Go High To Stay Alive
The greatest Christmas wish and New Year resolution for the coming festive season would probably be: Go higher-end.
The economic doom and gloom is no longer looming because it is already ahead of our heels. At every turn, during every exhibition, the most common comments we hear on the best way to staying afloat in the business is to focus on design and create products targeting the higher-end markets. As they say, the rich will always have money to spend.
One Malaysian manufacturer/exporter is doing just that. By working with international designers (interior, product, and industrial), Kian Export is able to reach into the high-end of the contract furnishing markets, which according to its Group CEO James Ng, are highly lucrative. Kian Export came into the furniture business making only indoor ranges; it diversified into the great outdoors only three years ago. Not only is the company healthy, it is growing while many others are mulling. (More on page 31.)
Admittedly, we cannot generalise base on one success story alone. But after going through a string of trade shows in September, we returned with on-site surveys that spell both apprehension and optimism. The market is generally quiet because buyers are cautious; not because they don’t want to or can’t buy. On the other hand, there are also others who have done better than before, simply because the weaker ones have been weeded out, while their target higher-end markets are less affected by the financial turmoil. (Read more in the three Talking Point features this issue.)
Going higher-end with original designs work in China as well. Hakon Rydland, previously President of President of Ekornes Asia shared the four main criteria that foreign brands must possess in order to capture the Chinese consumer market. Now as Director of International Divisions at Jisheng Wellborn, he added, “At the low end, one cannot be competitive in any way. Brand name, quality and design don’t mean much here”. (Full interview on pages 42 to 43).
Over in Europe, the 30 year-old Decosit Brussels is putting in a strong and commendable effort. The market is quieter but its organiser Textirama knew better than to just go along staying so. Patrick Geysels, General Manager of Textirama, said: “We can’t improve the economic situation. But as a trade fair, we have to create momentum. We must stimulate manufacturers to create new things and surprise their customers. That's what a true fair does”. (See postshow report on pages 66 to 67.)
How crucial this momentum is, at these difficult moments! For Decosit, there was no compromise or slowing down in its focus on originality, selectivity, high-end quality and relevance.
In the September 2008 issue of Furniture & Furnishing Export, International (FFE), we spoke of the outdoor and office/contract segments as the greener pastures within the furniture industry now. Displaying acute market understanding and foresight, Decosit Brussels 2008 opened with the debut of an outdoor show, with promises to increase the scale of DecoContract. And in less than a month after its 30th edition concluded, Textirama announced a date change and brand new show name (to MOOD) for 2009, all in the same breath – which most certainly gave it a new breath of life as well.
We’ll return with January 2009 as our next issue, and with a breath of fresh air: There will be reports from our very successful outing at Orgatec Cologne and stories on winners of the Furniture Leadership Awards (FLA) Malaysia organised by our magazine to recognise entrepreneurial leadership excellence in the furniture trade and industry and to honour the outstanding managers. This award will span the Asia region with programmes planned for other countries next year. Merry Christmas and Happy New Year, everyone. Go higher-end and prosper.
Kuala Lumpur, Malaysia: According to a report by Bernama, Malaysia’s furniture industry exports are expected to reach RM10 billion (US$2.79 Billion by 2010, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said.
The US and Europe have been traditional markets for Malaysian furniture. “However, due to the current economic crisis, exports to these places have been affected,” he said. Furniture exports to the US declined to RM1.49 billion for the first eight months of this year compared to RM1.53 billion recorded for the same period last year, Chin said.
“However, overall furniture exports for the first eight months of this year increased to RM5.67 billion from RM5.66 billion in the previous corresponding period with strong exports growth from the Middle East, India and Canada,” he said.
Chin commented, “There is a need for market diversification, especially in potential markets like Russia and the Middle East.”
He also said that in order for Malaysia’s furniture players to stay ahead of competition and penetrate into higher end markets, there should be continuous innovation in furniture designs, coupled with aggressive promotion, marketing and brand development.
On concerns that a shortage of foreign labour may have a negative impact on the industry, Chin said it was more crucial for producers to focus on value-added high-end products.
To attract more Malaysians to work in the industry, furniture makers would need to offer attractive salaries, he said. He added that a meeting with the relevant ministries would be held to discuss issues on foreign labour.
Singapore: Four Star Industries Pte Ltd (Four Star) has launched a new series of pocketed spring mattresses, On Cloud Nine, which comes with a special feather layer containing 90 percent feathers and 10 percent down. A breakthrough in innovation, these mattresses are the first in the world to combine feathers with pocket springs, a material that is more commonly found in pillows and comforters.
Four Star, a member of the local furniture industry brand, Singapore Mozaic, has been committed in their research in sleep sciences and development. The unique On Cloud Nine feathered pocketed spring mattresses mark another step forward in Four Star’s efforts to move the company in a new business direction. Four Star has been actively expanding their product range to cater to younger audiences who seek comfort, quality and design expertise when purchasing mattresses.
Mr Neo Sia Meng, Executive Director, Four Star Industries Pte Ltd said, “As each feather in the mattress reacts independently, curling under pressure and naturally returning to its original state when the weight is lifted, the feather layer is able to closely hug and support the contours of the body’s natural curvature. Coupled with Four Star’s renowned Naturalign™ pocketed spring system, the mattress is able to offer a high level of comfort and softness while delivering superb natural body alignment. Feather, which can dissipate heat naturally, is also well-suited for countries with humid tropical climates like Singapore. Through the introduction of On Cloud Nine, we wish to provide our consumers with yet another innovative option which will help them achieve an entire night of quality, sleep.”
Hafiz Koh, Singapore’s youngest race car driver and Four Star ambassador is full of praises for the new mattress, “As a professional race car driver, a good night’s sleep is essential for me to deliver my best performance. With my Four Star mattress, I‘m able to enjoy good night sleep every night that allows me to be 101 percent alert for my vigorous training the next day. The On Cloud Nine mattress has provided me an unsurpassed level of rest experience, my lifestyle and sports career has given a leading edge by its comfort and serenity.”
Singapore: IKEA Components, a wholesale distribution part of The IKEA Group that is focused on developing, distributing and trading components, fittings and raw materials for the IKEA product range, recently used Lawson Opportunity Analyzer to help optimize its enterprise software implementation. The use of Lawson Opportunity Analyzer, from Lawson Software helped IKEA Components identify the most significant opportunities for business process improvements and set company-wide strategic goals.
Lawson Opportunity Analyzer is a business modeling tool designed to help companies analyze the financial and operative effects of various business scenarios. IKEA Components developed its business strategy and identified its Key Performance Indicators (KPIs). It then conducted continuous measurement of these KPIs.
IKEA Components was then able to use the information gained through tracking these KPIs to help it enhance customer service and improve profitability. Specifically, the company reports an improvement in product availability, a reduction in customer complaints and a reduction in time required to process orders. In addition, IKEA Components reports reductions in the time required to produce inventories and order execution costs.
Singapore: Star Furniture Group, the integrated retailer and manufacturer of household furniture with 27 years of experience, announced today that its niche brand, Zen Tradition has won the Singapore Prestige Brand Awards (SPBA) 2008 in the Promising Brand category.
The SPBA awards are awarded annually by ASME Singapore (Association of Small and Medium Enterprises). The awards recognize and honour Singapore companies that have successfully grown their business by effectively developing and managing their unique brands.
Zen Tradition was created in 2002 under the umbrella of the Star Furniture Group to portray the Group’s perspective on Zen living concept. Zen Tradition furniture is characterized by the influence of Asian Zen in a contemporary, individualistic style, exuding an Oriental-Western fusion for furniture and furnishing. It appeals to discerning individuals who are upwardly mobile, individualistic and specific about his/her homely comfort and ambience.
“As a Group, we have consistently maintained a distinct identity for each of our furniture brands. We have four distinct product lines each having its own unique brand identity, style and target audience. All of our brands carry the Star Furniture Group’s promise of unbeatable quality and customer service. This win by Zen Tradition is an endorsement of our branding strategy and a definite encouragement for us to continue to embrace branding as a strategic impetus for the Group.” says Mr Kenny Koh, Managing Director of Star Furniture Group.
The SPBA ‘Promising Brand’ category recognizes successful brands that have been established in Singapore for three to eight years. Entries were evaluated on their brand concept, brand development and management and brand performance.
This is the first time that Star Furniture Group has participated in the SPBA Awards.
Last month, Star Furniture was awarded ‘Premium Service GEM’ status by SRA (Singapore Retailers Association) and WDA (Workforce Development Authority).
Premium Service GEM companies are selected based on their standards of service delivery, evaluated through a Retail Industry Mystery Shopping Programme.
Zen Tradition was created in 2002 as a niche furniture brand under the Star Furniture Group. Zen Tradition furniture is retailed at 21 showrooms across Singapore and Taiwan. It is also exported to more than 45 countries worldwide.
Harbin, China: As reported by Xinhua, Feng Yongming, de facto controller of the listed Guangming Group Furniture Co has been detained for misappropriating state assets.
In a statement by the Chinese government on October 11, 2008, Feng and his daughter, Feng Lijia, were detained on September 26, 2008. The authorities are investigating the case in which the two allegedly seized Yichun City Government’s shares of the listed company.
Speaking at a press conference, Yichun City Government’s Secretary General Bai Bo did not specify the value of the shares mishandled by Feng and his daughter. However, a separate report by the National Business Daily said the case involved RMB95 million (US$13.9 million).
Feng senior allegedly breached the Criminal Law by falsely declaring capital contributions and later withdrawing the said-contributions and divesting the funds to other interests. Guangming Group Furniture Co was listed on the Shenzhen Stock Exchange in 1996. In 1997, by virtue of the group’s sales revenue and total profit, it ranked first amongst Chinese furniture companies.
Wenzhou, China: According to a report by the International Herald Tribune, Chinese furniture manufacturers are feeling the effects of the credit crisis half a world away. According to the China National Furniture Association, the country sells 40 percent of its output overseas.
As the US reels from the credit crunch, demand for furniture is dropping. “Business is bad this year, especially since May,” said Liu Yongcheng, a senior executive at Zhejiang Adwin Furniture. The company’s factory is running well below capacity. At full speed, its plant can churn out US$1 million worth of furniture monthly.
The problems faced by Liu and other exporters in China’s coastal regions have attracted the attention of the central leadership in Beijing. Officials have carried out a series of high-profile visits to see how the financial crisis is hurting the Chinese economy.
Apart from weakening US demand, companies now have to cope with tight credit and reduced tax rebates. In order to survive, many have had to reduce the size of their workforce. Zhu Changling, Vice President of the China National Furniture Association, said US importers are cutting orders as the crisis deepens, while Chinese factories are reluctant to accept the risk brought on by long-term orders because of the steadily rising RMB.
In other words, companies are taking bigger risks even though their profit margins are declining. Although official figures cite furniture exports as up 28.5 percent in value in the first six months of 2008, average profit margins has dropped to 1.1 percent from 3.2 percent in the same period last year.
The Chinese Ministry of Commerce has recommended slowing the RMB’s pace of appreciation as well as increasing rebates on Value-Added Tax (VAT) for exporters to counter the sharp drop in overseas shipments.
Chinese manufacturers are wary about passing their costs to their customers. “If we raise our prices, our clients will leave. If we don’t, we are going to suffer,” said Liu.
Guangdong, China: Samson Holdings – a Chinese furniture manufacturer based in Dongguan, Guangdong – has bought UK firm Willis and Gambier. According to a report on The Evening Telegraph, staff whom were previously retrenched may get their jobs back.
Samson Holdings manufactures in China and runs a large wholesale operation, with much of its business interests in the US. The acquisition gives Samson a foothold in the UK where Willis and Gambier has manufacturing sites in Peterborough and Saffron Walden.
A spokesman for the Peterborough site said, “This is an exciting time for the company. We are even seeking to hire some of the staff who were made redundant when the firm went into administration.”
Mohamad Amini, Samson Holding Group President, “With the acquisition of Willis and Gambier, we are able to extend our operations into Europe from a solid base and continue the growth within a new market. It is our intention to build on the excellent relationships and core values of this business and to grow it from its already strong position.”
Mark Symes has been appointed Managing Director of Willis and Gambier. He said,” Willis and Gambier has excellent manufacturing relationships and we will continue to work to maintain the good reputation the company has. This will be an exciting time for our people and our customers as we consolidate the business, with all its strengths, maintain the current product line and grow with the addition of new and highly commercial products entering all areas of the market place.”
The company will continue to operate from its existing head office, warehouse and distribution operations from its existing sites.
Beijing, China: According to a report by Forbes, China will raise export rebates on textiles, toys, apparel and some other products including furniture. This policy adjustment was announced by the Chinese authorities: the Ministry of Finance and the State Administration of Taxation on Tuesday, October 21, 2008. It has said that a total of 3,486 products will benefit.
The new rebate rates will take effect on November 1, 2008. Rates will rise from five to 17 percent. Export rebate for furniture products will be raised to 11 – 13 percent.
Export oriented companies, especially small and medium sized enterprises have been adversely affected due to falling overseas demand, the rising RMB as well as labour costs. “This move will help ease operating pressure [on companies] and enhance their competitiveness,” said the two government bodies in a joint statement.
Hong Kong SAR, China: Humanscale – manufacturer of ergonomic office solutions- has opened a showroom in Hong Kong. According to a report by Nielson Business Media, the showroom is the first in Asia for Humanscale. Asia is an important region for Humanscale’s expansion plans. In 2007, international sales accounted for 23 percent of the company’s total sales.
Located in Central, Hong Kong’s Hollywood Road- the showroom is in good company. Steelcase, HOK and the American Institute of Architects all have a presence in that area.
In the space formerly occupied by HOK, Humanscale’s Hong Kong showroom will highlight how the company’s seating and office tools can work in compact spaces – a challenge for most offices in the territory.
Shanghai, China: According to a report by The Hindu, China’s economic growth has fallen for the third quarter in a row. Analysts and commentators attribute the slump to the spill-over effects of the global financial crisis that erupted due to credit insolvency in the US.
The Chinese National Bureau of Statistics (NBS) announced on Monday October 20, 2008 that the economy saw nine percent of growth in the three months leading up to September, 2008. In the first and second quarter of 2008, the Chinese economy grew by 10.6 and 10.1 percent respectively.
The announcement has raised worries that China will be hit harder than previously thought. “There are no signs of a definite recovery from the financial crisis. The growth rate of the world economy has slowed down noticeably. There are more uncertain and volatile factors in the international economic climate. All these factors have started to release their negative impact on the Chinese economy,” said Li Xiaochao, spokesman for the NBS.
Part of the reason for the slowdown is the sharp decrease in exports. Due to falling demand from key markets: the US and Europe, exports have fallen by 5.7 as compared to 2007 figures for the same period. News of closures in China’s manufacturing heartlands in the south has followed and more than 7,000 workers were laid off when a factory in Dongguan went out of business.
To counter the effects of decreasing international demand, the government has shifted its focus to improving domestic growth. It has outlined a land-use reform that would give farmers greater land-use rights. Under the new ruling, farmers will be able to transfer or lease their land rights. In communist China, all landholdings are currently state-owned. Analysts expect this latest move to stimulate the rural economy, increase rural incomes and shore up local consumer demand for goods and services.
Guangzhou, China: Guangzhou authorities announced that close to 40 percent of the furniture produced in Guangdong fails the safety test, according to The Epoch Times. Formaldehyde emissions were the chief cause of products not meeting safety standards.
In the most serious breaches, emissions were found to be seven mg per 3.7L. Guangzhou authorities announced that close to 40 percent of the furniture produced in Guangdong Province, China, fails the quality test.
The result of the random check showed that only 63.6 percent of the furniture products passed the test. Sixteen percent of unqualified furniture exceeds the formaldehyde emission limit.
To reduce costs, some manufacturers use an inferior graded medium density fibre broad, which is cheaper, but emits a higher percentage of formaldehyde. Compounding the problem, most of these companies do not have the scale to do in-house safety tests nor independent laboratory screenings.
Guangzhou City has 296 furniture companies. More than half are smallscale workshops, reproducing furniture from factories. Of these 296, problems have been found with 191 enterprises.
Hong Kong SAR, China: Home furnishings and accessories supply chain provider Zenith Global Logistics has forged a new partnership with Hong Kong based distribution services provider IDS Group. Through this collaboration, Zenith Global will expand its furniture logistics business to 15 ports throughout Asia.
“Zenith home furnishings customers can now call on us for complete supply chain management, beginning from their preferred factories in Asia all the way through delivery into the consumer’s home. Alternately, because of our menu of service solutions with IDS is completely flexible, it allows our customers to pick and choose. Customers can select only the services that they need, such as freight consolidation from multiple factories or inventory management and warehousing. This flexibility allows our customers to focus more of their attention and resources to their core business strengths, such as product design, manufacturing, licensing and marketing,” Steve Wolfe, Vice President of Business, Zenith Global.
Zenith’s partnership with IDS also gives home furnishings retailers and manufacturers access to sophisticated logistics technology for tracking inventory and shipment status in real time. “Through IDS’ Trigantic Information Portal, customers will have vital data on things such as delivery aging, inventory levels and other key performance indicators,” said Wolfe.
Taipei, Taiwan ROC: According to a report by Taiwan News, companies have been asked to study the emissions trading program by a group of local and foreign experts in carbon footprint management.
“The term ‘carbon footprint’ is commonly used to describe the total amount of carbon dioxide gas and other greenhouse gas emissions for which an individual, an organisation, an event or a product is responsible. A company should be aware of its carbon footprint so that it can meet corporate and social responsibilities by critically engaging with climate change issues,” said Jenny Chu, Senior business development consultant at Camco Group, a business that specialises in sustainable energy and low carbon markets.
“Those companies that are better prepared for greenhouse gas reporting and cap-and-trade legislation will also have first mover advantage on emission trading. Cap-and-trade systems limit the total permissible emissions within a given jurisdiction. Regulated businesses that reduce emissions below their permitted levels will become more cost-effective, resource efficient and will also be able to profit from the sales of emissions allocations,” said Mark Fraser, global marketing manager for the British Standards Institute.
“Cap-and-trade legislation is already in effect for over 11,500 energyinstallations across the European Union. Other countries, including Taiwan, are going to pass a law on imposing the system,” said Fraser.
Cap-and-trade mechanisms are administered by a central authority – usually the government. It sets a limit on the amount of a particular pollutant that can be legally emitted.
Companies and other groups are issued emission permits which will regulate how much of a pollutant they can emit. The actual emissions from an organisation may not exceed that limit, or it must buy additional allowance from another entity that pollutes less.
Chu and Fraser made these comments during a seminar held Tuesday, October 21, 2008 entitled “A Total Solution – UK Carbon Footprint Management To Emission Trading” in Taipei, Taiwan ROC.
Matera, Italy: Nicoletti, the Italian sofa manufacturer which has filed for voluntary liquidation in Italy has reinvented itself into G. Nicoletti Trade which will concentrate on production for the middle and upper end market. Run by the founder Giuseppe Nicoletti and his eldest son Eustachio, the company will stop producing promotional lines.
Eustachio Nicoletti said in a High Point Report, “We are going back to our original roots as a high-end producer. We see that in producing promotional products you don’t make money. Everybody is losing money. The situation is very hard. The problem is that the customer is continuing to squeeze the vendor and the vendor cannot afford to keep those (low) prices.” He added, “All of the profits we are making on the medium-to-high products, we are losing on the promotional stuff. The problem with promotional is that there is no bottom. It is always too expensive compared to the competition. In Italy, we call it ‘the war of the poor people.”
As Nicoletti’s Chinese factory was shut down in the summer, it will be partnering with Calia Italia, which has allowed the new entity, G. Nicoletti Trade, access to the use of its factory and production facilities. G. Nicoletti’s sofas in leather, fabric or microfibre will retail for about USD 2,000.
Nicoletti’s licensing agreement with US furniture executives, however, will continue with the launching of Nicoletti USA at High Point. A separate factory in China will manufacture upholstery for the US brand. Nicoletti USA will be headed by Nicoletti’s former Vice President of Sales in the US, Jim Anton and his business partner Ron Spivey.
London, UK: Martin Jourdan, Chairman of the British Furniture Confederation, has called for the association to raise its profile among furniture manufacturers. Two years since its inception, the association has made various achievements at the political level and is keen to gather feedback and opinions from the industry. However, a recent open day held at the Furniture Makers Hall in London was met with lukewarm response.
Jourdan expressed his disappointment with online furnishing news magazine, Furnishing Report: “The BFC now has the ear of politicians and senior civil servants and is keen to solicit industry opinion so that major issues can be addressed and resolved. This meeting would have been an ideal opportunity for senior executives to put their cases forward.”
This dedicated Government lobby group attends the bi-monthly All-Party Parliamentary Furniture Industry Group (APPFG) sessions at the House of Commons.
Speakers at the event included Jessica Alexander, the National Bed Federation’s representative and Roger Mason, Managing Director of the British Furniture Manufacturer’s Organisation, who respectively touched on flammability regulations and a consumption tax proposal.
Cambridgeshire, UK: Myer’s Beds, a part of the Swedish-based Hilding Anders group since 2007, plans to downsize and is in consultations with its employees over redundancy packages. Based in Cambridgeshire since the 1960s, Myer’s Beds is one of the UK’s major bed manufacturers.
Following news of two orders worth “millions of pounds”, the general trade union GMB Union, is hoping that all the jobs could be saved. Hilding Anders employs a staff of 5600 around the world and records a turnover of 750 million euros in 2007.
New York, US: The Jaclyn Smith Home Collection is expected to broaden Kmart’s customer base. Building on the actress’ 23-year relationship with the retail giant, the new bed and bath line will be expanded into furniture, rugs, tabletop and home patio, as well as lawn and garden in the spring.
A reflection of how the former Charlie’s Angels lives at home, the collection includes patterns such as Spring Shadows, with satin-trimmed stitching, and Willow, with custom embroidery. While the Martha Stewart Everyday home collection occupies the “best” spot, the Jaclyn Smith line is positioned as “better” in a good-betterbest equation.
Kmart, with more than 1400 stores in the US, is a wholly owned subsidiary of Sears Holding Corporation, a mass merchandising company offering customers quality products through a portfolio of exclusive brands and labels.
Banbury, UK: The British Shops and Stores Association (bssa), a lobby group representing smaller furniture retailers has reported a 3.8 percent annual drop in sales among its members. The group is calling for more interest rates cuts to encourage consumers to spend and to prevent independent retailers from having to close shop.
Based on a recent survey, sales of home-related products, it says, have fallen by 7.8 percent. Established in 1991, the association, which focuses on small and medium sized businesses, has 4,000 members with an annual turnover of GBP 3 billion trading out of 6,200 outlets and employing 45,000 staff.
The group has two main tasks. First, to leverage economies of scale created by its large membership base and to provide a comprehensive and highly competitive portfolio of core retailing business and professional services to its members. Second, bssa aims to represent the interests and concerns of its members to government both directly and where necessary, in concert with other retail organisations.
Brent, UK: Ikea, the home furnishing retailer, will conduct a two-month tour of the east coast of Scotland in order to boost sales up north. With a UK turnover of £1.1billion, Ikea aims to drive visitors to its two Scottish stores in Edinburgh and Glasgow.
Stand, the Glasgow design agency was hired to create an audio-visual catalogue that Ikea will present at retail sites at various locations including Edinburgh, Stirling, Dunfermline, Livingston, Dundee and Aberdeen.
The design agency will create an interior projection booth that is sculpted to look like a giant stack of catalogues. Customers will be able to experience new products animated within the interior.
East Anglia, UK: Glasswells, East Anglia’s leading independent home furnishers, will close its existing store in Martlesham Heath, Ipswich. However, a spanking new £5m store with 73,000sq ft of space is being built in the town’s Orwell Retail Park and is slated to open in December. Apart from house furniture, flooring, window dressings, kitchenware and accessories, the new store will include a café – with freshly prepared foods – and a children’s play area.
In preparation for the opening, Glasswells are offering massive discounts to clear clear £1m worth of stock. With stores in Haverhill, Saffron Walden and Bury St Edmonds, Glasswells reports a turnover of just over £21million, up 7.8 percent on the previous year.
The new showroom will be managed by Andrea Johnston, who has two decades of experience in the home furnishings retail trade. Johnston, who has directly managed showrooms and has worked at a senior level for two national home furnishing retailers in Suffolk, Essex, Cambridgeshire and London, will be responsible for recruiting 70 new staff. In a press release, she said, “This is a very exciting new role and it builds on my experience in the home furnishings retail sector. I’m a big fan of Glasswells, and I’m really looking forward to planning for the opening and operation of the Ipswich showroom.”
Hartlepool, UK: Carpet manufacturer Whitestone Weavers has recently unveiled its Italian influenced carpet range called Verona. Inspired by the traditional architecture and masonry of Northern Italy, the traditionally woven Axminster will be available in eight mineral colourways: sardonyx, opal, moonstone, soapstone, aroqonite, marble, granite and quartz. The combination of natural tones with a scroll motif pattern will enhance interiors designed in the classical style.
Available in a width of 3.66m, the high performance blend of 80 percent wool and 20 percent polyamide gives it a luxurious look and feel but is highly practical and suitable for any domestic or commercial environments.
Steve Byrne, managing director at Whitestone says: “The Verona is a very elegant range, suitable for both extra heavy domestic and heavy contract installations and can be used in both a traditional and contemporary setting. We are extremely happy with the range as it has a great aesthetic appeal but at the same time is quite practical and modern; getting both elements right is essential in today’s society.”
Whitestone Weavers has also launched Natural Tones, a sister collection to its eco-friendly 100 percent wool Nature’s Own range. Made of 100 percent undyed wool, using different breeds of sheep from across the UK to give a unique and individual shade to the carpet, Natural Tones is a seven row, lighter weight version making it even more accessibly priced. The range comes in 15 coloursand three new designs: Royale, Checkmate and Inspiration. Natural Tones is available, ex-stock, in four metre width rolls or cuts. It has a backing finish that includes jute and biodegradable natural latex.
Barcelona, Spain: Kettal, the Barcelona-based furniture company with a workforce of 300, has recently launched a new collection by Italiantrained Spanish designer Patricia Urquiola for the Maia range. The Kettal Maia collection comprises braided hightech fibre with an aluminium structure that casts interesting shadows. New models have been added to this outdoor furniture range including the latest versions of the wheeled deckchair, the centre, side and dining-room table, two-seater sofa, 360°-rotating double deckchair and tall stool.
Urquiola has designed a new range of fabrics called Kernel and Paddock which uses an interesting mix of PVC and acrylic. Four fabrics in an original range of contemporary colours -- reds, lilacs, blacks, whites, browns, beiges – combine the advantages of Porotex textile with the softness and feel of chenille.
Santeramo In Colle, Italy: The board of the Italian upholstery giant, Natuzzi, has approved a three-year business plan to increase sales and profitability that includes opening its first production facility in North America. In a challenging business environment with low consumer confidence exacerbated by the global financial crisis, Natuzzi aims to improve results. Senior management will begin to brief clients in the US and Britain on the company’s 2009 – 2011 projections before it is formally unveiled to the financial community in November.
Some of the proposals include: increasing sales in Europe, penetrating the emerging markets of Brazil, Russia and India, where the company now has no significant business, supporting growth in Asia and continuing its recovery in North America and focusing its brand strategy worldwide with Natuzzi and Italsofa in order to attract the premium high-end as well as the younger consumer segments.
The company also aims to strengthen advertising and marketing to support the brands as well as drastically reducing production costs by leveraging existing plants to serve the regions where they are located, establishing a shorter route to market with better customer service and improved supply chain efficiencies.
It will launch a lean manufacturing program for all facilities and strict control of general and administrative expenses. It will also expand its retail network with a goal of almost doubling the number of stores and shops-in-shop worldwide.
The new strategy aims at achieving sales of 1 billion Euros in 2011, with earnings before interest and taxes targeted to be about 15 percent of net sales. In the first half of this year, the company reported sales of 341.6 million Euros (USD 523.4 million) and a net loss of 25.9 million Euros (US$ 39.7 million).
Epping, UK: With a marketing budget of £750,000, the Great Big Home and Furniture Store and the Home Discount Show has teamed up to offer exhibitors and consumers the best of both worlds.
Apart from quality products at best prices, consumers can now purchase luxury and well-known brands at very competitive prices. Exhibitors can be assured of volume sales over a three-day period as an average of 30,000 shoppers look for a good bargain at an opening sale, mid-season sale and closing sale in the same weekend.
High Point, US: Smaller furniture that fits into smaller spaces is growing more popular. According to Emery P Dalesio, who writes for the Associated Press and Los Angeles Times, such is the trend observed at the High Point Market furniture trade show. Sizes of sofas, entertainment centres, dressers, coffee tables and nightstands have all been reduced. Home offices are compressed furniture into single foldout cabinets.
“It’s scaled down to the kind of residences that are selling today,” said Don Essenberg, Magnussen Home Furnishings chief marketing officer. Magnussen started downscaling three years ago in response to its consumer studies.
“Our sales have shifted from 70 percent over-scaled to 70 percent the smaller scale now,” Essenberg said. “We’ve seen a return to what many in the industry have seen as a more appropriate and normal scale in furniture. It’s less grandiose than we have seen in a decade or so.”
Aspenhome, based in Phoenix, is offering a bedroom valet that looks like a TV stand with drawers underneath but hides a built-in laundry hamper and slide-out ironing board.
“Increasingly, people are choosing to live by themselves, with apartments becoming a more popular choice of res idence in metropolitan areas. These smaller households therefore also drive large demand for smaller furniture items,” according to a recent report by IBISWorld
Inc, a Los Angeles industry intelligence firm.
Reduced buying power also meant that consumers are looking at smaller new homes, hence smaller furniture. KB Home, which once offered large homes with expensive amenities, has redesigned its new home layouts from 316 sq m to 223 sq m.
Budapest, Hungary: Hungary is slowly becoming a potential furniture market for retailers. Two Spanish and one German furniture store chains are planning to enter the the country, Hungarian Franchise Association Head Secretary Katalin Mandel told Napi.hu.
Spanish Kolonial Home offers a combination of rustic and modern styles in addition to exotic decorations, while Banak Importa specialises in colonial style furniture. The Banak franchise recipient will need to open at least three units of at least 150 sq m, representing an investment of EUR 600,000 (US$763,165). Becoming a franchisee of Kolonial Home will be cheaper. German Möbel Kolonie offers a style similar to Banak made of teak. It already has six showrooms in Germany, Austria and Spain.
New York, US: The Calvin Klein Home division will introduce two designer furniture lines this spring – ‘Calvin Klein’ and ‘The curator collection by Calvin Klein Home.’ These lines are to be launched in the US in January 2009. The latest additions to the Calvin Klein Home line will consist of modern, timeless pieces in keeping with the Calvin Klein brand aesthetic. The initial offering includes furnishings for the living room, dining room, and bedroom, including sofas, chairs, dining tables, coffee and side tables, beds, mirrors, and book cases.
The launch will be supported by a national advertising campaign with placements in strategic shelter, lifestyle, and fashion publications, such as Elle Decor, Metropolitan Home, O at Home, Vanity Fair, InStyle, Wallpaper, Domino, and New York Times Magazine, among others.
All designs were conceptualised and executed by an in-house team led by Calvin Klein Home’s Creative Director, Amy Mellen. The manufacture, production, sales, and distribution of both lines will be executed by licensing partners, Alexandre International and Shayne Industries.
Both lines take inspiration from the Calvin Klein apparel and accessory lines, as evidenced in the textures, materials,and hardware. Surfaces are elegant in travertine, parchment, marble, smoked glass, brushed stainless steel, and gold leaf, in unique combinations of matte and high gloss finishes.
The ‘Calvin Klein’ furniture line will be available exclusively at select Macy’s nationwide beginning this January. This line is eclectically merchandised into three key groups inspired by their ultimate use – City, Weekend, and Destination. Each group is delineated by a specific singular wood finish: walnut, whitewash, and teak, respectively.
‘The curator collection’ by Calvin Klein Home is a more elaborately detailed offering consisting of approximately 65 SKUs. The collection is highly polished, with hand-rubbed, dark walnut-finished and ebonized-finished pieces, accented with leather details and bronze hardware. Some of the multi-functional pieces include a tall chest of drawers with valet doors, a parchment-front dresser, and an elegant, hand-rubbed walnut day bed with all-natural linen upholstered cushion and pillows. ‘The curator collection’ is planned to be available at fine furniture retailers nationwide and range from US$1,100 for a cocktail table to US$5,000 for a walnut sleigh bed with hand-applied gold leaf.
The collection was shown exclusively at the High Point market on a dedicated floor within the Commerce & Design building, by invitation only. Additionally, it is planned that a unique line of decorative pillows designed to specifically complement the collection will complement ‘the curator collection’.
“We believe that Calvin Klein furniture will bring a fresh and modern approach to the current marketplace and serve to enhance the overall Calvin Klein Home presentation at retail,” said A J Menozzi, CEO, Calvin Klein Home Furniture and The Next Market, who oversee operations for the new furniture lines.
High Point, US: Furniture sales will not be suffering a slump for far too long. “The situation we have now is somewhat severe, but it will be shortlived,” said Jerry Epperson, a home furnishings analyst speaking at the High Point Market’s opening day media breakfast.
Epperson, a well known home furnishing analyst who has 35 years, said he expects at least two more quarters to continue the downward trend in furniture orders and sales: “The fourth quarter will be down three percent and the first quarter next year down one percent”. He added, “The second quarter will be flat, and we will see movement upward in the third quarter. If our numbers in the third quarter next year are not better than this year, we are in a pickle.”
In addition, he is confident furniture sales will pick up next year. “The reason I can tell you next year will be better is we are creating numbers this year that will not be hard to beat,” said Epperson, drawing laughs from the audience.
Epperson said that the lagging sales and orders in the furniture industry are not surprising, considering what is happening across the US in the housing market and credit industry. While the new home construction market would not be a quick turnaround, he expects existing home market sales and lending industries to improve sooner, which will help furniture sales.
“We will not see a bounce back in the new home industry until 2010, but we will see a bounce back sooner in existing home sales,” he said. “Who got badly burned in the housing industry were people who were going out buying homes to flip. They were taking these interest-only loans expecting to never stay in the homes long. These homes are down in value.”
With Epperson’s forecast of brighter conditions for furniture manufacturers and retailers next year, Brain Casey, president and CEO of the High Point Market said that only some will survive. “I think the manufacturers based here have had their big shakeout,” he said, referring to announced factory closings such as Stanley Furniture’s Lexington plant. “I think you will see us lose a few more retailers, however.” He also pointed to some positive news in the past year. Thomasville Furniture Industries recalled 50 furniture workers to make chairs at its previously shuttered Plant C and Ikea opened a manufacturing facility in Danville.
Berkeley, US: Smaller scaled furniture stores are feeling the pinch of the slowing economy, including those who thrive on design and aesthetics. Edgar Blazona of Berkeley designs for his brand, True Modern. Business had been good previously but this might not last long, according to a report by the San Francisco Chronicle.
“My sales have to go up. If my sales do not go up, I would say I have another six months maybe. Maybe three to six months, “ Blazona said in the report.
Blazona and countless other small business operators have been pummelled twice. The rising fuel costs increased his transportation expenses, including a 40 percent spike in overseas container shipping, as his assembled furniture is delivered to the Ports of Los Angeles, New York and New Jersey. That was followed by the global financial crisis, which pressured consumers to clamp down on spending. His business has gone down 30 to 50 percent, as children’s furniture, for example, is not a priority for consumers in uncertain times.
“People are not putting the same amount of money into a child’s room as they were before. There is more handme-down stuff. They are living without. They are just not spending like they were,” he said.
Blazona added, “We’re all just sitting here, waiting. We’re looking at the market. I assume that has a lot to do with the election. People think the election will solve some of these economic issues. Overall, I don’t think it will, but it might solve some of the day-to-day spending. People might get back to that day when they are still cautious but willing to spend some of that precious cash.”
The slowdown in consumer spending is affecting most discretionary retail categories, according to the National Retail Federation. September sales at furniture and home furnishing stores in the US decreased 2.3 percent, seasonally adjusted from August, and 9.2 percent unadjusted from September 2007.
Particularly telling are data about 2008 retail container traffic - traffic that in healthier times included more of Blazona’s furniture from Asia. “The factories (in Asia) are down 40 or 50 percent, and I know because I’ve been there,” Blazona said. “In China a few weeks ago, there were five or six trucks going out of a factory. A year ago, there were tons of trucks. The factories are perfectly clean right now.”
But he said that he would be fine after all: “The market is adjusting, and I think we won’t probably see the same sales we saw a year ago. But the furniture industry won’t come to a halt. People always need talented designers.”
North Carolina, US: Ecko Home Furnishings was to close its Chapel Hill store in October, according to the News & Observer. Ecko will consolidate its operations into its Glenwood Avenue location in Raleigh. But the company, owned by Ben Stewart, was founded here.
Stewart had hoped for Ecko to always be located in Chapel Hill. But the furniture business is changing. “Five years ago I knew that would be the last lease I would sign,” said Stewart. “I need 10,000 sq ft (929 sq m) I couldn’t find anything in Chapel Hill that wasn’t cost prohibitive. The furniture industry as a whole has declined markedly in the last few years, retail and manufacturing”.
He added that he used to buy a lot of furniture in North Carolina and Scandinavia. Now, everything, including Scandinavian designs, are made in Asia. “Currently I have one North Carolina upholstery manufacturer that I carry in my store. That is all I have left. And I hope they survive,” Stewart said.
In Raleigh, Ecko will be located close to a number of furniture stores. “Most in Raleigh are on the Glenwood Avenue Furniture strip,” said Stewart. “At one time there were 12 furniture stores in Chapel Hill. There’s Hill Country downtown and one store on Elliott road that sells leather recliners. Other than that, I don’t think there are any others. Even Haverty is closing.”
North Carolina, US: Pasquale Natuzzi, Chief stylist of the Natuzzi Group, was inducted into the American Furniture Hall of Fame on Tuesday, October 21, 2008. Natuzzi is the first non-American to be inducted and to receive the ‘Affie’ Award. Presented to each new permanent member of the American Furniture Hall of Fame, the “Affie” is symbolic of his or her iconic presence within the furniture industry.
In 1959, Pasquale Natuzzi founded The Natuzzi Group, which remains the world’s largest furniture manufacturer and the global leader in leather upholstery. The Natuzzi Group is known for its innovation in style and design, along with its dedication to quality product. The company’s values are founded on Pasquale Natuzzi’s vision, realised through his design philosophy and illustrated in his ‘total look’ approach to design. With his commitment to style and quality also comes a commitment to social responsibility. Since 1995, Natuzzi’s company has been ISO 9001 certified and in 2001, the Natuzzi Group was certified ISO 14001 for its environmentally responsible practices and processes.
Pasquale Natuzzi attributes his success to his rich history and the people with whom he works. Today, Pasquale Natuzzi employs over 8,000 people worldwide, selling his Natuzzi branded products in 123 countries and in over 300 branded stores. Every day 4,000 people choose Natuzzi branded products for their homes.
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and manufactures a broad collection of residential upholstered furniture. With 2007 revenues of EUR 634.4 million (US$808.84 million), Natuzzi is the largest furniture manufacturer and the global leader in the leather upholstery segment, exporting its innovative highquality sofas and armchairs to 123 markets on five continents.
North Caroline, US: Theater Xtreme Entertainment Group, a publicly held company that operates a chain of home theatre design centres has acquired Jasper Cabinet, according to Furniture/Today. Jasper Cabinet is a resource for home entertainment, home office and accent furniture.
Under terms of the deal, announced during the High Point Market exhibition, Jasper Cabinet will continue to operate as an autonomous unit of Theater Xtreme and Robert Cribbs will remain Jasper Cabinet’s president. “This is an exciting opportunity. It gets us into markets that we are not in now,” Cribbs said in an interview with Furniture/Today. “And it gives our dealers so much more flexibility.”
Before discussions about the acquisition begain, Jasper Cabinet was working with Theater Xtreme about a year ago, when the two formed a partnership allowing Jasper Cabinet to market Theater Xtreme’s Row One collection of home entertainment and home theater furniture. Cribbs said he’s hoping to sell the Row One products through traditional furniture stores as well as Theater Xtreme’s franchised design centres.
Georgia, US: OnTimeSupplies.com announced the release of their new line of discount HON furniture collections featuring flexible desk configurations, conference room suites, and many other workspace solutions. OnTimeSupplies. com sells office furniture, office supplies, school supplies, toner, file cabinets and everything else needed for the office.
“We are very pleased to expand our relationship with HON, which is recognised as a global leader in highquality office furniture,” said Andre Scott, co-founder of the Atlanta-based office furniture superstore. “Our new office collections allow customers to quickly and easily select furniture configurations that would otherwise involve custom configuration. This new offering allows us to offer clients significant time and cost savings.”
Some of the most popular HON office furniture collections include the HON L-Shaped Corner Office Desk Suite (the HON 94000 series), as well as the HON 10600 L-Shaped Desk series, and many others.
Essex, UK: Mark Symes, former Managing Director of International Gambier, has been appointed the new Managing Director of Willis & Gambier, the major supplier of premium bedroom and dining furniture. Established in 1990 by Barney Willis and Nigel Gambier, the company which supplies furniture to High Street stores such as House of Fraser, John Lewis and Marks & Spencer, has been bought by Samson Holding Ltd.
Mohamad Amini, Samson Holding group president said, “Mark has had associations with our business for over 10 years and is well connected both with the existing customer base of Willis & Gambier as well as a number of large volume retailers.”
The acquisition of Willis & Gambier allows Samson Holding to extend its operations into Europe from a solid base and continue the growth within a new market. It aims to build on the excellent relationships and core values of the business and to grow it from its already strong position.
Symes said, ‘I am delighted to be appointed as Managing Director of Willis & Gambier. It is a company I have long admired both in their product line and customer base. The business is now perfectly positioned to benefit from a strong financial and corporate group structure that will bring comfort and security to our retail partners.”
Malmo, Sweden: Hilding Anders, the Swedish company that “aims to give the world a good night’s sleep” has appointed Fredrik Arp as Chairman of the group. Arp has recently vacated his position as Chief Executive Officer and President of the Volvo Car Corporation, allowing him more time for board duty.
Fredrik Arp said, “Hilding Anders is an interesting and successful group with many interesting opportunities before it. I look forward to heading the work of the board in its endeavours.”
Anders Pålsson The President and Chief Executive Officer of Hilding Anders said, “It is positive that Fredrik Arp will now have more time for his board duties with Hilding Anders, as it gives us greater opportunities to utilise his industrial competencies and network.”
Banking On Original European Designs
Based in Malaysia, Kian Export (M) Sdn Bhd has found for itself a unique point of differentiation from so many of its peers by offering original European designs at Asian prices.
By Nicole Liang
European designs, Asian prices – this is most often marketed as a tag line for Asian factories operating on foreign (western) investments. But this coming from an Asian-owned company warrants special attention; and even rarer when it is not based in stylish cities such as Japan.
Based in Malaysia, Kian Export (M) Sdn Bhd has found for itself a unique point of differentiation from so many of its peers using this tag line. Since 2004, it has been working with independent designers such as Ton Haas and Stephanie Maignan to offer original higher-end furniture at affordable prices.
In 2007, its partnership with Danny Fang was especially fruitful. Fang’s Matryoshka Chairs, inspired by Russian Matryoshka dolls, won the Gold Award in the Furniture Excellence Awards, organised by the Malaysian International Furniture Fair in 2008. This propelled Kian instantly into the spotlight, and Fang into design stardom. For both manufacturer and designer, these collaborations bring tangible and intangible returns.
“In addition to creating more businesses, these partnerships allow us to differentiate ourselves from other manufacturers. By working with international designers, we create beautiful and unique furniture. At the same time, we exchange a lot of knowledge about design and manufacturing with them. Not only we learn from them, but they also learn from us,” said James Ng, Group CEO of the company.
Ng continued, “Sometimes some designs are either too far-fetched or difficult to produce. Designers mostly do not know how, who or what to work with. First, we must be able to make and market the furniture that they design, and the design must be suitable for our target markets. Secondly, we like to see what other designs they have made, so we can evaluate the overall level of marketability of their designs. We like innovation, and we like designs with a story to tell”.
Kian Export adds a new designer to its portfolio every year. The company would commission individual brochures for each designer’s works it manufactures. This year, Kian Export welcomes Nini Andrade Silva onboard. The Portuguese designer has received several notable mentions in international publications, including Andrew Martin’s Yearbook of the world’s leading designers. According to Ng, Silva, who runs two interior design and architectural ateliers, used to source from him for her projects. She wanted her own designs to be manufactured and chose Kian Export to be her partner.
The European and Asian duo is working on the Calhau series that is inspired by pebbles. The 'Garota do Calhau' sun lounger made its debut at the Furniture China exhibition in Shanghai, held September 10-13, 2008. The product is already in production and available for export only.
Also at Furniture China, Kian Export launched a new range of fabrics and matching accessories for its existing lines of furniture – another effort at distinguishing itself from the pack. This total concept will also help retailers improve store layout and inject more attractive colours into their showrooms, Ng added.
Ng’s meticulous consideration for retail stems from experience. The Kian group also owns a retail chain, Homelife, in Malaysia. The first of its five stores opened in the early 1990s.
As for export, its key markets are Australia, Europe and Latin America. Kian ships 60 to 80 containers monthly on average. And business has been brisk, said Ng, thanks to the growth posted from hospitality orders.
“We have been expanding over the past three years, especially with hospitality furniture. We are stronger in mass production, even though the projects segment has been growing and we have been developing a lot of new products at customers’ request,” Ng shared.
Some of these containers exported are wooden indoor furniture destined for its buyers’ hospitality projects. According to Ng, Kian Export’s hospitality range is also quite extensive, and it accounts for about half of its business. “We started our business in China doing indoor hospitality furniture and only went into outdoor furniture in the last three years. We supply to all types of restaurants, including fast food chains like Starbucks and McDonalds,” he continued. The Kian group has factories in Kuala Lumpur, Malaysia and Guangdong, China.
Chanel Sofa Design:Opulent and luxurious, Venice is a gem of a design. The high backs, overstuffed and richly padded with soft, sinewy polyester fibres ensures extraordinary comfort. Precision double stitching with contrasting threads makes this model pleasing to the eye; and draws attention to the seats and backs. Generous arm rests on both sides enhances the overall comfort and look. Seats are made with individual barrel-shaped pocket springs, and padded with high quality polyurethane foam to give lasting comfort and durability.
Tacchini: Sit On Quilt
Quilt's quilted stitching immediately communicates a feeling of comfort and a sense of luxury. The sofa is available in different sizes with a chromed-steel base; the armchair comes with a disc-shaped base in painted steel. The collection is complemented by a square pouffe that can be placed next to the sofa or chair. The design comes from Pearson and Lloyd.
Artifort: As Easy As ABCD
Pierre Paulin’s award-winning ABCD Sofa is a design classic but contemporary in appeal. Ideal for hotel lobbies and lounges, the sofa’s psychedelic design brightens up any room and encourages conversation. Covered in ‘Momentum’, the original fabric designed by Jack Larson in the sixties, the ABCD sofa is a collector’s item.
B&B Italia: Frank Perception
With its simple shapes and generous proportions, the Frank series by Antonio Citterio can be combined in a variety of ways with two sitting cushions accented by a pouf and chaise longue. Three small rigid cushions can be added as support for the back cushions or used as armrest.
Kallemo: Waves Of Pleasure
Presented for the first time at Salone del Mobile Milano 2008, the Navigator easy chair designed by Johan Linton for Kallemo is inspired by the sea. The sofa comes in two lengths at 1500mm or 2100mm with a depth of 720mm. The twoseater or three-seater sofas can also be combined to create a longer piece for use in a corporate environment.
Perobell: Metropolitan Life
The Metropolitan range by Perobell is conceived as a comprehensive series whereby pieces can be acquired individually or combined with a range of angled settings and accessories. With a robust wooden construction and quality forms, the Metropolitan will last a long time. Detachable covers ensure easy cleaning.
Edward Bulmer: Dutch Simplicity
The Holland Range by Edward Bullmer is upholstered in leather with floating buttoned seat cushions, brass nail trim and brass castors. This modular range is designed in a contemporary style and includes a chaise and side chair. Can be made with sycamore, ash, dark walnut or any other type of hardwood.
Offect: Fancy An Orgy?
Designed by Karim Rashid, the Orgy sofa with ottoman comprises a wooden frame with a steel chrome base upholstered with polyurethane foam and flameproof fibre. It is a striking conversation piece for the home or in a club environment.
Communistar Designers:Designer Marian Laššák created this unique bedside table, made of MDF and plastic, which looks like a pile of books. The bedside table contains four drawers and is 750mm in height.
Star Furniture: Sheer Luxury
The Lyon Bedroom Suite is another exquisite creation by Star Furniture from its luxurious high-gloss collection. Elegant and sophisticated in design, it showcases an innovative combination of brilliant high-gloss finishing with superbly hand laminated Ash Crown Cut veneer. This range is designed to accentuate the distinctive and contemporary look of a modern home.
Vision Worth:This solid rubberwood bed by
Vision Worth Sdn Bhd is suitable for children or adults. Featuring curves and straight clean lines, its simplicity also adds sophistication to it. The manufacturer is based in Malaysia and specialises in bedroom furniture for export.
Horm: Veneer OfMade of multi-layered beech, the Sottiletto bed designed by Christoph Burtscher and Patrizia Bertolini, has a veneered frame with meta-acrylic spacers. Buyers can choose from three types of veneers: walnut veneer, natural beech and beech with mocha stain.
Koskela: Sturdy Simplicity
The fully upholstered bed by Australian-based Koskela comes in either fabric or leather with slatted mattress support, made of solid timber. Buyers can also opt for the Haefele slat system support.
Gervasoni: Unity In Contrast
The Gray storage unit with four adjustable shelves by Gervasoni is an exercise in contrasts. The two door storage unit can be made of white or grey-stained oak, as well as natural American walnut. Doors are equipped with mirrored or silkscreen panels.
Iannone: Green Storage
The Damask ‘graphic armoire’ from US-based Iannone Design is touted to be ecologically friendly as its doors are made of the reclaimed stalks of the sorghum plant. It has a natural maple interior and is finished in gloss white laminate. The doors are soft closing.
Woodlandor Wood:An elegant four-poster bed for the young, the Geneva Youth 4 Poster Bed is designed with built-in drawers to maximize storage space. Made of tropical hardwood and rubberwood, the poster bed can be accented with a stylish canopy. With its luxurious finish, this bed is for keeps.
Afid Design: Handy Units
Designed by Michael Armstrong who founded Afid Design, this range of handmade storage units is deceptively simple. Made from certified hardwoods and finished to the highest quality, the units are simple incorporating graphic linear elements and can be made according to client’s choice of timber.
Brave Space Design:Made from Amber Bamboo and treated with a durable non-toxic water-based finish, the Planar Drawer from Brave Space Design comprises shallow accessory drawers and deeper clothing storage. The push-touch drawers are made of 100 percent recycled MDF panels finished with a waterborne paint.
Cattelan Italia:The extension leaf in the York dining table is made of stainless steel and gives unparalleled strength and sturdiness to the table. The point of connection between the table tops and wooden legs is maintained with the help of this steel frame and provides for easy handling on an everyday basis as well as during shipping etc. The York wooden extendible dining table is available in cherry; beech and Wenge veneered tops and matched by wooden legs in the same exterior finish.
AFA Furniture: Sweet Dreams
The Algol Youth Series is designed by Ryan Theo from AFA Furniture. Made entirely of solid wood, it comes and white and pink, as well as white and blue colour combinations. The design and construction concept is characteristic of the company’s strength in convenient DIY products.
Argington: Convertible Comfort
The Sahara crib is the central focus of Argington’s Nursery line. It is a sleek, modern crib that can be converted to a toddler bed, giving more value to parents. It is designed to be a match with the Delphi changing table. The platform of the crib meshes with a recess in the changing dresser creating an ergonomic configuration.
Haba: Tower Of Knowledge
Designed to encourage reading, Haba’s Book Tower has eight large side cubbies and four bins on top that provide plenty of space for books. Individual titles can be displayed behind the acrylic slats. Four castors turn the Book Tower into a mobile library. Two of the wheels are lockable for safety. The Book Tower is made of real beech veneer.
Hickory At Home: Rustic Charm
Hickory at Home brings the Kids Krates Twin Captain Bed with Storage. Made of pine wood with a oil finish that is easy to maintain and refinish, it is part of a full line of bedroom related pieces in a similar pine crate style. Each slat in the bed is screw-fastened to the rails to provide support and structural integrity to the assembled bed.
China: Growing Amidst Crisis
With the US credit crisis looming large over the globe’s economy, many industries are feeling the pinch. As the markets tumble and banks cut back on lending, consumers around the world are tightening their belts. Sapping demand for everything from consumer electronics to furniture, the future looks bleak. Furniture and Furnishing Export, International brings the latest fi gures for 2008 and speaks to some prominent players in the industry on the climate today.
By Ong Hong Tat
With additional reporting from Nicole Liang
Updated statistics from the Chinese Customs released on September 3, 2008 told the world that the Chinese furniture industry exported 28.5 percent more in the fi rst half of the year. Total furniture exports amounted to some US$13.03 billion. In June 2008 alone, China exported US$2.08 billion in furniture, up 21.1 percent compared to the same period last year.
This development has the following feature: As general trade grows, processing trade will decrease. General trade refers to the import or export of good by enterprises in China with import-export rights. Processing trade refers to the business activity of importing all or part of components for further work in China and re-exporting the fi nished products.
In the fi rst half of 2008, China exported US$8.81 billion worth of furniture by general trade, a 42.1 percent growth as compared to the same period in 2007. The amount accounts for 67.6 percent of China’s gross furniture exports. In the processing trade category, the country exported US$3.85 billion in furniture, accounting for 29.5 percent and a 7.3 percentage point decrease as compared to the same period in 2007.
Traditionally, China furniture exporters’ main markets are the US, Canada, Europe and Japan. In the fi rst half of 2008, China exported US$5.21 billion and US$3.2 billion in furniture to the US and Europe respectively. Together, these two markets accounted for 64.5 percent of China’s total furniture exports. The US and European markets are growing healthily at 16 percent and 32.5 percent respectively as compared to the same period in 2007.
To Japan, China exported US$910 million worth of furniture and to Canada, US$560 million, growing 43.5 percent and 40.7 percent respectively. Inland exports to Hong Kong, however, did not do as well. China sent only US$340 million worth of furniture to the territory, falling 46.6 percent as compared to the same period of 2007.
In the mix of foreign-invested and Chinese-owned private furniture enterprises, the former leads the pack. Firms operating with foreign investment exported US$7.3 billion worth of furniture, registering a strong 20 percent growth as compared to the same period in 2007 and accounts for 54.7 percent of China’s total furniture output. Chinese-owned private enterprises exported US$4.18 billion worth of furniture, growing a whopping 51.8 percent.
As is usually the case, the coastal areas of China are the most prolific producers due to earlier implemented government policies such as special economic statuses and port proximity. China’s mega manufacturing base, Guangdong province, exported US$5.03 billion worth of furniture, up 23.2 percent from the same period in the previous year. This means that the province is responsible for 38.6 percent of China’s six-month output in the earlier half of 2008.
Zhejiang, Shanghai and Jiangsu chalked up US$2.82 billion, US$1.46 billion and US$ 1.06 billion worth of furniture exports respectively. All three regions posted positive growth: Zhejiang’s output grew by 32.8 percent, Shanghai 42.3 percent and Jiangsu 41.1 percent. Together, these four major areas account for 79.6 percent of total Chinese furniture throughput in terms of value.
“The Chinese furniture industry is at a cross road. The strong, financially sound and versatile manufacturers will continue to grow and expand. The weaker players in the industry will either cease to exist or be absorbed by the more able manufacturers.”
“We are affected by global market movements, just like everybody else even in other industries. Recently exports have fallen due to competition from other players, both domestic and international. Internally, we are affected by the drop in the value of the RMB. Externally, the US sub-prime crisis is sapping consumer confi dence. As a result, sales have dropped as they are unwilling to spend.”
“The smaller and less equipped factories that have all along been pretending to be able to meet standards will get hit fi rst. The Chinese government is working to standardise quality and basic levels of labour conditions. This is an uneasy period of consolidation.”
Even though numerical statistics seem to suggest that the Chinese furniture industry is doing well, a report by the China National Furniture Association (CNFA) points to several factors that may constitute challenges to the sustained profi tability of the industry.
Kinwai Furniture, one of China’s largest exporters to the US, shared some views. The group’s CEO, KC Lau, said, “The Chinese furniture industry is at a cross road. The strong, financially sound and versatile manufacturers will continue to grow and expand. The weaker players in the industry will either cease to exist or be absorbed by the more able manufacturers. The logistics chain has developed to a point where it can support the growth of the industry without a break in delivery of key components necessary for manufacturing.“
Small and medium scale enterprises may still lack the management expertise. While their levels of operations are sufficient for the domestic market, it will be an impediment to going global. “There are opportunities both locally and internationally. Current owners of Chinese furniture companies are usually founders. Either that or the company is family-owned. As such, management styles and practices are very much dictated by their personalities. Much of the skills required for modern business practices could still be lacking,” Said Lau.
Even though this might be the case, the industry is nevertheless evolving in terms of production quality and operational excellence. “Many [furniture] companies are now recruiting professional managers and also encouraging training for staff members. The use of information technology to streamline management practices in a professional manner will also help to increase the service levels that the industry is able to provide. Over time, more of these companies will try to be listed on stock exchanges to raise funds for expansion. Management skills must be improved before they can take the crucial step to becoming a public company,” added Lau.
The CNFA report, presented by its President Jia Qingwen during the Furniture China exhibition held in Shanghai in September, said that not all is rosy. While export fi gures are growing at healthful rates, deeper issues such as the level of added value that the industry maintains is far from satisfactory. Chinese furniture exports are still dominated by low end products. At present, small and medium players in the domestic market still imitate furniture designs from branded names in the production process. These players lack the capital to innovate. As a result, the main competitive edge of Chinese furniture still lies in its cost competitiveness. According to Chinese Customs Department statistics, China’s wooden furniture imports averages at US$78.40 per piece, contrasted with a piece-average of only US$39.80 for its exports.
But as production costs rise steadily due to inflating labour wages, China is fast losing its price competitiveness. Rising raw material costs are also ramping up the pressure on Chinese furniture enterprises to stay afloat. According to Customs statistics, the Chinese furniture industry paid 22.8 percent more in the first half of 2008 for its log imports compared to the same period a year ago. Lau added, “The issue of labour can be overcome by the prudent employment of personnel, training and technology.”
Russia is one of the largest suppliers of timber to China. Recently, Russia has decided that it will raise its export tariffs on wood. Although exact figures are not available, analysts expect that the move will drive up price pressure on the average Chinese furniture entrepreneur.
Additionally, the recent surge in fuel prices is also an unwelcome development for the industry. Although unpleasant, it also represents a window of opportunity for the companies that are poised to navigate the changing business climate. “Increases in fuel prices will affect transportation costs. This will exert further pressure on manufacturers to be more efficient and cost effective. While some of the rising prices will inevitably passed on to end-consumers, there is a threshold. When it reaches certain price points, consumers will not be able to accept anymore,” said Lau.
Commenting further, Gary Ma, CEO of Hong Kong based- Royal Furniture Holdings took a more holistic view. He said, “These negative factors are the same for all players across the board. The smaller and less equipped factories that have all along been pretending to be able to meet standards will get hit first. The Chinese government is working to standardise quality and basic levels of labour conditions. This is an uneasy period of consolidation.”
Internal changes in China furniture’s export destinations are also expected to impact the industry. According to the CNFA report, as trade protectionism deepens, export environments will become more hostile to the influx of Chinese furniture. Some European countries have already begun to insist on timber certificates as a precondition to acceptance. On the other hand, the US has recalled Chinese furniture products for flouting its import laws of metal and chemical content limits.
The effects of these changes are already being felt within the Chinese furniture industry. Numerous factories in the Chinese manufacturing heartlands are faced with cash flow and operational problems. However, this might be viewed as a period of correction where the less competitive manufacturers and enterprises are forced out of business by the market. Ma commented, “Although there are the truly unfortunate, most of the hundreds of factories closing are the irresponsible manufacturers. Their unreasonably low prices have put them in a precarious position. It’s a make-or-break situation for them now. If they tide through, everything will be okay. If they don’t, most of their fates are sealed,” Ma commented.
Lau added, “Given the current inflation rate, the amended administrative and legal requirements of the operating a business or a manufacturing concern in the mainland, there is bound to be a falling out of marginal players. They do not have the resources or management abilities to work under such conditions and comply with the
regulations and therefore it is expected that more factories will have to close. This phenomenon will not be solely seen in Dongguan, a major furniture manufacturing hub, other areas will be similarly affected.”
Even the big players are not spared from these developments. Hing Lee Myriad Home also has to cope with the unfavourable climate. “We are affected by global market movements, just like everybody else even in other industries. Recently exports have fallen due to competition from other players, both domestic and international. Internally, we are affected by the drop in the value of the RMB. Externally, the US sub-prime crisis is sapping consumer confidence. As a result, sales have dropped as they are unwilling to spend,” said Huang Weiye, President of The Shenzhen Furniture Trade Association and Managing Director of Hing Lee Myriad Home.
As Europe and the US step up their environmental regulations and requirements, Chinese furniture exporters who do not keep with this trend will inevitably be left behind. Companies that have been proactive will see the results. “Kinwai has always been in the forefront of developing and manufacturing with a green focus. Many of the green requirements are now being implemented both locally and overseas are already in place at Kinwai. We are by no means perfect when it comes to be environmentally conscious but we have already started this journey and I am confident that over time, our customers will appreciate our efforts,” said Lau.
Beijing Olympics’ exclusive indoor furniture supplier, Royal Furniture, is another which has benefited directly from being green, on top of its commitment to stringently specified guidelines. “As a supplier of home furniture for major events like the recently concluded Beijing Olympics: there are no ifs, buts and maybes. You simply have to deliver the items within agreed deadlines with consistent quality,” said Ma.
Bracing Exhibiting The Shanghai Calibre
Held September 10-13, 2008, Furniture China hosted an international mix of buyers who felt very little pressure from factories closing in Guangdong. Exhibitors in Shanghai are of a higher calibre, many said.
“Our business has gone up with positive increase in retail. We plan to open about 20 stores in Japan every year. There is always demand, even in small towns such as Kyushu and Hiroshima. Japanese like small sized furniture because of the lack of space. They also like modern, European styles. Ikea has opened in Japan as well, signalling healthy consumer demand. Ikea and Nitori are a little different – we offer finished and completely assembled goods which the Japanese are willing to pay a bit more for.”
Fumimaro Moriwaki (Left),
Hidetoshi Kobayashi (Right)
Merchandising Managers, Nitori Co Ltd
“Orders have gone down by about 20 to 30 percent. The
Steve Connor
President, SIS
“I’m based in Qingdao and the company sells to retailers in the UK and Ireland. We sell within the mid-high end market so those factories which closed down are not those whom we deal with. Consumers are still buying, although not a lot. We have to scale down our supply – we’ll sell what sells best and skip the other collections so we can cut down on warehousing.”
William Peterson
Chief Representing Officer
Link Interiors Asia, China
“Things are quite ok in Belgium. People are complaining but they are still buying. Those who have the spending power and enjoy a tasteful lifestyle will still continue to spend.”
Laurent Segers
Creacabin, Belgium
“I’m from Belgium and sell to the US. Everything is dandy and I am not affected. I am still confident of the market.”
Christian Johansen
Merchandising Manager
RT Sourcing (Shenzhen) Co Ltd
“Some exporters are turning to domestic sales instead. Some will hunt overseas while there is also a big enough market locally. In my opinion, the local market is a must-do. Exporters, on the other hand, must have enough power such as in terms of money because they can only receive payment after the goods are being sent.”
Catalin Anton
Country General Manager, Romania Focus Group Ltd, Shanghai, Representative Office China
“With the credit crunch, people are not changing houses or furniture. We sell to the mid-high end of the market where quality goods are offered at affordable prices.”
Ken Forrest
Chairman
Forrest Furnishing
Great Expectation
While general sentiments on the ground dictated that the Chinese domestic market was going strong at the detriment of its export business, the China International Furniture Fair (CIFF) held from September 8-11, 2008 saw a healthy number of overseas buyers who still believed in the country’s exporters. Furniture & Furnishings Export, International speaks to some of them.
“The Philippines is growing. More hotels, residential and restaurant projects means more business for the furniture industry. I see a change in the Chinese manufacturers: their designs are more understated now. They are making furniture that is more mellow and functional. Although prices are up, this is buoyed by more business in my country, so it is still okay.”
Sergio Melchor Z
Cornista II
Assistant Vice President - Merchandising
CLC Marketing Ventures Corp
Metro Manila, Philippines
“In the last six months, prices here (China) have went up dramatically. There are more big players and industry is maturing. The exporters are starting to focus on the more lucrative domestic market. But it is still viable for Palliser as we have been in China for many years and built up solid working relationships with our Chinese counterparts.”
Tom Enns
Vice President - Imports,
Palliser Furniture Ltd, Winnipeg, Canada
“We are a trade-only furniture supplier in the UK and I’m looking for contemporary furniture. China is getting expensive and it’s not the hottest anymore but you can’t deny that China is producing better made furniture nowadays. Other emerging countries like Vietnam are starting to look more attractive price-wise since China’s pricing is not exactly too good.”
Reg Pangali
Exclusive (UK) Ltd, Oxfordshire, UK
“Though quality is improving, prices are also going up. They have gone up a bit in the last year or so. While this is not a good thing for my business, I believe that Chinese furniture has gotten better at turning out consistent quality pieces. This price increase, although unpleasant, is a reflection that people are taking notice of the Chinese manufacturers.”
Karim El-Assal
General Manager, Green Line Furniture Giza, Egypt
“Good products at fair prices, that’s what I would say of the Chinese producers now. In fact, we are so confident in them that we started working with local manufacturers some time ago. So far, they have not let us down, delivering year-on-year. We’re sourcing for our chain stores back in the UK and so far it has been a fruitful fair for us.”
Managing Director,
Global Furniture Alliance Ltd, Newport, UK
“Almost everyone knows China is the sourcing destination. Personally I love it here, the prices remain attractive while quality is improving each time. While others are feeling the pinch of fuel price hikes, it affects us less because Venezuela is an oil-country. So, this has been less of a concern to me.”
Jonathan Baker
Area-Concepts, Venezuela
Alive And Kicking
Some 11,150 visitors attended the fabrics and textile exhibition, Decosit Brussels 2008, from September 13-16. Although this represents a four percent decline in numbers, the organiser, Textirama, says that the show is still very much “alive and kicking, even under difficult economic circumstances”. Furniture & Furnishing Export, International asked some of these visitors for their forecasts on trends and market conditions.
“I’m looking for new fabrics and the latest trends. These are for the hotel projects in Switzerland, which I’m in charge of. Currently, they like a lot of metallics. There are also a lot of parallels between fashion and furniture, although the latter does not move as quickly.”
Raquel Guenat
Bold Design, Switzerland
“I work with an interior design studio and our biggest market is in the United States. While some clients have held back on their budgets, others are still very design-conscious. But in order to move forward, we need to have new designs, if not, we will all be moving backwards.”
Gary Williams
Artwork Design Ltd, UK
“My organisation helps to orientate textile factories with the industry by business-matching activities. We have an extensive database of the Valencia furniture industry. The organisation also offers training to textile businessmen in Valencia.”
Beatriz Satorres Verdu
Innovation Department. Ateval, Spain
“Eco-friendliness is not so important in upholstery but perhaps more important for curtaining. The Americans, however, prefer recycled products. Generally, people want affordable prices more than anything else.”
Kess Hwang
Managing Director
Dae Song Textile Co Ltd, North Korea
“We sell our products to furniture makers in Europe, the US and Middle East. If the West, our customers prefer classical and larger motifs with sober colours. In the Far East, we’re looking at oriental styles. The market is down and people are very nervous to buy now because they don’t know how to market would react. We believe hat it is slowly getting strength but then again, this is going to be a very slow process.”
Rithesh Jain
Director, J K Fabrics (Bangalore) Pvt Ltd, India
Insight China Through Foreign Eyes
Hakon Rydland knows what it takes to make it big in the Chinese market. Previously as President of Ekornes Asia, he successfully led its Stressless brand of sofas into 11 countries in Asia, including China. Today, he takes on a new role at Jisheng Wellborn (JSWB) with a familiar task – to help more foreign brands replicate Stressless’ success, as tenants in the JSWB Global Home Furnishings Centre.
By Nicole Liang
China may be a huge furniture market but there are surprisingly few international brands retailed here. Hakon Rydland, previously President of Ekornes Asia, said, “Tens of thousands of foreign brands are manufactured in China but they are mainly only for export. Increasingly, foreign furniture brands are starting to look more sincerely at China. They are, however, not very familiar with the country and have only the impression of it as a low-cost producer that is good at copying”.
Ekornes ASA is one of the largest furniture manufacturers in the Nordic region and is public listed in Norway. Besides Stressless, it also owns such brand names as Ekornes and Svane. Ekornes manufactures in Norway out of it five factories, and produces its own wood components and foamed plastic. Rydland was in charge of the distribution and expansion of Ekornes’ Stressless brand in Asia from 2006 until June 2008. Within two years, he set up sales points for Stressless recliner sofas in 11 countries across the continent. Rydland led Stressless to open its first Chinese store in Shanghai Jisheng Wellborn (JSWB) Hongqiao Furniture Mall in April 2007.
The brand’s positioning in China is somewhat different from that in the rest of Asia. In China, Stressless is not just a high-end furniture brand. It bespeaks a luxury lifestyle, a niche that is waiting to be filled, Rydland said. He added, “Ekornes did a detailed market study before launching into China. As a new incomer, Ekornes was not worried about the China-made knock-offs because they are not sold domestically, but exported overseas. Chinese consumers who want to own a Stressless product will not consider buying these rip-offs”.
A year later, another showroom sprang in Shanghai in the JSWB Global Home Furnishings Centre, which according to Rydland “is the largest and nicest flagship store in Asia, and probably around the world”. Stressless officially launched its second Shanghai store on April 28, 2008. In an interview done at the store opening then, Rydland, who was still President of Ekornes Asia, said that Ekornes might even consider making China the regional centre in Asia.
Rydland has since left his role in Ekornes but continues to play a significant part in the Chinese furniture market. He is now Director of International Divisions at JSWB, a position he assumed on September 1, 2008. Leveraging on his experience at Ekornes, Rydland will be marketing JSWB Global Home Furnishings Centre as a premium furniture trade and retail platform where American and European brand owners can set up their showrooms. He is tasked to bring in an international mix of tenants and exhibitors, take charge of the fair, as well as strengthen communications.
“I can share a bit of my experience in and the characteristics of the consumer market in China. While offering them a space here, points on how to find a buyer, retailer or importer and which cities to reach can be discussed along the way. It is not enough to say that we have a big space to lease, but also to assist them in entering the Chinese market effectively,” Rydland said.
In order to increase chances at success, Rydland suggested four qualities that foreign brands should possess before making inroads into China. Firstly, the company must already have a strong foothold in the home market, with a brand value that can be easily transferred to China. He continued, “Then they have to be keen to expand the market far from home. On top of the interest to do so, they must have the time and resources to capture a big market. This means they need to be patient and willing to spend and plant the seeds before harvest”.
Most importantly, Rydland added, is that foreign brands, mainly American or European, have to be able to target market segments from the medium level upward. “At the low end, one cannot be competitive in any way. Brand name, quality and design don’t mean much here,” he cautioned.
Companies that boast these strengths are the ones that Rydland targets as potential clients. JSWB Global Home Furnishings Centre currently offers 200,000 square metres of permanent showroom space that serve both B2B and B2C purposes. In addition, it is also partly modelled after the High Point and Las Vegas markets, as the centre hosts the JSWB SFSF annually. Temporary spaces are in addition offered during the fair period, which is split between trade and public days.
Clearly, it is not a pre-requisite for tenants at the JSWB Global Home Furnishings Centre to have any export portfolio. As such, retail business is encouraged and the centre is open to local consumers all year round except during the first three days of the SFSF. “We won’t go out full fledge to attract foreign importers until Phase 2 is complete. We can’t offer a strong export-oriented show yet. We will slowly strike a balance between export and retail, and make it worthwhile for foreigners to come and place orders by containers,” Rydland explained.
This year, 320 and 55 brands were represented at JSWB SFSF's permanent and temporary show grounds respectively. Altogether, they received 24,336 visitors from September 11-15, 2008. Within this figure, 2,736 were from overseas. Including provisional show space and that which housed ZOW, the JSWB SFSF covered a grand area 300,000sq m.
Phase 2 of the centre will be completed next year and can add 250,000sq m of permanent showroom space. Starting from 2010, JSWB will host the SFSF twice a year. By 2012, Phase 3 of the project will present another 350,000sq m showcasing furniture of international brands. Only then can the 800,000sq m furniture village be accessed in its entirety.
It would be an understatement to classify this as yet another heavily invested project; the global financial slump does not help add any guarantee to its success. Rydland admits that JSWB has been affected by the economic downturn. “But this has not weakened our will and strength to invest despite negative market sentiments. This is a long-term plan that has to be completed in full,” he assured.
Marketing programmes are either ongoing or in the pipeline. Most of them are designed for the local audience due to its B2C facet. Nonetheless, Rydland said JSWB also visits trade exhibitions overseas to approach potential tenants directly.
Cannibalism Indigestion
Cannibalism is on the rise around the world. There is evidence of it everywhere… in retail, services, finance, manufacturing, rural, technology, media and even in mining. Its dog-eat-dog. With offers of 50 percent-off retail and up to five years interest-free, the behaviour of some is rabid. Barry Urquhart speaks on the emerging trends and surviving amidst the crunch.
The small but rapidly growing drift to online sales is indicative of a broader and deeper evolving trend. In a period of stagnate, if not declining sales, the incremental factor of online sales is further evidence that the broader retail sector is cannibalising itself. Significantly, the increasing use and influence of the internet is not generating more sales. In most, if not all cases, it is simply redistributing the sales and market shares. This is accelerating the importance of cost and overhead reductions.
A widening acceptance of the theories of Charles Darwin may be appropriate, with implied endorsement of the need for structural change, and fast.
Indigestion in a number of sectors will soon become apparent to the marketplace and consumers as the acquiring entities are made to swallow many rationalisations and consolidations of businesses, brands, products and services.
Absorbing, integrating and in some instances dispelling cultures will be difficult. And one is not talking of yoghurt. The dominant force in those scenarios will inevitably emerge with enhanced returns, market presence and positioning.
A growing number of astute business leaders are dedicating resources to the identification and analysis of opportunities for mergers, acquisitions and strategic alliances with competitors, substitutes and potential collaborators. For others, addressing the issues of exit-strategies and succession plans have become paramount.
The risk profiles associated with such initiatives can be and often are less than business development strategies which involve increased capital expenditure, larger advertising and market ing budget s and expanded inventories.
Capitalising upon and realising the potential will be dependent upon business owners, leaders and managers being objective, detached and strategic in their evaluations of the propositions. Territorialism and unwarranted self-interest defensiveness will be both unfortunate and inappropriate.
The current market circumstances are unique. Projections of outcomes which are based on history and past experiences may have little relevance.
Certainly, middle ranking executives will be among the sacrificial lambs. However, it will be the senior positions that will be thinned, in some instances aggressively.
Stronger leadership will evolve and will be valued by financiers, analysts, suppliers, associates, clients and consumers.
Fragmentation and replication, which have been characteristics of many market places during the past decade, will decline. This will provide for scope and flexibility for business owners and managers to more effectively promote, position and utilise brand marketing principles to secure and sustain market advantage.
During periods of volatility, clients and customers seek out the reassurance of recognisable and trusted brands. As a consequence, advertising messages for brand leaders will be more penetrable and effective. Advertising expenditure can then be reasonably reduced, and a greater concentration of the media utilised be effected. In short, marketing initiatives will be more effective, and efficient, for some.
It is reasonable to expect that these projections will materialise over a period of 18 to 36 months. After that, most growth will be organic as individual brands, departments and franchise operations recognise and pursue unfulfilled potential.
For many of those talented senior people who will be deemed to be casualties of the cannibalistic processes, the scope and temptation will be to exploit their creative and entrepreneurial skills and experiences.
And so from 2011, as the credit crisis retreats, confidence and trust emerges and the true nature of capitalism will come to the fore, a new generation of ‘start-up’ businesses will assert its presence.
The huge amounts of capital within sovereign funds and superannuation accounts will quickly recognise the talent, potential and scope for growth within these entities, which are or will be led by strong, experienced and enthusiastic but previously misplaced and displaced business professionals.
Survival today and in the immediate future will be enjoyed by those who are the fastest, fittest and most determined. (The Olympic spirit transcends all boundaries)
Strong corporate cultural bonds will enhance resilience, flexibility and responsiveness. Cannibalism need not and should not be evident with the ranks.
Barry Urquhart is Managing Director of Marketing Focus, Perth. He is an internationally recognised conference keynote speaker, author and business analyst. His new conference topic and management development workshop focus on the need for and nature of effective corporate culture change and is titled: “Fantasise, Strategise, Optimise.” Urquhart sits on the Editorial Advisory Board of Furniture & Furnishing Export, International.
