Looking Ahead: Crafting a Bright Future for the Furniture Industry
High End Furniture & Design remains to this day one of the most fragmented industries of the global economy, with a significant concentration of manufacturers and brands located in South Western Europe, Italy primarily. Whilst constantly rising production costs and the relatively poor state of the home economies, alongside with the very developed presence of key players, make the local market hard to compete in, two strategic events have taken place, namely a consolidation of the key players by investment funds and a strong drive towards internationalisation. Around the late 1990’s most of this internationalisation drive was focused on the relatively close to home booming oil rich Middle Eastern, Russian and ex-Soviet countries, thus creating a strong bias and dependency on these markets. However, every economic boom has an expiration date to it and arguably, that date has gone by for the oil economies.
Where does this leave the SMBs of the Furniture Industry on their internationalisation journey? How do you ensure continued growth for your business?
It all boils down to classroom taught principles of business. Growth is driven by profitability, which at its turn can be affected by two levers - Cost and Revenue.
An SMB can of course follow the never ending spiral of attempting to lower costs through the search of new, cheaper suppliers. Another option is to opt for a direct to customer model, bypassing the loss of revenue created through costly cooperation with retailers, e-tailers and professionals. However a Direct to Customer model, will undeniably mean a higher contribution towards digital marketing and investment into a solid proprietary online commerce platform. Last but not least, cost reduction through consolidation and economies of scale remains one of the most feasible options. Consolidation however, needs to be financed and that is, a game involving outside investment entities and one that needs to be played carefully, with the relevant knowledge to hand, going far beyond product, manufacturing or design.
Whilst lesser, Revenue generation also presents its challenges. A non-diversified international footprint presents exposure to local cyclical crises, operating through a local presence creates exposure to high fixed costs, which is not warranted unless there is enough revenue coming from the specific market and finally, there are the agents, who’s knowledge of the local market is asymmetrical to their benefit and whilst most likely representing multiple Brands, you can never be sure that your company is getting enough attention.
In today’s post COVID-19 economy there is no easy and straightforward answer to the above stated questions, internationalisation and business development is a multidimensional discipline. Thus, at BCS we take targeted actions and steps to support Brands in growing their presence in the markets of our operation, namely:
Step 1 - Increase Brand Awareness through development of a Physical Footprint and Paid Digital Marketing
Step 2 - Commercially Activate the Brand on the market through interaction with industry professionals, brick & mortar players and e-tailers
Step 3 - Improve Sales performance on a quantitative and qualitative dimension through Engagement, impacting raw confirmations and average order value
Whilst consumer needs and the “size of the prize” are not identical across markets, the needs of the Brands for Awareness, Commercial Activation and Engagement remain aligned across countries, in what is becoming a borderless online driven global economy, albeit with a few exceptions. Thus, in order to sustain healthy growth rates and insulate against local cyclical economic crises, Brands must continue expanding their international footprint through a systematic application of hybrid sales and marketing strategies. Through the cumulative expertise of our BCS.Trade and BCS.Growth teams we are uniquely positioned to support Brands in their internationalisation journeys, on both, the marketing and sales fronts, supporting development of your market specific knowledge and impacting performance where it most matters.