Titel presentatie[Naam, organisatienaam]

Working Day - Track: Managing learning networksCluster development success factors

Joaquim Solana

A cross-sectoral approach for an industrial reconversion

Promoting innovation in Home and contract furnishings

Joaquim SolanaTCI, Eindhoven, November 2016

A cross-sectoral approach for an industrialreconversion: from furniture manufacturer to

hotel interiors services provider

Furniture in Southern Catalonia: a well known case study

Microcluster know in the 90’s (On competition, M. Porter)

Harvard business school case (Antmobel), 1995

Local production system characteristics

- Mainly located in one small town (La Sénia)- Specialized in home furniture manufacturing and distribution (modular, modern style)- High concentration in just one industrial sector (surrounded by olives and mountains)

The “Golden Age”: 2000-2007

In 2007: 700.000 houses built in Spain(more than UK + Italy + Germany)

Home furniture retail booming:Internal market increases more than 10% per year

Companies strategic positioning:- Commercialization is limited through traditional shops- Costumers demand big production flexibility (industrial artisans)

The Golden Age consequences

- Focussed on manufacturing: attending the big demand

- All atention to internal market -> neglect exportations

- Loss of competititiviness (imports increase)

- Lack of innovative stimulus:- Trend followers- No branding to final costumers- Traditional bussiness model: no verticalization- Little technology innovation

The nightmare

Housing bubble burst + strong crisis

New houses construction in Spain

And the 5 axis perfect storm:

1. No new houses construction2. High young unemployement3. High employement risk perception: no sails of not essential goods4. Bank credit reduction to a minimum5. New distribution systems (traditional shop desapearsing) and cheaper

products solutions (DIY)

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Catalan furniture sector recent evolutionNumber of companies

EBITDA (thousand euros)Anual turnover (thousand euros)

Workers (thousands)

The crisis affected lots of companies5 of the 7 founder companies of the cluster went bankrupt

Cluster companies need to find urgently new markets

What would you do as a cluster?

Poll “N5 Furniture strategy”. TCI - App

1.- Promotion of exports: market intelligence, consortiums

2.- Inspiring companies verticalization: B2C, branding, own shop…

3.- Channel change: hospitality furnishing

4.- All of them

Crisis, what crisis ?

TourismContinued growth in Spain during the crisis

High hotel occupation rates:• External causes: sun&beach tourism forward from other places• Internal causes: tourism diversification & cities attractiveness

Consequences:• More hotels needed• Hotel interiors refurbishing

Is it a real opportunity ?

1) Hospitality market already has big operators

2) Furniture manufacturers don’t want to act just as subcontractors but to arrive to prescription (architects) and costumer (hotels):

• Longer position in value chain -> higher profits• Reducing risks (not to depend on others)

3) Big oportunity to make the shift from product to service

Strategic Oportunity vs Strategic challenge

New skills are needed:• Develop a marketing message attractive for architects• Complementary products knowledge: lighting, flooring…• New suppliers (or partners) for complementary products• Installation capabilities• Acces to medium term financing

Crisis was intensifying in retail and companies were in a hurry

The cluster role

Help companies in the strategic challenge development but…We also have to learn!

Phase 1: Personalized strategic planCompany needs detection, planning, KPISkills detection (sectorial), contents preparation, training

Phase 2: Looking for complementary partners

Phase 3: Jumping to the market

Find the main difference

Looking for complementary partners

Complementary partners for completing the product offer:Lighting, flooring, home textile, bath, decoration

Economies of scale and economies of scope (synergies)

WEcontract (www.wecontract.bcn) 13 complementary companies in a permanent consortiumStrong rules to ensure no competence

Sharing: • Space (premium area)• Sales staff• Costumers

Looking for costumers

Toruism is a BIG marketSpain: third world position in tourism17.000 hotels, 1.800.000 rooms, 14.000 M€ (hotels turnover)

Hotel interiors fragmented demandHotels ownership distribution: 40% chains, 60% SMEs

Hotel chains: few professional buyersHotel SME: lots of uneficient buying

Oportunity for a Marquet Place creation!

InteriHOTEL: www.interihotel.com

Description:• Marketplace focused 100% on Hotel interiors• Main market place in Spain (Top 5 in Europe)• 152 exhibition companies (80 showrooms)• 3.000 professional attendants (architects, hotel buyers)• 20% international

Reasons for succeeding:• Growth from a little seed• Focused on giving value to companies not to organization • From the cluster cradle (far from markets) to Barcelona and others• Moving forward “traditional fair” concept:

networking + knowledge + experiences + products in an atmosphere

Cluster transformation

Strategy of focusing in a business -not in a sector- allowed the cluster:• To develop a connected set of sales projects: InteriHOTEL, Wecontract• To acquire a big market intelligence• To foster technology projects related to this business approach

www.furnit-saver.eu , www.eco4vet.com

As consequences: • Increasing cluster attractiveness for companies from other sectors :

- Other manufacturers (lighting, flooring, home textiles…)- Project management co.- Distributors

• Nowadays just 30% of companies of the cluster are furniture manuf.• Change from mono-sectorial to cross-sectorial cluster

Future challenges

What do suggest us to do in the future?

Poll “N5 Future strategy”. TCI - App

1.- Internationalization (something more than exporting)

2.- Furnishing other spaces: nursing homes, AAL elderly, shops…

3.- Win market share by upgrading offer (new materials, author design, smart products…)

4.- All of them

Internacionalization

- Actions for market intelligence in emerging touristic markets

- Planning a COSME – Go international proposal (EU funding)

Do you know home interiors, hotels, building, architects clusters?

Please, contact us:Joaquim Solana

joaquim.solana@cenfim.org+34 607 82 19 10