MILAN — With two weeks to go before design fair Salone del Mobile here, a joint Fondazione Altagamma and Bain study found that the design market worldwide had revenues of 90 billion euros, or $119.7 billion at average exchange, last year. Including unbranded products, the market totaled 360 billion euros, or $478.8 billion.
The first Altagamma Bain Design Market Monitor was based on the study of 350 Italian and international companies from 30 different countries.
Altagamma vice chairman Armando Branchini said the study will allow the industry to “gain awareness of the challenges by understanding what is happening” in a sector that is still in an initial phase of development despite its long tradition, as it is dominated by a group of small and independent operators, mainly in Europe.
Last year, the core design, or high-end, sector returned to sales close to levels seen before the 2008-2009 economic crisis, totaling 29 billion euros, or $38.5 billion. Italian brands represent around 30 percent of this segment.
The pure design, or very high-end range, represented 60 percent of the core design business, totaling 18 billion euros, or $24 billion. Italian companies represented 39 percent of that category.
The uptick in sales in 2014 was led by the American market, which gained 6 percent, and by emerging countries, which grew between 6 and 7 percent. Europe was up 1 percent. The contract segment is expanding, as it increased 15 percent.
Claudia D’Arpizio, Bain & Co. partner, said the design market has the potential to triple in size if companies innovate their business models in terms of branding, route-to-market, collaborations among firms, the development of the contract sector and shifting toward a multispecialist format. “The design sector has a brilliant future ahead,” if it evolves, said D’Arpizio. “It is one of the most avant-garde industries with products that are highly innovative both in terms of function and aesthetically.” To achieve growth, she urged companies to be equally innovative by evolving “the route-to-market that is now connected to a model that is extremely traditional and remote from the new consumers.”
Branchini concurred, saying that the business model must be skewed more toward the market to maintain industrial leadership and grow in size.
Medium and long-term strategies include the development of online platforms through the improvement of customer experience and service; the strengthening of the direct retail channel role by improving the customer experience in an omnichannel view; the support of the multibrand channel with sophisticated trade marketing activities and the definition of a structured approach to the contract channel.
Claudio Luti, president of Kartell and vice president of Altagamma, said that the Italian design industry should focus on the improvement of its brand policies, its distribution strategies and getting bigger, which will allow the sector’s companies “to be more profitable, to better preside over international markets and, especially, to remain independent.”
The industry is still highly concentrated in wholesale distribution, which represents 72 percent of the total — compared with 64 percent in the luxury goods business, for example — but it is a model that is struggling in established markets and is not easily exportable in emerging countries, said D’Arpizio. “The retail model can be supported only by those specialists that have a diversified offer,” she said.
Stefano Core, ceo of Driade, cautioned against “a bulimic product innovation that goes against the logics of luxury” to boost multiples, but rather to prioritize “product uniqueness” avoiding outsourcing, which would tarnish the level of quality.
On the back of the Yoox and Net-a-porter merger confirmed on Tuesday, Piero Gandini, president of lighting firm Flos, highlighted the “excellence of planning” of Italian design companies, while at the same time pointing to the possibility of “common logistics poles” as a means to grow.