Furniture and lighting, decline in turnover except in the luxury sector

This week there is Milan Design Week, an unmissable opportunity for lovers of furniture, design and also art. There is therefore no better opportunity to reflect on furniture sales numbers, because there are interesting data and even more surprising reasons, with the luxury sector which, unlike other companies, does not see lean periods.

The economic landscape of companies operating in the furniture and lighting sector suffered one significant decline over the last yearwith a 2.8% drop in turnover total. This is the main conclusion that emerged from the Observatory on the sector, recently created by the Mediobanca Research Area.

Falling turnover, the impact of geopolitical tensions

According to data collected through a questionnaire conducted between March 10 and April 11 on approximately 330 companies, the turnover of the participating companies exceeded 10 million euros in 2022, representing 60% of the entire sector system. This negative trend in sales was also reported by Federlegno Arredo.

The geopolitical tensions played a decisive role in the negative trend of economic performance. In particular, the analysis highlights a 3.5% decrease in exports, while national sales recorded a contraction of 1.7%. These data are in fact fully consistent with the situation that arose a few months ago in the Red Sea, where cargo ships were forced to change route.

Another relevant aspect is represented by the pressure on industrial margins, noted by 57.8% of the companies interviewed. Furthermore, 46.7% of the sample highlighted difficulty in finding suitable professional profileshighlighting a recurring problem in the sector.

A further obstacle identified concerns the use of production capacity. 44.4% of businesses met difficulty in maximizing one’s productionattributing this to the reduced purchasing power of customers and weak domestic demand. Intensification of price competition is another factor that negatively influences market dynamics.

Quality competition appears not to represent an area of ​​concern for the majority of Italian companies, with only 4.4% of companies identifying this aspect as problematic.

Internationalization strategies

Alone 10% of the companies interviewed have production sites abroad, mainly operators in the high-end segment. The decision to set up factories across the border is mainly motivated by the availability of lower cost labor and raw materialsaffirmed by 80% of the companies involved.

Furthermore, for 40% of them, the advantage derives from the proximity to the supply markets. It emerges, however, that 60% of these companies complain of difficulties in hiring reliable managerial staff abroad, while 40% blame the burden of excessive bureaucracy, cultural distance with the host country and obstacles in obtaining financial resources .

Exports, however, represent 55% of turnover. The main destinations of their products are the European Union (89.4% of respondents), North America (57.4%) and the United Kingdom (48.9%).

As regards the distribution channels used to sell abroad, there is diversification: 34% of companies favor specialized final resellers, followed by the proprietary sales network and multi-brand import intermediaries, both used by 31.9% of companies.

Degrowth is not seen in the luxury sector

Despite global decline, the high-end furniture and lighting sector continues to demonstrate remarkable resilience and steady growth. Over the course of 2023, high-end operators reported a 3.4% increase in sales, of which 0.7% was generated by exports.

These data confirm the positive trend that characterizes this segment (and is not only seen in luxury furniture but also in other categories), capable of consolidating its position even in economically complex periods.

This is also reflected in the forecasts for 2024: 68% of high-end companies say they are confident about a further increase in sales, a figure significantly higher than the 48% of other non-luxury companies. This optimism also extends to the prospects for sales abroad, with 68% of these companies expecting export growth.