An identikit of the sector through the exhibitors at Proposte
In addition to being the world’s leading event in furnishing fabrics and curtains, Proposte is also an aggregate sample of outstanding companies. This enables us to make a reliable analysis of the market situation, from both an industrial and an international business point of view. As we did not want to miss this opportunity a 7-question survey was circulated among all exhibitors. Our sector represents a very small sample of operators and therefore it is not easy to gather data for in-depth studies. Triumphalisms being set aside, this piece of research represents the first aggregate analysis of the sector in a long time. The questions we asked – apart from the last one concerning the dramatic issue of the Coronavirus epidemic and its economic consequences – were mainly about the economic trends in 2019, the forecasts for the year 2020 and customer and market segmentation.
We decided to split the charts into the two macro-families, representing Italian and foreign exhibitors, and kept all data strictly anonymous. We did not carry out company interviews, as the survey was aiming at providing general news about the state of the entire production system and of the business environment developing around home textile products.
One thing should be stressed though: our questionnaires were circulated before the Covid-19 pandemic exploded in all its drama. The data concerning the 2019 financial statements, as well as customers’ segmentation and the reference markets are still valid, but in the light of the day-to-day evolution of the situation our suggestion is that the last question concerning the impact of the pandemic on the market should be evaluated more cautiously. One should therefore consider the answers provided more as “wishful thinking” options rather than as real indications, since nobody is currently able to make predictions on the real impact of this dramatic situation on the international business development of even only one sector.
So, let’s start with the first question: how do you evaluate the 2019 turnover result for your company? (Graph 1/Graph 1A) We noted straightaway that the sector was not performing too badly: among Italian companies stability prevails (54% of them remained at the level of 2018) whereas 20% of them were up 10%. The end-of-year results were regarded as “good” by 32% of the foreign companies, almost in line with the turnover levels of the previous year (35%). Perhaps considering the sector in good health is too far-fetched, but apart from some individual cases, the business level was not bad.
The second question was: what are your first sensations for 2020 after the January fairs? (Graph 2/Graph 2A). Here the opinions expressed by the Italian and international production chains differ more markedly.
Among Italian producers a certain pessimism prevails: 46% indicated their sentiment to be “negative”, while among foreigner companies the percentages are quite different with a watchful 50% choosing the answer “normal” and 38% being “positive”. The reason for these different opinions could be a different segmentation of the clientele, mainly “multi-channel” for foreign companies, more linked to the world of textile publishing and furniture production for Italian manufacturers. Clearly, the latter is solely our own theory, that we have elaborated after a detailed analysis of the data.
Let’s come to the third question (Graph 3/Graph 3A): what is the export share on your total turnover? Frankly speaking, the answers surprised us. Italians were less than half the number of foreigner interviewees, but they are the strongest exporters. In fact, only 13% of them indicated an export share of “up to 50% of their turnover”, while 80% of them said that their export share lies between 70 and 80% of their turnover. Among foreigners instead almost one third (27%) said that their export level does not exceed 50%, while 38% of them declares that their exports reach a level of 70%. Moreover, many producers basically only export their products (22% of them said that “over 90% of their turnover is made abroad”).
The fourth question (Graph 4/Graph 4A) was whether there had been any variation in export levels in 2019. The answers clearly show a flat market for Italian companies and the results match with those obtained from the first question, where companies that reported a “negligible” growth and those that recorded stagnating export figures were equally represented in the 47% share. The market is decidedly livelier for foreign companies: 37% of them reported at least a +5% export growth, 5% recorded a 10% increase and ten respondents out of 100 reported an even “excellent” growth level totalling a double digit turnover increase.
Question 5 (Chart 5/Graph 5A): How is your customer base broken down? In this case the analysis was a bit more complex: first of all, let us say from the very start that we have broken down the data and calculated simple mathematical averages for each item. These are global evaluations that we have tried to deepen by providing the incidence % for each type of customer vs the total number of respondents, the mathematical percentage of the channel over the total number of respondents and the percentage weight range for the respondents in each channel. Considering the specificity of each company there could be substantial variations in the percentage figures, but we intended to provide a global figure and a mathematical average is the quickest and clearest way to proceed.
The answers show that textile publishers have the lion’s share, with the Italians in a leading position. Indeed, Italian textile publishers and furniture manufacturers serve almost two-thirds of the clientele, while foreigner textile publishers have a broader channel segmentation with the contract sector growing further and wholesalers becoming more relevant.
As for the sixth question (Graph 6/Graph 6A) – the market is segmented in geographical area utilizing the same methodological approach adopted previously. All interviewees answered the question and there seems to be a greater level of homogeneity between Italian and foreigner producers. Well over half of the fabric/curtain business is made in Europe, while another very important area is of course represented by the United States of America. Foreign exhibitors are only slightly more active in other continents showing somewhat better results in Africa, Oceania and South America.
In conclusion a question was asked concerning the lethal coronavirus (Graph 7/ Graph 7A): we prompted an opinion on the economic repercussions of the pandemic on our sector. Clearly, no one is yet able to foretell what is going to happen especially in the economic sphere. However, we feel that it was our duty to also explore opinions and sentiments. Italians have a more pessimistic attitude (approximately 30% of them think that the pandemic is going to affect them “a lot”), while abroad the idea that this pandemic will adversely impact on the economy of the sector is remarkably more contained (72%). Finally, please note that some Italians very frankly answered “I don’t know” (while some of them think that even the national supply chain could benefit from it). No Italian interviewee believes that the Coronavirus crises will have no consequences, as opposed to foreign respondents, for whom this opinion holds true for 8% of respondents.