The volatility of the markets has intensified the highly charged nature of this issue, and the times are over in which the market for furniture with a convenient regularity grew or contracted by one to three percentage points over the course of a number of years. Now, instead it is external business fluctuations that are incapable of being influenced and that are hardly predictable which are determining the situation. In the last financial crisis of 2008/2009, all of the manufacturers had to make sacrifices - at different points in time and to different extents. Especially hard and swiftly hit was the kitchen furniture and fittings sector, as well as the sectors close to B2B, like office furniture or furnished property business.
Against this background, the top management levels of the furniture manufacturers need to complete their homework urgently, in order to get their business models in the success lane. The problem: "Today, the concept of the business model is used to such an extent that it is becoming meaningless. Only a very few actually know what a business model really is, let alone, what should actually be improved. This situation has to change at all costs!", explains Dr. Timo Renz, a member of the executive board and an industry expert at W&P.
If it's about putting to the test the "robustness" and the "future viability" in a kind of stress test, then for Renz both the "front end" (such as products and services, market and competition scenarios) as well as the "back end" of the business model (such as organisation, creation and addition of value and procedures) must be examined carefully. It is especially in light of the clout of the giants of the furniture market such as XXL-Lutz, Segmüller, Höffner or Porta, who are all, as before, still expanding strongly, fighting out price wars in the market and exerting their full purchasing power over their suppliers, that the "setting apart" for most of the middle-sized furniture manufacturers is becoming more and more difficult. Added to this is the trend that the furniture retailers – whether large-scale or medium-sized – are taking on more and more manufacturing tasks in that they are strongly pushing retail brands and in some cases are even becoming furniture producers. As an example, the VME-Einrichtungspartnerring, a furniture association of middle-sized furniture retailers, which combines well in excess of one billion euro in purchasing volume, absorbed the flagging kitchen manufacturer Brinkmeier-Küchen just a few months ago. For many German furniture manufacturers, the air is getting thinner in view of the power and strategy of retailers and of the international competition coming from Eastern Europe and Asia. "If as a furniture manufacturer in these conditions, you're not maximally efficient while at the same time delivering an excellent quality in products and services – both to end customers and retailers, then you don't have a chance", Renz sums up.
So that this can succeed long term as well as in the event of a sudden downturn in the market, both the business culture on the one hand and the business financing on the other hand must be put to the test.
"It's only if you're better, different, more intelligent and efficient than others; if you're prepared against all resistance with your business model in any given stress scenario, that you'll be ahead in future", says Renz in conclusion. "The fertile ground for this success is a secure financing base, as well as an entrepreneurial culture, which doesn't see change in a bad light, but rather takes hold of it as a creative and permanent renewal process."
If it's about putting to the test the "robustness" and the "future viability" in a kind of stress test, then for Renz both the "front end" (such as products and services, market and competition scenarios) as well as the "back end" of the business model (such as organisation, creation and addition of value and procedures) must be examined carefully. It is especially in light of the clout of the giants of the furniture market such as XXL-Lutz, Segmüller, Höffner or Porta, who are all, as before, still expanding strongly, fighting out price wars in the market and exerting their full purchasing power over their suppliers, that the "setting apart" for most of the middle-sized furniture manufacturers is becoming more and more difficult. Added to this is the trend that the furniture retailers – whether large-scale or medium-sized – are taking on more and more manufacturing tasks in that they are strongly pushing retail brands and in some cases are even becoming furniture producers. As an example, the VME-Einrichtungspartnerring, a furniture association of middle-sized furniture retailers, which combines well in excess of one billion euro in purchasing volume, absorbed the flagging kitchen manufacturer Brinkmeier-Küchen just a few months ago. For many German furniture manufacturers, the air is getting thinner in view of the power and strategy of retailers and of the international competition coming from Eastern Europe and Asia. "If as a furniture manufacturer in these conditions, you're not maximally efficient while at the same time delivering an excellent quality in products and services – both to end customers and retailers, then you don't have a chance", Renz sums up.
So that this can succeed long term as well as in the event of a sudden downturn in the market, both the business culture on the one hand and the business financing on the other hand must be put to the test.
"It's only if you're better, different, more intelligent and efficient than others; if you're prepared against all resistance with your business model in any given stress scenario, that you'll be ahead in future", says Renz in conclusion. "The fertile ground for this success is a secure financing base, as well as an entrepreneurial culture, which doesn't see change in a bad light, but rather takes hold of it as a creative and permanent renewal process."
The current W&P brochure "Management of Business Models in the Furniture and Furnishing Sector" is available upon request.
