Dario Rinero, CEO of Poltrona Frau Group, photo © Hannes Magerstaedt
Questions to
Dario Rinero

Feb 6, 2013

Robert Volhard: Where do you see the future of the Italian furniture industry?

Dario Rinero: First of all, it is important to note that the furniture industry is one of Italy’s three most important sectors. By that I mean the three big “Fs”: Food, Fashion and Furniture. The other two “Fs” have already gone through an extensive development and rationalization phase: The food industry around sixty to seventy years ago, the fashion industry fifteen to twenty years ago. Apart from some, equally magnificent, smaller ateliers and firms that produced corporations such as Armani, Gucci, Versace or Barilla and Ferrero, this development is yet to take place in the furniture industry, which means there are still a plethora of small and mid-sized firms that have on average a share of about 20,000 Euros in a market worth around 18 million.

The second point is that in 2005 the market was at its peak with sales of 20 billion Euros; now following the crisis that figure stands at around 18 billion. This was doubtlessly a drastic development full of rationalizations, which under normal circumstances would take ten to fifteen years, but owing to the crisis only took five to seven. The reason is that many companies that enjoy an excellent reputation on the Italian domestic market are now unable to survive. Of those companies that export their products, eighty percent concentrate solely on France, Switzerland and Germany, none of which are booming markets. This made a strong rationalization inevitable; many companies have already closed down. However, these developments also open up new options for those firms that survived.

Where do those opportunities lie?

Rinero: Either the companies achieve organic growth or they attract a buyer and merge. In this context Poltrona Frau offers an interesting example. We are the only group that has developed from the purchase of other firms. The market is seriously considering the option of investing in firms and banks, and depending how successful this concept is it could serve as a model for further, similar projects. I don’t really see any other future for the market. The reason is that most companies are family businesses and many do not survive the switch to the next generation, which is why I think we are facing some tough, but interesting years. As we know only too well, demand in Europe is slowing down but business is still booming in Asia and Latin America. But penetrating the market is not as easy for a small company. This is why size will play a decisive role in the future. My hope and my wish is that in five or ten years Italy will still have small firms as well as mid-sized firms in the middle price and quality segment – and perhaps one or two large corporations. Naturally, we want to become the number one.

In Germanythe Volkswagen group is highly successful with a corporate strategy based on a modular system: In production the same parts are made for different car brands. Is a similar strategy also feasible for the furniture industry?

Rinero: Volkswagen is a real yardstick, and I am not saying that because I am in Germany. The French corporation LVMH, for example, buys firms and allows them to develop relatively autonomously. But the Volkswagen model offers the greatest incentive for imitation. Fundamentally, VW buys excellent firms, which retain their own brand identity, yet are given the means for improved market penetration. That is the art of VW. We call it the “King Midas” principle. Everything he touched turned into gold. In the case of VW that means brands like Audi, Seat, Lamborghini or Bentley, and now Ducati too. Regardless of what it does the company seems to get it right. This is a real motivation for us. In other industries someone buys a company that is worth 40 million Euros but once it has been integrated into the group it is only worth 30 million. But that does not happen with Volkswagen.

What conclusions do you draw from that?

Rinero: What do we do? We take everything that constitutes the identity of a brand and try to get a handle on the other things. Let me give you an example: Production at Poltrona Frau is different from that at Cassina. At Poltrona Frau many items are still handmade, but Cassina on the other hand relies on semi-industrial production. However, sharing the costs of the showrooms and stores, buying in leather or enlisting external service providers together is a way to really reduce costs.

What role does Poltrona Frau play in the overall picture?

Rinero: It was never Poltrona Frau’s objective to merge three firms. Rather our goal was to create a group like Volkswagen or LVMH and buy every company that fits our portfolio. In the years 2009 and 2010 the development slowed down owing to the crisis. But things in our company are now back in order and can start to pick up again.

Is Asia an important market for you?

Rinero: In the last three years the Asian market has achieved average growth rates of between 18 and 20 percent a year. In other words, it has doubled. Today, Asia and America account for 37 percent of our business and that figure is set to reach 50 percent soon. Aside from that Asia is a figment of the imagination that does not really exist. Japan is different from China and Thailand. China, our most important market, is experiencing strong growth but Japan is booming too; last year they reported growth of 17 percent, this year 21 percent, although on a much smaller basis. After all, fashion is bought more spontaneously than furniture. Someone might see an Armani shirt for 150 Dollars and buy it although they have a traditional Chinese cupboard at home. But if they were to see a Poltrona Frau Sofa for 15,000 Dollars and live in a typically Chinese house then they might think twice.

Incidentally, there is also growth in India, although slight.

Does the Asian market have an influence on the Poltrona Frau group’s product range?

Rinero: That works both ways, the influence the market has on us comes up against our own attempts to influence the market. To look at the influence the market has on us: If you were to start exporting your goods, some might quickly draw the wrong conclusion that you are trying to get the whole world to like your taste. At first glance that might seem correct but not when you consider it more carefully. Let’s take this sofa as an example. On average, the Chinese are twenty centimeters shorter than the average European and would simply disappear on this sofa. So we asked Mario Bellini if he could design a “Lazy Susan” table specifically for the Asian market. Therefore you have to accept the influence of DNA so as to provide a better service to a foreign market.

And how do you change Asian taste?

Rinero: If you are planning to try to influence the taste in a certain market you must first consider the differences. For example, in China our brand represents specific characteristics. Poltrona Frau is responsible for designing the interior fittings of the vehicles at Ferrari, Maserati and Lamborghini. And so in China Ferrari presents its new model in the Poltrona Frau showrooms. By doing this you make people aware that the interior of a Ferrari has been designed by Poltrona Frau – and thus it seems logical for a Ferrari fan to also have a Poltrona Frau armchair at home. This is why we are taking more and more international designers on board. Cassina has always done it like that. But we also actively look for good designers from China and India and see them as a source of inspiration.

How important is online mediafor your corporate communications?

Rinero: To my mind, we could do more in this direction. That is not to say that compared with the competition we have missed the boat; the industry as a whole has some catching up to do in this area. I am a big fan of online business. It is very easy to tell the story that is behind a product on the Internet. One day it will be possible for someone in Montreal to order a sofa from Poltrona and even have insights into the production process. They would see what going on here, how Lucio prepares the leather and how the sofa is made by hand. I have great confidence in the possibilities offered by the Internet.