The Design Industry in Asia – in the Footsteps of Fashion

Andrea Bonardi, managing partner at Texere Advisors, analyzes the prospects for the design sector in Asia.
Jan 08, 2018

Italian furniture and design companies have considerably grown over the last few years, notably in Asia. In turn, because of its growing relevance as a consumer and a manufacturer, Asia has started to influence the furniture industry, causing important changes to the market.

Italian design firms are exporting to China alone 400 million euros a year, with double-digit growth rates, following the rapid evolution of Asian consumers, who are shifting away from fashion products in favour of home-related items, notably international contemporary design products. Firstly, well-being is focusing more on the environment where we live, particularly the home; secondly, Asians are increasingly using their home as a social place where to host friends and guests, and live social relations; thirdly, younger consumers have abandoned classic and artisanal furniture; lastly, the growing urban middle class lives in modern, mostly small apartments that require functional furnishings.

On top of it, fashion and accessories have lost some of their glamour, with the fever for luxury brands fading away, the advent of the internet oversupplying competitive and qualitative products, and the proliferation of the street fashion brands that have conquered the Millennials.

Design and furniture brands should therefore take advantage of this positive moment, to enter Asia massively, by opening their own offices and expanding their retail presence directly or through distributors.

The emergence of design in Asia is faster than what occurred in fashion in the past. Firstly, furniture is still distributed through multi-brand channels, making it easier for a brand to penetrate a market, as opposed to the fashion mono-brand model. Secondly, the furniture industry can also count on contract business, that is, sales that occur through architects and designers who specify for real estate developments. The world of design is naturally globalised, for an architect sitting in London can work on a project in Singapore or vice versa, thus boosting a brand’s presence and brand awareness even where there is no retail presence.

Briefly, Asia has become a strategic market both in the retail and contract business, thanks to its rapid development and Asians’ fresh passion for design, Singapore and Hong Kong being the main specification hubs. It is no surprise after all, considering the massive investments in real estate that are taking place in Asia, with hundreds of new hotels being constructed every year, fast infrastructure developments and a residential boom that is not slowing down.

Today, therefore, it is imperative to enter this market, as it represents a huge opportunity in the future. Before it is too late though.

As a matter of fact, in the furniture business we see similarities of what shaped the fashion sector in the 90s, when certain brands managed to outperform their competitors by monopolising consumers’ tastes and choices while marginalising their weaker and unprepared peers. Those visionary brands, the Hermes and Louis Vuitton of the world, have since become today’s superbrands. Thanks to these, we have now been witnessing a major sector consolidation, we shop in repetitive malls, and our taste is fully globalised, a trend that forces smaller brands out of the market.

Let’s see what are the critical factors that have made some fashion brands successful.

The brand is by far the most important asset for a company, more so in the furniture business, where the customer is not yet educated to appreciate quality and design. In fact, purchasing branded furniture contributes to build social status that is shared with guests at home, as much as a car or a designer bag. On the contrary, a beautiful unbranded design piece will not go down well with consumers. It takes time and patience to build a brand.

Firstly, by developing a retail presence in Europe, then by developing awareness on the social media, by telling a strong and aspirational story, in a nutshell by developing a lifestyle positioning. A lifestyle positioning, though, cannot be achieved without a large and complete product assortment and a relevant merchandising, to reach out to as many customers as possible, in a way that they don’t need to buy from any other brands. Even interior designers are influenced by brands that are present on the media or that contact them regularly to introduce their product ranges.

All this is to say that the brand is pivotal to the success of a company at both retail level and in contract business when the architect makes choices on behalf of their clients.

In the supply chain, issues are even more critical. The market has grown more and more dynamic, because of increasingly competitive Asian competitors that are able to offer low pricing, growing quality and shorter lead time. Increasing pressure on margins will soon push Western companies to move part of their productions to Asia, notably China, thus shifting their brand values away from the “Made in” towards the “Designed by”.

As said, fashion companies had already embarked in this process at least thirty years ago. They would increasingly focus on the brand story and story-telling, strengthen their domestic markets followed by international expansion, develop more and more sophisticated and experiential merchandise and visual merchandising tools, expand eventually their product assortment to offer their consumers a complete lifestyle to make it difficult to them to shop elsewhere, shifting away from the “Made in” to the “Designed by”.

How to achieve all these objectives efficiently? The mono-brand store has been the answer, the tool that has allowed successful fashion brands to prosper today. Some furniture brands are already evolving this way, by increasing their assortment and opening mono-brand stores where consumers can experience and visualise their home through the brand’s eyes.

In Japan the above process has already been completed, and is fast developing in China. Soon, furniture retail will be concentrated in few strong locations consisting of Class A and Class B mono-brand stores, the former being an élite of design brands, and the latter being a selected number of niche brands that will have been able to survive without reaching a full-fledged lifestyle identity. All the remaining competitors, which won’t have been able to upgrade or won’t have seen this trend coming, will be doomed and restricted to multi-brand stores, which will also fade away with time.

Asia is therefore about to bring major changes to European and Italian design brands, forcing them to completely rethink their approach to the Asian market and its consumers, adapting as fast as possible to new languages, dynamics and values that are almost unknown in Europe, where design culture is in our blood.

As much as in fashion, the future of design will be monopolised by a few “best” brands with great financial and managerial capabilities that will allow them to dominate the Asian market.




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