- 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



Return on Investment (ROI) (%)

2002


2003


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


Medium HighDesign based/ high

innovation

Generalists and upholstery productors

Downstream (FLAGSHIP),

sometimes Upstream

Absent

Commercial companies


Medium Medium Market orientedGeneralists and


Absent Sometimes present

Medium quality groups


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




productors


Present






Absent




innovation



sometimes Upstream

Absent










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 -


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


- 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 -


*

*: 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 -


- 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



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



Cluster B5/ 10.000

square mts.

Medium, Medium/

Low

Furniture, accessories, appliances

Present WideMainly



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



A14 18 17 12 7 8 8 10 10 10 18 2 8


B3


(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:



A4 9 1 7 0 1 1 6 1 6 3


B1


(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.


A4 9 1 7 0 1 1 6 1 6 3


B1


(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




productors


Present






Absent




innovation



sometimes Upstream

Absent










Marcolin)

Upstream Present

PRODUCTIONECONOMIC RESULTS PRODUCTTurnover Internationalization Quality level Business driver Division Integration Delocalization




productors


Present






Absent




innovation



sometimes Upstream

Absent










Marcolin)

Upstream Present

PRODUCTIONECONOMIC RESULTS PRODUCT

Source: JIC 2006

- 40 -


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


Mercatone Uno

Conforama Ikea Grancasa Emmelunga Per Sempre SemeraroMondo

convenienzaSME Aventino

Market Entry Strategy

Enlargement of the assortment


Integration/ substitution of the existent products




Integration of the existent

products




Cost per contact

Quality level of products

Large scale specialized outlets

Low Medium

Cluster A Cluster B

Low Low

Source: JIC - 2006

- 42 -

Legend:




Enlargement / integration/ substitution





Integration of the existent

products


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


Source: JIC - 2006

- 43 -

Legend:










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


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



- 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



- 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.


- 52 -


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).

- 1 - marketing executive 2006 8th may 2006 european and italian furniture industry executive...

Documents