Contract: a business to discover


Highly developed abroad, in Italy the supply of furniture and appliances to 360° “turnkey” is growing slowly, except in exceptional and excellent cases. Here are some examples to follow.

Ernestomeda kitchen, model One
Ernestomeda kitchen, model One

The concept of “contract” in home decor means, such as standard definition, large supplies of furniture and equipments, “turnkey”, made in collaboration with quality companies. It can be applied to the residences of new construction as well as to the hotels. In fact it is not simply a supply of furniture, but a complex system of services and global projects which provide everything that a structure requires to operate, with ready-made solutions for the customer, but especially flexible. In Italy the contract isn’t still very developed while abroad has become quite usual to turn to a “general contractor”, a single interlocutor to whom the customer relies on the management of all organizational steps related to the creation of spaces for hotels, airports, stations, residences, but also commercial spaces (restaurants, bars, shops, shopping centers), business (offices, banks), public buildings, such as theaters, museums, universities, hospital sector and residential buildings. The contract involves architects and designers, but also engineers, entrepreneurs, furniture-maker, companies operating in the appliances and accessories field.

The contract market in Europe…
The data about this market are relative to 2011 (the next data should be published this year), when the market registered a total turnover of approximately 7.7 billion Euro with a peak of investments in the Middle East, Africa, Russia, USA and in the “Next 11” (Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey, Vietnam). This has been stated by the report published by CSIL (the institute of economic research and consulting for the development), in October 2012, about the European market of contract furniture. The report highlights a situation of recovery for the period 2010-2011, after a negative trend in the previous two years. Mainly the hotel industry grows (which accounts for 20% of demand of contract supplies), while the retail segment is positioned just below and the office sector reaches 16%. The segment of the supply of furniture for residential projects is increasing but is still limited in Europe (10 % of total production, for a total of 840 million Euro).

The possibilities abroad
Here are some of the major construction projects (residential, hotel or commercial) that, according to the marketing agency Koinos Management, may represent a business in the near future also for Italian companies wishing to enter or continue in the contract market. All in the East of the world: the boom of casinos in Macau is giving birth to other similar structures in Asia, with great opportunities for furniture contract; the Mandarin Oriental hotel chain wants to open a luxury hotel in Chengdu, capital of Sichuan Province, China; in a few years, Abu Dhabi will open The District, a new neighborhood of luxury; The Lagoons neighborhood, a spectacular Waterfront project constructed around the twin towers of the UAE, will be developed by 2020 in Dubai; by 2022, on the occasion of the World Cup, the first stadium of Qatar will be built.

And in Italy…
According to the available data, confirmed by the federation Federlegno Arredo, Italy exports products for contract sector with a value estimated at around 22% of the entire European segment. The Italian companies that choose to produce for the contract operate mainly for foreign customers. The Institute for Foreign Trade (ICE) launched in 2010 the “Project Contract” with the aim of enhancing the supply chain of the most representative sectors of Made in Italy, with a brand (“Contractitaliano”) and the Internet portal of the same name. His success was quite good, considering that in three years has involved over 230 companies: the Italian producers who have participated have been working on supplies or subcontracts of products of various types in a segment of high-end or luxury. The integral management of international contracts has mainly involved large contract companies or architecture and design companies. All this has been practically completed in 2012. It’s also true, however, that in Italy begins to be present, albeit slowly and only in the big cities, the “multiapartment” model with Anglo-Saxon style: residential complexes (usually medium-high level or luxury) whose apartments, thanks to agreements between developers and companies of furniture, are sold or rented furnished totally or in part, with the possibility to choose or customize details and finishes.

LaCucinaAlessi by Valcucine with Miele household appliances (B-Tower, Rotterdam)
LaCucinaAlessi by Valcucine with Miele household appliances (B-Tower, Rotterdam)

Kitchens in the contract: some examples
Some Italian kitchens manufacturers have participated and still have ongoing contract projects, both in Italy and abroad. In the case of residential building, for example, the fact that the kitchens are included in the sales package may be a factor of great appeal to home buyers, since the kitchen is one of the assets less transferable from one apartment to another, often requiring customization and adaptations. In addition, the inclusion of the kitchen does not affect substantially the price of the property. Among the Italian examples we can mention the “Porta Nuova” project in Milan, involving through the platform Dolce Vita Homes over 30 major Italian producers operating in the field of interior design. Among the companies that manufacture kitchens, Arclinea, Boffi, Dada, Varenna have joined the project “Porta Nuova”, while Electrolux has been chosen for the appliances. Ernestomeda dedicates a division in Milan (thanks to a dedicated team), a showroom and even an Internet site to the contract business. Ernestomeda collaborates with AEG in Italy, while abroad the company does not sell home appliances. Outside Italy, the company is working on contract projects in Istanbul, Singapore, New York, Spain (here in particular with 255 housing units) and on two major projects in India. All other examples of a certain weight are related to overseas projects. Molteni Group is operating in New York (at Leonard Street) with the architectural firm Herzog & De Meuron: Dada provides 145 kitchens tailored to fit very high ceilings (about 3.40 meters, a non-standard and particularly “difficult” height), containing Miele appliances and Sub Zero appliances (for the cooling). The last contract project in terms of time, realized by Snaidero in late 2013 in partnership with De Dietrich and Siemens with regard to the supply of household appliances for the kitchens, is the setting up of the apartments at Kata Rocks Luxury Resort in Thailand, on the coast of the Andaman Sea, in the Indian Ocean. Another “deluxe” example is the inclusion of LaCucinaAlessi by Valcucine in B-Tower in Rotterdam (The Netherlands) designed by Wiel Arets, which hosts both a retail space dedicated to fashion and spaces that are dedicated to residential use. As for the appliances, the partnership has been made ​​with Miele, which has provided ovens, hobs, hoods, refrigerators and dishwashers. Even if Valcucine does not have a real contract division, the company has collaborated in the preparation of another building in the Netherlands, in Maastricht in 2013, and currently has another project in Amsterdam.

The requirements to work in the contract market
What do you need to work in this field? Basically competence, dynamism and flexibility. In 2012, architects and entrepreneurs working in the field had already come to this “synthesis” during a round table organized by MADEexpo and Interni: it appeared that especially abroad the know how required is transversal. Sellers must be trained to manage the expectations of the general contractors and meet their needs of management of the site: a negative opinion on the use of the product is equivalent to loss the supply. Besides, to be able to participate in a tender abroad, it is necessary to be included in a “vendor-list” which can be accessed only if in possession of precise requirements. Of course, the price is also important, combined with the quality of the product. In a study published in the magazine of the SDA Bocconi School of Management, (“Economy and Management”, 6-2012) edited by professors Gabriella Lojacono, Antonio Catalani and by Armando Bruno, general director of the Marco Piva architecture and design firm, focused on furniture manufacturers for the day and night area, we read that “the contract provides opportunities for companies of the furniture system regardless of whether they have pursued a strategy based on the affirmation of the brand or are of big dimension”. The three experts explain: “In order that the sales activity is effective, it is necessary to activate a large number of contacts with architects or builders, propose specific sell topics relating to the particular type of work that the company is able to accomplish, and then continue to maintain the relationship by informing about news, soliciting requests for quotes, and so on”.