International Marketing Plan | Structube

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

https://absolunet.com/en/project/structube/

https://www.alliedmarketresearch.com/home-decor-furnishing-market https://www.structube.com/en/about-beyond-the-product

External analysis

http://plus.lapresse.ca/screens/2c0b0415-0de7-4b1a-8e72-96dba4e709c2__7C___0.html

https://industrytoday.co.uk/market-research-industry-today/furniture-market-growth--future-prospects-andcompetitive-analysis--2018-2026

https://www.businesswire.com/news/home/20170814005447/en/Global-Furniture-Market---DriversForecasts-Technavio

https://dailyindustryresearch.com/102010/home-furniture-market-global-industry-analysis-size-sales-and-

https://www.researchandmarkets.com/reports/4368933/global-furniture-market-2017-2021

forecast-by-2021/

https://www.cmtc.com/blog/furniture-manufacturing-challenges-trends-2016

http://www.wsiltv.com/story/38839206/global-home-furniture-market-2018-industry-key-players-trends-

https://katana.media/blog/furniture-industry-trends-report-2017/

sales-supply-demand-analysis-forecast-to-2025 https://www.technavio.com/report/global-furniture-market

https://www.fungglobalretailtech.com/research/deep-dive-us-furniture-market-2017-stores-face-softergrowth-e-commerce-competition/

http://www.mynewsdesk.com/se/pressreleases/global-home-furnishings-market-2018-driving-factors-market-

https://www.slideshare.net/damhuybinh/furniture-industry-vietnam-summary-global-market-outlook

STRUCTUBE _ 2018 REPORT

analysis-investment-feasibility-and-trends-2023-2536011 https://www.buzzfeednews.com/article/annehelenpetersen/how-one-generation-changed-the-way-we-think-

Criteria

about-furniture https://www.fungglobalretailtech.com/research/deep-dive-millennials-furniture-us-uk-ten-characteristics-

http://www.worldometers.info/population/world/ https://www.imf.org/external/datamapper/NGDPDPC@WEO/OEMDC/ADVEC/WEOWORLD/EUQ/DEU/CAN/FRA

define-market/

Statista.com (2016, 2017, 2018), central intelligence agency

https://www.fungglobalretailtech.com/research/global-furniture-and-homewares-e-commerce/

https://www.forbes.com/sites/leezamangaldas/2018/06/26/ikea-will-finally-open-its-first-india-store-but-

https://www.forbes.com/sites/deborahweinswig/2016/02/15/seismic-shift-to-millennials-driving-dramatic-

winning-customers-wont-be-easy/#317bfaaa47fa 


changes-in-us-furniture-market/ https://www.bdiusa.com/blog/age-of-style-the-millennial-furniture-buyer

https://theculturetrip.com/asia/japan/articles/japans-best-home-and-interior-design-stores/ Statista.com 2017

https://www.social4retail.com/the-new-retail-demographics.html

https://ecommercenews.eu/37-german-consumers-bought-furniture-online/

https://www.thoughtshift.co.uk/furniture-retail-market-trends-and-statistics/

https://ecommercenews.eu/ecommerce-belgium-e10-billion-2017/

https://www.persistencemarketresearch.com/market-research/furniture-market.asp

https://www.theguardian.com/money/2018/jul/18/uk-annual-house-prices-rising-at-slowest-rate-for-five-

https://www.benzinga.com/pressreleases/17/09/b10006615/global-furniture-market-analysis-technologiesforecasts-to-2021-key-ve

years-ons https://www.dbresearch.com/PROD/RPS_EN-PROD/PROD0000000000460528/

https://www.ibisworld.ca/industry-trends/market-research-reports/retail-trade/furniture-stores.html

The_German_housing_market_in_2018.pdf

https://www.technavio.com/report/global-home-furnishings-market

https://www.notaires.fr/en/housing-tax-system/french-property-market/french-property-market-analysis

https://www.statista.com/topics/1136/us-furniture-retail/

https://www.ecb.europa.eu/pub/economic-bulletin/focus/2018/html/ecb.ebbox201805_01.en.html

https://www.marketresearch.com/GlobalInfoResearch-v4117/Global-North-America-Europe-Asia-11872072/ https://www.marketresearch.com/Consumer-Goods-c1596/Consumer-Goods-Retailing-c80/Furniture-c115/

https://timesofindia.indiatimes.com/business/india-business/real-estate-market-makes-a-strong-comebackin-2018/articleshow/65345303.cms

https://www.factmr.com/report/244/home-furniture-market

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