The main objective of the meeting was a 360° reflection on the design industry, which today needs to rethink some of its paradigms. The challenges of a competitive market and the reaching of new consumers require integrated and innovative approaches, but firmly anchored to the production.
Claudio Luti, Kartell President and Vice President of Altagamma, said that “… Making design today means to plan, but mainly to do research. Companies must work closely with designers, to do research on products, processes and on materials, not to mention a new approach to the client. ” Antonio Citterio added that the design world “today … needs a substantial reindustrialization, founded on the use of the most advanced technologies. The technical training should be revived, and should be given its proper value. Technical training is required for the revival of the production design, and can also become a lever to give young people new perspectives.”
Claudia D’Arpizio, Bain & Company partner, then presented the second edition of the Design Market Monitor.
The Design Market Monitor 2016 describes an industry with a tremendous growth potential, due both to the popularity of design – not fully translated into a growth in turnover of companies – and the huge reservoir represented by the Asian markets, which are growing, but are still marginal compared the more mature geographies.
Among the key challenges for enterprises, primarily for the European and Italian companies, it lies the growth in size and the start of a direct dialogue with the new consumers through the use of digital channels.
The design market
The design market, as a whole, has reached about 100 billion euros in 2015.
The Core Design segment (living and sleeping, kitchen, bathroom, lighting and outdoor) has reached 32 billion euros, exceeding for the first time its pre-crisis level, an increase on 2014 of +4% at constant rates (+ 9% at current rates). The European market, with an increase of +4%, accounts for nearly half of the global consumption (47%). Same positive trend for the Americas (31% of consumption), with the US benefiting from the favorable exchange rate, while the real outstanding growth lies in Asia Pacific (+ 7% with a 15% share).
There is a marked disconnection between the current geography of demand and that of the high-spending consumers: in this sense Asia, which concentrates 51% of the consumption of luxury goods for the person, has the greatest potential for future growth of the high-end design market.
The Living & Bedroom (46% of the total market) and Lighting (12%) are the sectors that have reacted better to the crisis, reaching an increase of +6% from 2009 to 2015. During the same period, the Bath (17% of the total) and Outdoor (5%) have grown by + 3%, while the Kitchen market (20% of the total) has remained substantially stable (-1% over the period, but up 1% in 2015 over the previous year).
The strongest growth is recorded in “Branded Retailers” (shops selling everything about design, brick-and-mortar or online), especially American ones, although they register a lower profitability compared to the “Pure Design Brands” (companies that produce only design, typically Italian), mostly Italian and European.
For those brands, which are already market leaders, the challenge is to reinvest the margins in view of a dimensional growth: the market reveals a direct correlation between the size of companies and their growth, due to the greater ability of large companies to reach distant markets, which are the fastest growing, and to structure an effective contract model to serve them.
The Wholesale channel still has a dominant role in the Core Design market, with 71% of revenues and growth at current rates of +6% on 2014. But other direct channels are growing even more: the MonoBrand Retail grew by +10%, the Contract +19 % and the Online +24%. The latter represents the future of the channels, but it is still in an embryonic stage of development (representing 4% of total sales only).
The Italian production companies
Thanks to their rooted and time-honored experience, the Italian companies are the protagonists of the high-end design market, with a 30% market share. It is a conglomeration of about 200 players with around 50 million euro turnover each, which are faced with the challenge of growth in size to compete internationally. A process already begun in some cases, either through mergers and IPO.
The potential from online selling (which represents only 4% of total sales), alongside the expansion of the Asian markets, are the main challenges of today for the Italian companies.