Furniture industry: challenges and opportunities for sustainable development

The study conducted and presented by Stefania Trenti, Head of Industry Research at Intesa Sanpaolo Research Department, underscores how furniture is one of the most representative sectors of Italian industry in the world. Thanks to exports, the furniture sector achieved excellent results in 2021, leaping 8.3% over 2019 levels to reach €10.8 billion, driven by the U.S., French, German and Chinese markets, contributing to generate a balance of €8.3 billion. An excellent performance abroad dovetailed with robust momentum in domestic demand, sustained by incentives and an increased focus on the domestic environment following the pandemic, driving sales far above pre-Covid levels: +15.7% on 2019, outperforming the Italian manufacturing industry (+9.1%) and some major European competitors in the sector, such as Germany (+0.6%), France (+1.2%) and Spain (+1.5%). Early 2022 was characterized by a similarly brilliant performance, with growth in the first quarter in both sales at +13.9% and exports at +20.7%.

The outbreak of the conflict between Russia and Ukraine also changes the scenario for furniture companies: energy prices at their highest, exports to the Russian and Ukrainian markets worth 3.7% compared the manufacturing average of 2% in 2021 and, above all, demand for durable goods penalised both in Italy and in other European countries by uncertainty and energy bills, will lead to a slowdown in sales at constant prices. However, the expected growth in prices will allow the industry to record a new increase in sales at current prices (+13.1% on average for the year). In the absence of conflict escalation, the sector can resume good rates of development in the coming years with a projected growth rate of 2.7% per year on average at current prices in the period to 2026. To achieve these results, it will be crucial for the furniture sector to continue on the path of competitive strengthening, accelerating in the area of investments geared particularly toward: green transition and digitalisation, sales processes and functions, R&D and human capital training.

Also rewarding for the growth of the furniture industry will be investment in the circular economy, intensifying efforts in water and waste management and the use of recycled raw materials within production processes – policies that are already more prevalent among furniture companies than the manufacturing average (32.7% of furniture companies use secondary raw materials compared to 25.4% in manufacturing).

Being green pays off: according to an original analysis of a sample of more than 2,500 financial statements, over the 2008-2019 decade, furniture companies with a greater focus on sustainability, evidenced by obtaining environmental certifications, created employment (+10.2%) and performed better in terms of both revenue growth (median of +20.7% vs. -6.9% for non-certified companies) and EBIDTA margin (+0.6% between 2008 and 2019 vs. a 0.7% reduction for the rest).

Local supply chains, which are already typical of the structure of the sector, may also be instrumental in better ushering in the sustainability goals of the entire supply chain. Local supply arrangements could, among other things, intensify in the coming years as a reaction to the logistical difficulties encountered during the most critical phase of the pandemic. According to Intesa Sanpaolo's survey of its managers, just under 50% say they have observed an intention, among furniture-buying client firms. to step up procurement from suppliers located either in the same region or elsewhere in Italy.