Design Sector Eyes New Markets As It Faces an Unpredictable Year
WWD collects CEO forecasts for the year ahead, as Milan Design Week kicks off Monday.
MILAN — The hope interest rates hikes will subside has boosted the sort of nonessential spending crucial for furniture, lighting, kitchen and bath makers. And even though the geopolitical situation is worsening around the globe, industry leaders here are staying positive.
Claudia D'Arpizio, a Bain & Co. partner and global head of fashion and luxury, told WWD that the luxury furniture sector, including bath and kitchens, was valued at between 46 billion and 48 billion euros in 2023, which could have been either a drop of 3 percent on the lower end or a 1 percent rise on the higher end.
“Conditions on 2024 are still uncertain… but expectations are in between low-dingle digit growth and contraction,” D'Arpizio commented, adding that the pandemic-effect growth seen in 2022 is unlikely this year.
Among the segments driving sales, lighting continues to outperform other categories versus kitchens and bathrooms, which require more complex planning.
Cappellini's chief executive officer Emanuele Corvo said the firm finished 2023 with revenues of about 15 million euros, and there is further potential to leverage its famous designs envisaged by some of the design world's biggest names, such as Patricia Urquiola, Piero Lissoni and Tom Dixon, while still mentoring new and upcoming designers.
“We are forecasting moderate growth. There are some challenges in the first quarter that show headwinds, which are still the ones we saw in the second part of 2023, but we are also forecasting that the slow momentum will ease up later this year,” he said. The CEO noted the company is keeping an eye on the slow gross domestic product growth in some mature markets and mulling prospects in faster-growing ones like India and Southeast Asia.
Cappellini, alongside other brands like Cassina, Ceccotti, Zanotta, Karakter, Janus et Cie, Luminaire, Interni, Poltrona Frau and the licensing powerhouse Luxury Living Group, is under the umbrella of the Lifestyle Design Division of U.S.-based Haworth Inc.
Luca Fuso, CEO of Cassina, echoed his comments, saying that Singapore, Philippines, Indonesia and Thailand are constantly developing. Cassina is planning to open seven to eight new stores in 2024, with an eye on new Asia openings in the future.
“We are moderately positive on the economic indicators on the second half of 2024. The market is way more difficult in this moment but in general, the U.S. market is performing well and if interest rates go down, consumers will start making more long-term purchases,” Fuso said, noting this week the company will unfurl a re-edit of Cornaro, the model designed by Venetian architect Carlo Scarpa in 1973.
Molteni Group, home to luxury home furnishings and kitchens brand Molteni&C and office furnishings and bespoke projects firms UniFor and Citterio, confirmed its sales rose to 475 million euros, up from 460 million euros in 2022, a figure first released to WWD in March. The lion's share of its revenue came from Molteni&C, which recorded 319 million euros in sales.
Molteni, which celebrates its 90th anniversary this year, is positive about 2024, as it continues to roll out its international expansion plans, having just opened a new directly operated store in Washington, D.C., in March.
Across the board, Italian design companies are positioning themselves to benefit from unique market opportunities.
Milan-based company Nemo Lighting became Nemo Group in March, following a series of acquisitions to fortify its business. In 2020, it acquired ILTI Luce, a historical brand with a strong focus on technical lighting and outdoor solutions. In mid2023, Nemo Lighting acquired Reggiani, a leader in large-scale professional technical and architectural lighting, merging the expertise of the three brands.
Nemo's U.S. CEO Pietro Gennaro explained that the new Nemo Group, which collaborates with world-renowned names such as designer Ron Gilad and boasts big names in the industry such as Le Corbusier, Charlotte Perriand, Lina Bo Bardi and Álvaro Siza in its collection, is well prepared to face the challenges of the market.
“This year has started well, with a positive first quarter. Our comprehensive catalogue, which ranges from decorative lighting products to architectural lighting solutions, puts us in a good position to expand further and be present in most residential and commercial spaces. In addition, we are investing in the market and consolidating our capabilities to realize tailor-made solutions,” said Gennaro.
There is a given impact on design sales with higher interest rates, as the market is highly tied to real-estate transactions, D'Arpizio explained.
“As splurging on new home furniture is not a necessity, many might offset this purchase, awaiting better market conditions. Between the U.S. and EU, the former is more impacted due to both higher interest rates at the moment and higher ‘reactionary' behavior of American consumers versus EU ones to fluctuations of credit market conditions,” she added.
Design Holding, which has heritage Italian furnishing brands B&B Italia, Maxalto and Azucena; lighting brands Flos and Louis Poulsen, and kitchen-maker Arclinea, is expected to release full-year results in April. In 2022, the last year reported, revenues rose 25.8 percent to 867.6 million euros, compared with 2021, boosted by business in the U.S. and Asia Pacific, as well as its high-end contract business. Contract business, CEO Daniel Lalonde said, is expected to drive sales, offsetting losses indirectly due to rising interest rates that have negatively impacted the housing market.
When asked in March if the group is on track to meet its near-term goal of 1 billion euros in sales, Lalonde was confident in the company's momentum.
“That's still a goal. And then, I'm gonna ask my team: What does it take to go to two? And I'm very convinced that it's highly achievable with our brand portfolio today and there's so much runway ahead,” the executive added, reiterating that a public offering is not a priority.
Luxury Living CEO Andrea Gentilini said the group that produces for Dolce & Gabbana Casa, Versace Home, Trussardi Casa, Bentley Home, Bugatti Home and Luxence is confident about growth. “We have ambitious targets for 2024,” he said.
While China's property crisis shows no signs of abating, Gentilini said the company is well-poised to take advantage of opportunities within the contract business and world of branded residences, a key facet of its business.
“However, as far as China is concerned, the market is recalibrating after many years of strong growth in the world of luxury and therefore China remains a fundamental market for us,” he said. In the U.S., the luxury residential market has been contracting for about two years but Luxury Living continues to eye opportunities, especially in cities like Miami.
Among Luxury Living's many projects is the Bentley Residences Miami, set for completion in 2026. At about 749 feet tall, Bentley Residences is set to be the tallest U.S. oceanfront building, according to a spokesperson for the project. Designed by Sieger Suarez Architects, the 63-story building will feature 216 units with sweeping ocean views, a slew of amenities, and an elevator designed to take residents up to their doorstep while seated inside their cars.
Gianni Fortuna, CEO of Arclinea, also continues to see the U.S. and China as crucial areas in terms of growth for both retail and the contract arena. “Let's say that the most important markets from a contract point of view are the Far East, therefore China, Hong Kong, Korea, Taiwan, Japan, Thailand are the main countries where we develop our contract business,” as well as the U.S.
Arclinea was started in Caldogno, Italy, in 1925 by Fortuna's grandfather Silvio Fortuna Sr. In 1986, Arclinea began collaborating with designer and architect Antonio Citterio who continues to envisage their ”architectures for living” to this day.
In terms of retail, Arclinea has recently opened stores in Los Angeles, Miami, Washington and Boston, together with B&B Italia.
In its latest report, FederlegnoArredo, the Italian federation of woodworking and furniture industries, said exports of Italian furniture in 2024 should rise 8.5 percent, despite declining consumer confidence and restrained spending patterns worldwide.
The organization expects sales of the wood furnishing supply chain to rise 4.5 percent in 2024 after sales fell 7.8 percent to 52.7 billion euros last year. “The hope is that these estimates can be confirmed, aware that it is now truly complex, not to say impossible, to make long-term forecasts, given the unstable international panorama,” the association said.
Smaller players, like high-end furniture maker Provasi, an Italian company based in Seregno, said it posted steady growth in the first quarter of 2024, after posting a 45 percent rise in revenues in 2023 to 13.1 million euros.
“Despite a difficult context for the wood furniture sector, the current order backlog in addition to the ongoing negotiations offers a moderately optimistic scenario in which it is possible to continue the positive trend which will allow the company to fulfill all its obligations and continue along the path of recovery and relaunch,” CEO Alessandro Massa explained, adding that the company emerged from a debt crisis in 2018. Since then his appointment in 2021 has been key in developing new strategies to fortify the business on an international level. “Our ambition is to become the first point of contact for any classically inspired high-end project in the residential sector that may appear on the market.”
At the end of 2023, Provasi opened a new single-brand showroom in Dubai. “The signals collected in the different world markets in which the company operates, and more importantly in India and the Far East, highlight a strong and growing interest in classic and neoclassical style projects,” Massa said. During 2024 Provasi is focused on increasing its competitiveness in the contract and hospitality sectors, which are currently being boosted by international demand.
Provasi will unveil “The Time,” the second chapter of the trilogy that defines the cornerstones of the brand's philosophy, which includes a video installation by video artist Fabrizio Plessi.
Italy's main fair Salone del Mobile. Milano‘s 62nd edition will take place from Tuesday to April 21 and expects to welcome about 1,900 exhibitors, down from about 2,000 the year before, with major players in both the furniture and fashion worlds showcasing this year at prime locations, flagships and showrooms around town starting Monday. ■