CEO outlines Natuzzi's strategy, opportunities
July 26, 2013,
Pasquale Natuzzi, Natuzzi
Furniture/Today: Earlier this month, the company announced the reorganization of Italian production of Natuzzi. What is the goal of the reorganization?
Pasquale Natuzzi: We have announced a restructuring plan aimed at restoring the company's profitability levels and creating the basis for a solid path to future growth. This plan will allow the company to maintain its international leadership and protect our Italian production. The plan's strategic guidelines envisage that the current operating structure becomes aligned to real market needs, while stimulating a return to competitiveness with significant investments in product and process innovation. These enhancements will be made known to the trade and our target consumer via marketing and communication platforms and through the development of Natuzzi Italia points of sale throughout the world.
Natuzzi: The Americas are an extremely important market for the company and one where we intend to regain market share. To this end, I have decided to personally lead the effort in regards to the marketing and commercial activities of our three brands. We have strong managers in the United States leading each brand. By having these managers report directly to me, I will be personally involved in the activities and growth of the market. We are rethinking all the processes inside the company in order to become leaner, more efficient and stronger than ever.
F/T: What is your brand strategy to grow in U.S. market?
Natuzzi: The group's product offer is divided into three brands that best meet the needs of consumers in terms of style, coverings, and functions. Natuzzi Italia is produced 100% in Italy and dedicated to the medium to high-end market. The sofas and armchairs of the Natuzzi Italia collection are enriched by a selection of lamps, accessories and living room furniture. Natuzzi Editions is the brand that inherited Natuzzi's original vocation: to provide a wide range of sofas and armchairs in leather, available in different designs and functions. Softaly addresses the needs of large big box distribution.
The most effective distribution channel for the Natuzzi Italia brand is dedicated single-brand stores where the widest offer of the brand can be presented and where we can offer interior decoration services. We are heavily investing in the development of retail distribution in USA starting from Florida, where we have opened four stores and another two will follow in 2014. Our results thus far are quite satisfactory and we are looking to expand into other markets with dealers who are willing to follow our branded distribution model.
Natuzzi Editions is mainly distributed through galleries and points as a concept, not just product. We provide solutions that maximize the return of the retail space, layout consultation and assist dealers in positioning the best possible product mix. In addition we support retailers with advertising campaigns and education programs that clearly help to communicate our brand values.
Softaly is a program that we have set up for large volume retailers that are willing to have a strong partnership with us. Thanks to our manufacturing capacity worldwide, we can serve our retailer in a short period of time guaranteeing the best service and quality. The effectiveness of this business model is proven by the success of a two-decade collaboration with Ikea, one of the most demanding customers in the world, in terms of quality and service requirements.
F/T: Is there opportunity for synergies among the three brands and if so, how are you maximizing those objectives?
Natuzzi: Each brand maintains a distinct identity and personality that addresses specific segments. Since none overlap, we can maximize market coverage. At the same time, the three brands are the expression of one unique industrial group, the Natuzzi Group, and benefit from supporting synergies, such as operations, logistics, product development, technology and innovation. Simply stated, our objective is to achieve presence in new and emerging markets while growing our share in mature markets.
F/T: Where, why and how much are you investing in your company and what are some of the specific returns you hope to realize from those investments?
Natuzzi: The company has always implemented a zero-dividend policy with the objective of investing resources directly back into the company to support the development of its brand assets. These resources have allowed us to pursue process innovation and product development. To fulfill our customers' expectation, we are moving towards a different approach among services and the manufacturing process. The latter represents for us the crucial point for changing things and accelerating our time to market without sacrificing quality and service. This is the meaning of our lean approach to reach a lean enterprise status. We are reorganizing our production lines to reduce waste and optimize them in order to create a value circle for the whole end-to-end process, from raw material to the delivery of finished goods.
On the other hand, to be in line with new manufacturing developments, we are designing and projecting new products following our innovative roadmap. In a few months we will be ready to show a new unique sofa for the experience it will give our customers.
So, we expect to generate profit in a different and more efficient way of improving our worldwide awareness.
F/T: Your recent earnings show your U.S. sales were up more than 17%. Do you believe your opportunity will continue to be in the U.S. and if so, what measures are you taking to grow your business?
Natuzzi: The data confirms that our strategy is going in the right direction. By continuing on this path, we expect to achieve great results in the U.S. market, where the potential is enormous. Our three-brands strategy needs the right organization that brings our vision to the market, manages the equity our brands offer and helps us to grow our market share.
F/T: You founded this company in 1959. What are the milestones you have set?
Natuzzi: The history of our group is characterized by its ability to innovate and renew itself, an approach that today is part of the DNA of our brand. An ability that has defined all the significant moments of our journey, such as:
► Democratization of leather upholstery
► Worldwide control of our manufacturing processes
► Retail network
► Brand portfolio
F/T: You set the standard for contemporary, quality leather furniture both here and globally. What steps are you taking to guarantee that you continue to lead both in terms of design and quality?
Natuzzi: Natuzzi Italia has started collaborating with outside Italian designers to reinforce our Style Center and make sure that our products continue to offer cuttingedge design. Most recently, we've collaborated with Paola Navone and Claudio Bellini, son of Mario Bellini, who designed the offices of Natuzzi Americas in High Point. Concerning quality, we are continuously investing in production process reviews and strict selection of component suppliers aiming to achieve a 100% quality product.
F/T: What are your competitive advantages in each of your brands?
Natuzzi: We are one group ... with many opportunities. Three unique brands communicate Natuzzi Group's superior broad range of furnishings options, which address different needs and consumers, with a vast array of more than 2 million combinations of style, cover and functions.
Natuzzi Italia represents excellence, fashion and quality of luxurious leather furniture crafted entirely in Italy with a comprehensive range of furnishings and accessories. Natuzzi Italia is a turnkey retail program supported by a Quick Time stock program. Quick Time is designed to furnish a complete living space in the shortest time. In every Natuzzi Italia store and gallery there is a team of consultants, interior decorators and architects, who are constantly trained to advise and assist customers. Several technological tools make it easier for customers to conceptualize and visualize their space.
Natuzzi Editions is Italian heritage blended with America's comfort. Natuzzi Editions is designed and developed in Italy, but assembled globally for the particular tastes, desire for comfort, proportions and demand for value that North and South America expects. We begin our efforts with a concentration on logistics.
Softaly, or the private label program, is a collection for large key accounts capable of generating important volume in the promotional market segment. The program is a limited but efficient product range in all popular, high velocity retail categories. Construction remains the same as the Natuzzi Groups certified process. It's all about comfort. Advantages of keeping it simple and removing production complexity is to ensure longer runs, which builds a talented labor pool to produce a more consistent quality product, resulting in value for our partners and their business.
F/T: We have seen other global leaders grow their businesses by introducing new product categories. Will we see similar strategies from Natuzzi Group and if so, when?
Natuzzi: We are busy working nonstop to prepare for the High Point Market in October. This is a very significant event for the Natuzzi Group, where we will be presenting a great many new products, which will certainly meet the expectations and tastes of the American public. For Natuzzi Italia, it will be an opportunity to present the new Tempo, Forma, Duse sofas and the Viaggio armchair, which were extremely well received by the public during the events in Milan. We have also worked on extending our range in the dining area and will be presenting two new tables and three chairs. I would like to take this opportunity to officially announce the appointment of Claudio Bellini as chief stylist director of the Natuzzi Italia brand. Claudio is one of the most popular and recognized designers at international level and he will make a significant contribution to developing the brand.
High Point will also provide a platform for presenting operators with an innovative line of armchairs that will set new standards comfort and relaxation armchair segment. We have created the perfect place for everyone to finally take a break and regenerate mind, body and soul. But I can't disclose more, we will reveal all the details during the Fair.
F/T: We are also seeing a growing number of offshore suppliers establishing domestic production here in the U.S. What are your plans to produce goods here?
Natuzzi: For our Natuzzi Italia brand, manufacturing will be strictly Made in Italy, while for the other brands we will continue to constantly monitor the evolution of the market and always be ready to capture any opportunity that will allow us to better service important markets such as the Americas. I can't therefore exclude the possibility of U.S. production in the future, but at the moment we have already made key investments in our current production hubs (China, Romania, Brazil) and we intend to maximize these investments. Furthermore, thanks to the investments we are making on lean concepts, we can guarantee our customers service level and quality they expect.