy
the quality of the products 1ºa good welcome/reception 2ºthe atmosphere 3ºcompetitive prices 4ºthe clarity of presentation 5ºthe choice 6ºcapability of salespersons 7ºthe capacity to give good advice 8ºgrouping of the shopping 9ºthe geografical proximity 10ºpromotions, clearence sales 11ºhours opening 12ºadvantages offered to regular costumers 13ºthe costum 14ºcredit facilities 15º
- The choice of the shop -
Criteria of Italian furniture consumptionCriteria of Italian furniture consumption
Source: www.fena-furniture.com, 2005
- 21 -
DistributionDistribution
• The French, the German and the English furniture distributors are more concentrated than the Italian and the Spanish ones.
• Italian independent POS are the biggest part of national furniture distribution (84%); their ownership and management are family-based, and most of them are “Generalists” (see cluster analysis).
• The main trends of distribution in Italy are:
Increase of concentration on low/ medium price range (GD).
Threaths coming from big international dealers.
Strategic re-positioning of many Independent POS.
Strategic cooperation among dealers.
B2B and Contract represent a great opportunity of growing in the global market.
- 22 -
Furniture distribution structureFurniture distribution structure
CONTRACT CONSUMERChannels
Distribution Formats
Independent retail outlet• Generalists • Specialist outlets (mainly kitchens
and upholstered furniture)
Independent retail outlet• Generalists • Specialist outlets (mainly kitchens
and upholstered furniture)
Large scale specialized outlets*Large scale specialized outlets*
Direct saleDirect sale
Department stores/ DIY/ mail orderDepartment stores/ DIY/ mail order
: Specialized outlets: Non specialized outlets
*: franchising chains, buying groups, specialist furniture chains
Source: JIC 2006
- The sale channels -
- 23 -
84% 17%
75% 25%
94% 6%
67% 33%
84% 16%
80% 20%
0% 20% 40% 60% 80% 100%
% share of sales
France
Germany
Italy
UK
Spain
UE 15
Distribution formats - European Countries
SpecializedNon specialized
Furniture sales per distribution formatFurniture sales per distribution format
Source: JIC processing on Federmobili data - 2005
- 2003 -
- 24 -
Furniture sales per distribution formatFurniture sales per distribution format
*
*: for example IKEA
Source: JIC processing on Federmobili data - 2005
- 2003 -
19%
15%
45%
5%
7%
60%
1%7%
84%
2%8%
27%
4%5%
31%
54%
8%
10%
12%
35%
22%
4%
20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%%
sh
are
on s
ales
Specialized outlets: distribution formats per Country
Branch offices 5% 7% 8% 31% 12% 20%
Franchising chains 45% 1% 2% 5% 10% 4%
Buying groups 15% 60% 0% 4% 8% 22%
Independent 19% 7% 84% 27% 54% 35%
France Germany Italy UK Spain UE 15
- 25 -
Furniture sales per distribution formatFurniture sales per distribution format
- 2003 -
Source: JIC processing on Federmobile data- 2005
3%
5%
10%
20%
3%2%
3%
3%
22%
5%
6%
11%
0%
5%
8%
4%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% s
har
e on
sal
es
Non-Specialized outlets: distribution formats per Country
Direct sale 10% 2% 3% 6% 5% 8%
Mail 5% 3% 0% 5% 0% 4%
Dept. Stores, Ipermarkets 3% 20% 3% 22% 11% 8%
France Germany Italy UK Spain UE 15
- 26 -
(*) POS Turnover < 500.000 Euros
Italian furniture distributionItalian furniture distribution
Number of firms 16.400
Number of point of sale 19.000
- Small size POS (*) (number of POS) 11.000
- Small size POS turnover share 20%
- Medium size POS 8.000
Average display area (Square meters) 350
Percentage POS with max 5 employees 70%
Year 2003
Source: Federmobili, Istat 2006
- General informations -
- 27 -
40%
9%
2%
17%
4%
1%
14%
3%1%
7%1%0%
0%
10%
20%
30%
40%
50%
Northern Italy Central Italy Southern Italy Insular Italy
Distribution of furniture sales per channel and geographical area - 2003
Department stores (4%)Large scale specialized (17%)Independent (77%)
% Nr. POS % of Sales
SPECIALIST OUTLETS (mainly kitchens and upholstery)
14%
GENERALISTS 79%
1% 17%
6% 3%
3%
SPECIALIZED94%
77%
Distribution Formats
INDEPENDENT RETAIL OUTLETS
LARGE SCALE SPECIALIZED OUTLETS (ex. IKEA, Divani & Divani, Poltrone & sofà, Chateau D'Ax, Mercatone Uno,
Emmelunga, ...)
DEPARTMENT STORES (ex: La Rinascente)/ DIY/ MAIL ORDER
DIRECT SALE
NON SPECIALIZED6%
Sale channels in ItalySale channels in Italy
Source: Federmobili, Istat 2006
- 28 -
Sale channels in ItalySale channels in Italy
A B
Square metersMarket share in Turnover
% Nr. POSEfficiency
index (A/B)
< 200 2% 22% 0,1
200 - 600 13% 30% 0,4
600 - 3.000 57% 43% 1,3
> 3.000 29% 5% 5,7
100% 100%
Source: JIC processing on Federmobili data 2005
- Surface of POS and Market shares -
- 29 -
Main Large scale specialized outletsMain Large scale specialized outlets
CompanyFurniture sales 2003 (€ Mln)
% of furniture on total sales
outlet number 2003
Mercatone Uno 403 51% 85Ikea 342 56% 9Conforama Italia 182 30% 18Divani & Divani 156 98% 137PerSempre 120 100% 11Semeraro Holding 72* 60% 11Poltrone & Sofa 70* 100% 86Chateux D'Ax 70* 100% 100Emmelunga 62 95% 15Gruppo SME 60 21% 6GranCasa 56* 40% 18Compagnia del Mobile 40* 100% 52Mondo Convenienza 33* - 12Bergamin 30* 100% 6Ricci Casa + MObDi 30* 100% 5Arreda.Net 25 100% 15Aventino Arredamenti 21,5* 100% 5
*= 2002 dataSource: Federmobili - 2005
- Italy -
- 30 -
Display area (average)
Quality level
AssortmentInterior design
assistance
Opening/ closing
time
Regional concentration
Distribution format
Cluster A20/25.000
square mts.Low
Furniture, accessories/
household goods, appliances, DIY,
gardening (sometimes also
clothing)
Absent: Do it yourself system
WideMainly
Northern and Central Italy
Large scale specialized
Cluster B5/ 10.000
square mts.
Medium, Medium/
Low
Furniture, accessories, appliances
Present WideMainly
Northern and Central Italy
Large scale specialized
Cluster C500 square
mts.Medium
Main specialization in Kitchens or in Upholstered
furniture
PresentRetail
opening time
CapillaryFranchising
chain
Service
Display area (average)
Quality level
AssortmentInterior design
assistance
Opening/ closing
time
Regional concentration
Distribution format
Cluster A20/25.000
square mts.Low
Furniture, accessories/
household goods, appliances, DIY,
gardening (sometimes also
clothing)
Absent: Do it yourself system
WideMainly
Northern and Central Italy
Large scale specialized
Cluster B5/ 10.000
square mts.
Medium, Medium/
Low
Furniture, accessories, appliances
Present WideMainly
Northern and Central Italy
Large scale specialized
Cluster C500 square
mts.Medium
Main specialization in Kitchens or in Upholstered
furniture
PresentRetail
opening time
CapillaryFranchising
chain
Service
Main scale specialized outlets in ItalyMain scale specialized outlets in Italy
Source: JIC - 2006
- Cluster -
- 31 -
Independent retail outlet in ItalyIndependent retail outlet in Italy
STORE-IDENTITY/ TERRITORIAL
PRESTIGEPROFESSIONALITY
LEVEL OF SERVICE
QUALITY OF PRODUCTS
USE OF BRANDS
DISPLAY/ LAYOUT
NR. OF PRODUCTS
PER SQUARE MT.
"Nameless" Very low Lowmedium/
lowMedium
Unbranded products
Not careful (products
amassed, dust, absence of
merchandising, disorder)
Very high
"Reliable" Very high Medium/ High High MediumMainly
unbranded products
Not much careful
Medium
"Medium/ upper retailers"
Medium/ high High Very highMedium/
high
40% branded products,
60% unbranded
pdcts
Careful Medium/ low
"Differentiated" High High Very high Very high100%
branded products
Very careful Very low
REPUTATION/ GOODWILL ASSORTMENT
- Cluster -
Source: JIC - 2006
- 32 -Source: JIC - 2006
AssortmentAssortment
Sample:
CLASS. MOD. CLASS. MOD.
Nr. Products (average)
A14 18 17 12 7 8 8 10 10 10 18 2 8
Nr. Suppliers (average)
B3
Nr. Products per supplier
(A/B)3
6
5 7 7 2
LEATHER
8 3
3 3
KITCHENS UPHOLSTEREDKIDS
BEDROOM
CLASS. MOD.SOFA BED
BEDS
CLASS. MOD.
WARDROBE
CLASSICAL MODERN
4 2 8
CLASS. MOD.TEXTILE
CLASS. MOD. CLASS. MOD.
Nr. Products (average)
A14 18 17 12 7 8 8 10 10 10 18 2 8
Nr. Suppliers (average)
B3
Nr. Products per supplier
(A/B)3
6
5 7 7 2
LEATHER
8 3
3 3
KITCHENS UPHOLSTEREDKIDS
BEDROOM
CLASS. MOD.SOFA BED
BEDS
CLASS. MOD.
WARDROBE
CLASSICAL MODERN
4 2 8
CLASS. MOD.TEXTILE
NR. POSDISPLAY
AREATURNOVER Italian region
Turnover/ Square mt.
AVERAGE GD SAMPLE
44.500 sq.
Mts. € 15.000.000 Central Italy € 18.750
- GD sample -
- 33 -
Sample:
CLASS. MOD. CLASS. MOD.
Nr. Products (average)
A4 9 1 7 0 1 1 6 1 6 3
Nr. Suppliers (average)
B1
Nr. Products per supplier
(A/B)1
4,5 2
3 1 1 2 1 1
5 6 0 4
KITCHENS UPHOLSTERED BEDS WARDROBEKIDS
BEDROOM
CLASSICAL MODERNTEXTILE LEATHER
SOFA BED
CLASS. MOD. MOD.CLASS. CLASS. MOD.CLASS. MOD. CLASS. MOD.
Nr. Products (average)
A4 9 1 7 0 1 1 6 1 6 3
Nr. Suppliers (average)
B1
Nr. Products per supplier
(A/B)1
4,5 2
3 1 1 2 1 1
5 6 0 4
KITCHENS UPHOLSTERED BEDS WARDROBEKIDS
BEDROOM
CLASSICAL MODERNTEXTILE LEATHER
SOFA BED
CLASS. MOD. MOD.CLASS. CLASS. MOD.
- Independent retail outlet sample -
AssortmentAssortment
NR. POS DISPLAY AREA TURNOVER SELLERS NR.ASSEMBLERS
AND TRANSPORTERS
TOT EMPLOYEES
AVERAGE RETAIL SAMPLE
4 800 sq. Mts. € 975.000 3 3 6
Source: JIC - 2006
- 34 -
Distributive formats and type of products- Italy -
Distributive formats and type of products- Italy -
SPECIALIST OUTLETS TRADITIONAL
FURNITURE
Kitchens
Upholstery
Furniture
Outdoor furniture
SPECIALIZED94%
NON SPECIALIZED6%
INDEPENDENT RETAIL OUTLETS LARGE SCALE SPECIALIZED
OUTLETS DEPARTMENT STORES
/ DIY/ MAIL ORDER DIRECT
SALESPECIALIST OUTLETS TRADITIONAL
FURNITURE
Kitchens
Upholstery
Furniture
Outdoor furniture
SPECIALIZED94%
NON SPECIALIZED6%
INDEPENDENT RETAIL OUTLETS LARGE SCALE SPECIALIZED
OUTLETS DEPARTMENT STORES
/ DIY/ MAIL ORDER DIRECT
SALE
Source: JIC - 2006
- 35 -
The B2B channel in ItalyThe B2B channel in Italy
Large ordersLarge orders ContractContract
Catalogues Mainly custom made products
•Productor (direct sales);•POS;•Architect/ designer.
Main player:
Main player:
Main markets:
Main markets:
• General contractor;• Architect (only in Italy).
Hotels/ residences; Private and public offices, banks, embasses, official residences; POS/ boutiques; Restaurants, bars, pubs; Cruisers, sea ports;
Schools, universities, hospitals; Airports.
Small part of the total B2B
market in Italy
Great part of the total B2B
market in Italy
Key features:
Key features:
Function in charge:
Function in charge:
Total planning, long fulfillment times, on-site surveys, installation. Prevalent in UK and USA.
Contract divisionSales office
Mainly standard products; only the selling phase of the purchaising is followed.
- 36 -
Arreda.netArreda.net
For further informations: http://www.arreda.net/index800.html
Arreda.net is a marketing/ sales network of POS belonging to the medium/ high segment, located in the Northern-Western Italy.
Customized/ Double branded,
door to door distribution.
The goal of the network is to increase the turnover by offering a selected range of products and services inside Generalist POS (shop in shop format).
The structure
Nr. of firms 13
Nr. of POS 26
Tot sq. meters of exhibition 45.000
Tot. sq. meters of stocks 14.000
Interior designers 115
Nr. of catalogues125.000 (2003)
1.000.000 (2006)
Turnover4 Mln. of Euros (2003)
8 Mln. of Euros (2006)
- 37 -
Contacts/ relationshipsContacts/ relationships
How Recipient
Large scale specialized outlets
Personal/ telephonic contact, business correspondence
Buyer
DIYPersonal/ telephonic contact,
business correspondenceBuyer
ContractPersonal/ telephonic contact,
business correspondence
+ promotion
General Contractor or Contract Division (Manifacturers)
Independent POSPersonal/ telephonic contact,
business correspondence
+ promotion
Entrepreneurs and Associations
(ex: Federmobili)
Manifacturers
Exhibitions, personal/ telephonic contact, business
correspondence
+ promotion
Entrepreneurs, Associations
(ex: Federlegno-Arredo)
Source: JIC - 2006
- 38 -
Strategy and opportunitiesStrategy and opportunities
Strategic options for matching with production, following the Business models (see above):
• Availability of Production Capacity;
• Job Order production for B2B.
Particularly for Big Specialists, Commercial Companies and Medium quality Groups.
- Production -
- 39 -
Business models of furniture productorsBusiness models of furniture productors
Present
Turnover Internationalization Quality level Business driver Division Integration Delocalization
Big specialists> or = 75 Million
of EurosHigh Medium Market oriented
Mainly kitchens and upholstery
productors
Upstream and downstream
Present
Design Based companies
60 - 130 Million of Euros
High High Design basedGeneralists and
upholstery productors
Downstream (mainly DOS)
Absent
Innovative niche companies
20 - 25 Million of Euros
Medium HighDesign based/ high
innovation
Generalists and upholstery productors
Downstream (FLAGSHIP),
sometimes Upstream
Absent
Commercial companies
10 - 60 Million of Euros
Medium Medium Market orientedGeneralists and
upholstery productors
Absent Sometimes present
Medium quality groups
50 - 160 Million of Euros
Medium/ high Low/ medium Market oriented
Generalist productors (groups such as: Petrovich, Santarossa, Doimo,
Marcolin)
Upstream Present
PRODUCTIONECONOMIC RESULTS PRODUCTTurnover Internationalization Quality level Business driver Division Integration Delocalization
Big specialists> or = 75 Million
of EurosHigh Medium Market oriented
Mainly kitchens and upholstery
productors
Upstream and downstream
Present
Design Based companies
60 - 130 Million of Euros
High High Design basedGeneralists and
upholstery productors
Downstream (mainly DOS)
Absent
Innovative niche companies
20 - 25 Million of Euros
Medium HighDesign based/ high
innovation
Generalists and upholstery productors
Downstream (FLAGSHIP),
sometimes Upstream
Absent
Commercial companies
10 - 60 Million of Euros
Medium Medium Market orientedGeneralists and
upholstery productors
Absent Sometimes present
Medium quality groups
50 - 160 Million of Euros
Medium/ high Low/ medium Market oriented
Generalist productors (groups such as: Petrovich, Santarossa, Doimo,
Marcolin)
Upstream Present
PRODUCTIONECONOMIC RESULTS PRODUCT
Source: JIC 2006
- 40 -
Strategy and opportunitiesStrategy and opportunities
Strategic options for matching with distribution, following the cluster model (see above):
• Enlargement of the assortment;
• Integration of the existent products;
• Substitution of the existent products.
- Distribution -
- 41 -
Legend:
Actual absence of outdoor products in the assortment.
Actual presence of outdoor products in the assortment.
- Outdoor -
An example
Strategy and opportunitiesStrategy and opportunities
Mercatone Uno
Conforama Ikea Grancasa Emmelunga Per Sempre SemeraroMondo
convenienzaSME Aventino
Market Entry Strategy
Enlargement of the assortment
Enlargement of the assortment
Integration/ substitution of the existent products
Integration/ substitution of the existent products
Enlargement of the assortment
Enlargement of the assortment
Integration of the existent
products
Enlargement of the assortment
Enlargement of the assortment
Enlargement of the assortment
Cost per contact
Quality level of products
Large scale specialized outlets
Low Medium
Cluster A Cluster B
Low Low
Source: JIC - 2006
- 42 -
Legend:
Actual absence of outdoor products in the assortment.
Actual presence of outdoor products in the assortment.
Market Entry Strategy
Enlargement / integration/ substitution
Enlargement / integration/ substitution
Enlargement / integration/ substitution
Enlargement / integration/ substitution
Enlargement of the assortment
Integration of the existent
products
Enlargement of the assortment
Cost per contact
Quality level of products
Medium/ low
Medium Medium/ high High
Department stores
La Rinascente
Upim Coin
Independent retail outlets
Nameless ReliableMedium/
upper retailers
Differentiated
Medium/ high
High Low
- Outdoor -An example
Strategy and opportunitiesStrategy and opportunities
Source: JIC - 2006
- 43 -
Legend:
Actual absence of outdoor products in the assortment.
Actual presence of outdoor products in the assortment.
Market Entry Strategy
Integration/ substitution of the existent products
Integration/ substitution of the existent products
Integration/ substitution of the existent products
Integration/ substitution of the existent products
Integration/ substitution of the existent products
Integration/ substitution of the existent products
Hotels, residences, cruisers;
Cost per contact
Low Low Medium Medium Low Medium
Castorama Leroi merlin Brico ok
Large orders/ ContractPunto brico Brico center Bricofer
DIY
- Outdoor -
An example
Strategy and opportunitiesStrategy and opportunities
Source: JIC - 2006
- 44 -
Consumption TrendsConsumption Trends
• Traditional and classic materials and colours are mostly requested by consumers, not only in Italy.
• The most demanded products are kitchens because of functionality and bathrooms because of quality of life and aesthetics.
• Naturalness, wellness, slow life and conviviality are the main concepts expected by consumers, particularly in Italy.
• Vintage means classic products, history, modernism.
- 45 -
Growing trend Decreasing trend
WOOD
METAL
REFLECTIVE SURFACES
GLASS
POLYMER
STONE
TEXTILE
An exampleAn example
Source: MIP research for Webmobili* 2006
*: Webmobili is the most important Internet Portal of furniture in Italy. It shows 19.000 products classified in terms of typology, style, material and price range. It allows the customer to collect information about products, brands and point of sale in which he can find what he wants.The analysis of these preferences enables researchers to undertand market and offer trends in the furniture industry.For further informations: www.webmobili.it
Spread use of Teak and of Wengè
- Materials -
- 46 -
Eclectism Aware/responsible consumption
WellnessConviviality
Slow life
Minimalismvs
Baroque
NaturalnessCocooning
Consumption trendsConsumption trends
Source: JIC research – July 2005
Multisensoriality Ergonomics/ functionality
Play/ irony Delicacy/ lightnessVintageand Ethnic
- 47 -
2006Future
TrendKey identification elements
Minimalism vs BaroqueBig chandeliers, and rich seats vs
linear shapes of other furniture
Aware/ responsible consumption
Ethic, charity work, social networks
Delicacy/ lightnessRound shapes, warm houses, soft
materials
Ergonomics/ functionality Form/ aesthetics follows function
NaturalnessWood, natural materials, warm and
neutral colours
WellnessBody care, increasing time spent in the
bathroom, thermae, fitness, healthy food
Slow lifeComfort, measured consumptions,
increasing time dedicated to oneself
Legend: Actual presence of the trend in the marketWide actual presence of the trend in the market
Growing trendStable trend
Source: JIC research – July 2005
Consumption trendsConsumption trends
- 48 -
2006Future
TrendKey identification elements
Conviviality Sharing meals and relax with friends
CocooningSearch for protection, more time spent at
home, as a refuge in afraid moments
MultisensorialityWide stimulation of all the 5 human
senses
Play/ ironyElements of childhood in shapes
(unespected and fantastic), colours (strong), and lights
EclectismCombination of different stylistic/
qualitative elements
Vintage Recover of the past
Ethnic Local products
Legend: Actual presence of the trend in the marketWide actual presence of the trend in the market
Growing trendStable trend
Source: JIC research – July 2005
Consumption trendsConsumption trends
- 49 -
WarningsWarnings
• European furniture Industry is a grown sector, even if it shows several development opportunities in the key-markets and in the emerging markets.
• The Thai companies have to work on:
The matching with productors (Design-based companies vs Market oriented companies);
The matching with distributors (Specialized vs Non-specialized, GD vs Independent POS);
in order to understand the best segments/ niches in which they can enter.
• Regarding the market, Thai Companies have to reflect upon their positioning:
In Europe
In Italy
- 50 -
Next stepsNext steps
Next steps for Design, Promotion and Communication:
1. Trip in Bangkok (first week of June) to meet the group of Thai furniture Companies for:
The presentation of the concept project and selected products for the exhibition foreseen in September/ October in Milan (P. Scarzella and V. Downey).
The presentation of the Marketing Research (G. Comboni).
2. Presentation in Milan September/ October 2006 and meetings with buyers, Italian producers and retailers.
- 51 -
3. Invite Buyers, Companies, Associations, Federations and Journalists to visit Big in October or TIFF in March.
4. Invite a selected group of designers to visit the Thai Companies in order to develop a new Furniture Collection suitable for the European Market.
5. After the result of presentation in Milan September/ October 2006, we suggest to plan a show of the group of Thai Companies during the Milan Fair in April 2007.
Next stepsNext steps
- 52 -
Next stepsNext steps
Next Steps for Marketing Development:
1. Go in depth in Matching Analysis through interviews with management of manufacturers and distributors.
2. Define the Positionig or Re-positioning of Thai offer in European or Italian market (Identity, Mission, Vision).
3. Formulate a first release of Entry strategy (Business Plan).
4. Support the Product presentation (Marketing Plan & Communication Plan).