2018 REPORT
Analysis of the Internal and External Environments of Structube 1
MKG5321 - INTERNATIONAL MARKETING Autumn session 2018 group 66
Team members
MKG5321 _ INTERNATIONAL MARKETING (GROUP 66)
(SURNAME, Name & Permanent Code)
2
Part I Company Diagnosis Work presented to Mr. Thomas Leblond October 17th 2018
BOUCICAULT, Michèle
BOUM16539608
BOUSSAUD, Julie
BOUJ28579708
DELIA, Vincent
DELA14089704
DELVAUX, Axel
DELV16069703
KURTH, Iiris
KURI28569705
• 2016 : Targeting a 20 to 30% decrease in price • Purpose : to change the way customers see
PRICES
Structube’s products • So the company could adapt to the market needs
• 64 retail stores all around Canada, situated in 8
What’s Structube ?
provinces
LOCATIONS
• A recent expansion into the United States • Since May 2015 : products available online
Structube is a contemporary-style home furniture retailer, founded in 1974 in Montréal, Canada. The company was primarily a family business specialized in
• A diversified panel : Living room furnitures, dining
STRUCTUBE _ 2018 REPORT
tubular retail clothing racks. The name of the company
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comes therefore from the French expression “structures
room furnitures, bedroom furnitures, office
tubulaires”.
furnitures, lighting and accessories
PRODUCTS
(1) Emilie Tardif, 2017
• “We want to offer new products faster than others”(1)
RESOURCES Structube is now hiring approximately 450 employees. Structube's head office and distribution center is
Mission: Becoming an International Retailer Structube has a real ambition to export its concept out of its boundaries. It is planning to export between 50 and 70 retail stores in the US within less than 5 years according to STRUCTUBE _ 2018 REPORT
its president Marcel Knafo.
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located in MontrĂŠal, QC. 100% of the collection offered to customers is exposed in one shop located in MontrĂŠal. For financial resources, most data is confidential, but the idea of the range in which Structube is placed is that sales reached 85 millions dollars in 2015.
PRODUCTION Suppliers are very important for Structube. In addition to do their products, they try to adapt them to the culture of the country. They make business only with
Other goals that the company really follows are an increase
suppliers that have high quality, new and unique
of the profits and activities but also a bigger brand
process in the world. So that, it ensures the good
awareness worldwide and an image as a major actor of the
quality of the products. Their main suppliers are in
industry.
India, Germany and China.
Namely, in order to break down the social taboos about manufacturing in Asia, the company launched web series called “Beyond The Product” that demonstrates the relationship between the products, the place where they are produced and the people who produce them.
International Vision Structube believes that it
Quality Control
STRUCTUBE _ 2018 REPORT
could change the industry
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because they know that
Structube has a unique team
customer’s expectations are
composition of different
not met. The goal of the
experts travelling to different
company is to put the
countries in order to ensure
customer at the center of the
that products quality and
experience. Therefore they
products requirement are
want to simplify customer’s
respected. They check all raw
experience, never offer the
materials, productions
same experience twice and
process and final products.
offer each customer the best
This is part of Structube’s
possible price.
quality assurance process.
Online Strategy Structube has a specific online and offline system enabling them to be transparent with all stakeholders (mainly customers) in order to increase sales. This system was designed to lead the customer from research of
STRUCTUBE _ 2018 REPORT
products to purchasing.
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Strengths Physical shops with this is an advantage compare
High-performance e-commerce platform that generates 20% of sales
to pure players (only online)
Good social climate
Give complete product offering in new stores
Multiple channels used to sell
Competitive prices
Transparency on the market
Wide selection of goods
Good quality and materials
Good service (possibility to be served according to your needs; be shipped at home or collect in shop after ordering online for instance)
Contemporary design
Really good in Internet referencing
Urban shops
Combining exclusive, contemporary design with an aggressive pricing strategy
Weaknesses A distribution network sometimes causing longer wait times for consumers and stores in western Canada and the United States Product line too large to be fully exposed in every store due to their narrowness
STRUCTUBE _ 2018 REPORT
No presence yet in all markets in Canada
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Suppliers from different part of the world exposing the company to more risk of supplying problems
Only present online in the United States
The world of furniture in 2018 The global furniture market
4 5%
(1)
+
to +
growth in 2018
Over the past few years, furniture has become an integral part of human life. Globalization facilitates easier availability of home decor products for consumers. Suppliers are mainly in China, Poland, Vietnam and Malaysia. The demand for various types of furniture has showcased tremendous growth in the past 5-6 years due to rising growth of real estate all across the world. Sales of home furniture is projected to remain high through retail sector globally. In the US, the industry is growing at a rate of 5 to 6% YoY(2). Retail sector among other distribution channels is projected to reflect a relatively high CAGR(3) throughout 2021. The global market for furniture is forecast to grow at a CAGR of almost 6% by 2021 and around 5.2% between 2018 and 2024.
Growth of the worldwide furniture market over 10 years(1)
Main worldwide players in sales(4) (in millions of USD, in 2012)
+4,0% to
+5,0%
+2,9%
+2,3%
STRUCTUBE _ 2018 REPORT
+1,8%
+4,2% +4,5% +3,3%
+3,6%
+2,3% +2,4% +1% 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
These are the major companies leading the market. The level of competition among the key players is quite intense. Large companies compete through volume purchasing. Small companies focus on a market segment and compete through depth of products and superior customer service.
ASHLEY FURNITURE
27,5
MACY’S
STEELCASE 2,7
LA-Z-BOY 1,2 HERMAN MILLER 1,7 WAYFAIR
(1) The data has been approximatively calculated based on several researches. (2) YoY : Year-over-year. Source : Katana report on the state of the furniture industry, according to CIT. (3)
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CAGR : Compound Annual Growth Rate. (4) The data dates back to 2012 but in the absence of any more reliable information, this can help us to approche the reality of 2018.
WILLIAMSONOMA
The world of furniture in 2018 North America has the largest market share for furniture products, followed by Europe and Asia Pacific. Asia Pacific region is expected to overtake North American furniture market in the forecasted period in terms of market share. Price in US and EU is much higher than that of China and other developing countries due to their high quality and powerful functionalities.
Breakdown of the market by geographic Zone(1)
35%
46%
Western Europe / North America
44%
Asia Pacific
10%
LAMEA(2)
STRUCTUBE _ 2018 REPORT
Online sales
+
11,7% 30%
growth in the worldwide online furniture market
Breakdown of the market by product category(1)
share of e-commerce in the furniture market(3)
Wood, kitchen, cabinet
20%
Upholstered furniture
20%
Household consumption
Non-upholstered furniture
15%
Mattresses
10%
Blinds and shades
We can say that nowadays, consumers prefer online retail platforms for buying furniture. Online, most revenue is generated in China. The country, with the United States are by far the largest online furniture markets. In 2015, the UK had the highest percentage of furniture and homewares purchases made online in Europe at approximately 12.1%. The UK and Germany have the greatest share of retail online. The online furniture and homewares market is highly competitive. Overstock.com, Amazon and Wayfair are the three largest online retailers of furniture.
(1) These figures are based on 2012 data. Source : global market outlook by Daniel Dam Huy Binh on SlideShare, 2013. We nowadays know that The Asia Pacific is the dominant region in the global furniture
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market with the largest market share in terms of revenue in 2017. (2) LAMEA : Latin America, Middle East, Africa. (3) This data was forecast in 2014 according to research firm eMarketer.
Seizing the potential of every market In furniture market that pursued its steady growth in 2018, here is a geographic analysis of the main Zones.
Asia Pacific Asian market for furniture is expected to witness double digit growth in the coming years. Due to increasing urban population, developing countries such as India and China are contributing to the Asia Pacific furniture market growth.
Western Europe
STRUCTUBE _ 2018 REPORT
North America North America is considered one of the largest online furniture markets, with $65,1 bn of sales in the United States this year. Many of the key players are originally from North America. For example, Wayfair.com is considered the online challenger of the famous Swedish retailer IKEA, with 7 million available products versus 9,5k , only established in 5 countries versus 14 but with 2,1 billion annual visits.(1)
(1) To saw the infography by Statista, click here.
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Western Europe is the largest market for luxury furniture. This zone is projected to exhibit huge development in furniture consumption rates, due to growing expansion of the tourism industry and high demand for luxury and premium furniture products. The dominance of micro-firms and small & medium-sized enterprises in the furniture industry is driving the furniture market growth in the region. Innovations are going to boost the growth of the furniture market in Europe.
Currently, millennials in the US and the UK spend less on furniture than older generations, largely because they have lower incomes.
Who Buy Furniture ?
TECHNOLOGY Millennials are very active social media users, highly adept at using technology, and naturally more trusting of online sources.
STRUCTUBE _ 2018 REPORT
MULTI-FUNCTIONAL The Consumer Buying
The baby boomer may
Trends Survey
be buying their last
conducted by Furniture
mattress or a couple of
Today shows that
pieces, like a recliner,
millennials have
but they are not the
become the largest
primary consumers of
consumer group in the
home furnishings.
US furniture and
Generation X & Y,
bedding market.
totaling 112 millions of
Moreover in
people are the new
e-commerce, in the
demographic for home
year 2017 a share of
furnishings and they
36.5% of users is 25-34
are "wired for the
years old. However the
internet". Indeed, a
prime demographic for
significant number of
furniture buyers are
consumers are doing at
between the ages of
least part of their
32-45 years and
research in store and
predominantly female.
buying online.
They often look for smaller, multifunctional and affordable furniture that fit into their dynamic and urban lifestyles.
ECO-FRIENDLY They are also more influenced by product offerings that are marketed as ethical, sustainable and environmentally friendly.
Generational Shopping Behaviour(1) Shop online and buy in-store
50 % 47%
40 %
40%
(1) To saw the original infography by Katana report on the state of the furniture industry , click here.
36%
30 % 20 % 10 %
15%
15%
15%
0 %
MILLENIALS 12
Shop online and buy online
GEN X
BOOMERS
The Millennials •
Market Drivers
Value product reviews above all other factors
•
Tech dependent
•
Big on environmental issues
•
From an aesthetic perspective,
WHAT FACTORS ARE INFLUENCING THE MARKET ?
design elements such as visible wood grain and organic forms are share worthy for this generation
•
STRUCTUBE _ 2018 REPORT
•
Urbanization
Want clean-lined designs that can
2. Growth in real-estate sector
easily incorporate into their lifestyle
3. Growth in residential construction
The personal buying experience from retail stores is important to Millennial shoppers
•
1. Growing influence of Globalization and
Even though this generation
market 4. Growing consumer interest towards home decoration
consider themselves tech-
5. Increase in number of office spaces and declining vacancy rate
dependent, they also value the in-
6. Increasing disposable income
store shopping experience
7. Rise in Entrepreneurship and Work from Home
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Market Challenges THE THREATS
•
High Costs of Logistics
•
Increasing Cost of Raw Materials
•
Highly Fragmented Market
•
Complexity in Supply Chain Management
•
Increasing investment by the key companies in
STRUCTUBE _ 2018 REPORT
creativity, skills, innovations, and modern technologies
•
Markdowns and discounts will likely squeeze operators’ profit margins, forcing some small retailers to exit the industry
•
Rising Household Debt : poses a distinct threat to long-term consumer spending
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The growth of furniture
considerable reduction in available
e-commerce means more
sizes of homes. As available space
shipments to consumers, which is a
is smaller, consumers look for
positive for the
RTA(1)
segment of
furnishings that are compact and
the market. It also means that
easily portable to allow for efficient
there is a big opportunity for
use of the available space.
companies that can improve
The growth of one and two person
furniture design and assembly in
households also means that there
order to simplify the process of
is more demand for small and
putting furniture together.
easily portable furniture. And it is also due to a surge in
The increasing interest in interior
preference for less crowded
design will be one of the major
houses.
factors that will have a positive impact on the market’s growth.
Environmental awareness amongst the consumers has fuelled the
Developing countries such as China
demand for organic home
and India is more likely to attract
furnishing products.
THE OPPORTUNITIES
Here are the major market trends that can lead to opportunities for the company.
1. ONLINE
Global online furniture is projected to increase by a five-year CAGR of 15% and remains the fastest-growing channel in developing countries.
2. INNOVATIONS
To sustain the market’s competitive environment, the vendors in the market are focusing on product innovations.
3. MULTI-FUNCTIONAL
more investment opportunity for STRUCTUBE _ 2018 REPORT
5
Top Furniture Trends for 2018 and beyond
their potential demand.
Finally, the growth in home working
With the population growing in
and telecommuters is driving the
most parts of the world,
demand for home office furniture
particularly in urban cities, real
with a forecast global market
estate prices have increased
growth of 5.58% between 2014 and
significantly. This has led to
2019.
Rising Demand for Multi-Functional, Multi-Purpose and Smart Furniture & Growing use of RTA furniture.
4. LUXURY
Increased Demand for Luxury Furniture : consumers are willing to spend more on different designer and luxury home furnishings.
5. GO GREEN
Increasing Demand for Eco-Friendly and Sustainable Home Furnishings.
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(1) RTA : Ready-To-Assemble.
By looking at the data collected of the
to middle income, seeking for
different consumer types in the
convenient prices without giving up
furniture market we identified that the
quality and trends. This target group is
biggest purchasing group is between
subjected to move more and seek
ages 32-45. However, considering this
more for temporary choices when it
target, we analyzed that this group is
comes to furniture.
Target and Criteria (1/2)
tend to opt for luxury products and items that are permanent investments. This is possible due to higher income compared to other generations.
Criteria
Measure
UK
France
Germany
Belgium
China
Japan
India
Market Size
Population
66,689, 280
65,308,126
82,346,277
11,518,958
1,416,677,03 9
127,097,438
1,358,459,7 90
GDP per capita
PIB Thousands
42,26
42,93
48,67
46,98
9,63
40,11
2,02
Age distribution
Ages 20-29 in % of population
13,1
11,4
11,5
12,3
15,9
9,9
16,2
Number of main competitors
In the capital
4
3
2
3
3
3
1
Urbanization
% of the population living in urban areas
83,07
79,98
75,27
97,9
57,9
94,32
33,54
Consumption habits
e-commerce share of retail sales revenue in %
18
6,2
13,2
17
23,8
8,2
3,6
Growth in real estate markets
Annual house price growth in %
3
10,9
15
3,5
10
1,2
6,7
Considering the different opportunities in the furniture market, we notice that e-commerce poses major growth in the industry. Since Structube has a system in place for online platforms, we consider that they are serving this market well in Canada, from which we make a conclusion that millennials are the main target in this channel.
STRUCTUBE _ 2018 REPORT
Moreover, their pricing strategy suits
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younger generation in addition to serving the needs for contemporary design and current trends that are available in easily accessible locations. By taking these factors into account we can conclude that the main target is between ages 23-30, with lower middle
• Population: 0-50=1, 51-150=2,
Criteria (2/2)
150+=3
• GDP: 0-30=1, 30-50=2, 50+=3 • Age distribution: 0-10=1, 10-15=2, 15+=3
Criteria
Weight
UK
France
Germany
Belgium
China
Japan
India
Market Size
2
2x2
2X2
2x2
1x2
3x2
2x2
3x2
GDP per capita
1
2x1
2x1
2x1
2x1
1x1
2x1
1x1
Age distribution
1,5
2x1.5
2x1.5
2x1.5
2x1.5
3x1.5
1x1.5
3x1.5
Number of main competitors
1
1x1
2x1
3x1
2x1
2x1
2x1
3x1
• Rivalry: 4=1, 3=2, 1-2=3 • Urbanization: 0-70=1, 71-80=2, 80+=3 • Consumption habits: 0-10=1, 10-15=2, 15+=3
• Growth in real estate: 0-10=1, 10-13=2, 13+=3
Considering the attractive criteria for Urbanization
1,5
3x1.5
2x1.5
2x1.5
3x1.5
1x1.5
3x1.5
1x1.5
the furniture market and the table of
STRUCTUBE _ 2018 REPORT
data created from those we can
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Consumption habits
1
Growth in real estate markets
2
Total
3x1
1x1
2x1
3x1
3x1
1x1
1x1
identify that for Structube, the 3 strongest countries to enter to would
1x2
2x2
3x2
1x2
2x2
1x2
1x2
19,5
19
23
18,5
22
17
19
be Germany, United Kingdom and China.
References Internal analysis
http://www.rfdtv.com/story/38839206/global-home-furniture-market-2018-industry-key-players-trends-sales-
http://plus.lapresse.ca/screens/2c0b0415-0de7-4b1a-8e72-96dba4e709c2__7C___0.html https://www.structube.com/fr/salon/meubles-tele
supply-demand-analysis-forecast-to-2025 https://www.grandviewresearch.com/industry-analysis/furniture-market
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External analysis
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STRUCTUBE _ 2018 REPORT
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Criteria
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define-market/
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winning-customers-wont-be-easy/#317bfaaa47fa 

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The_German_housing_market_in_2018.pdf
https://www.technavio.com/report/global-home-furnishings-market
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https://www.factmr.com/report/244/home-furniture-market
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