Why Are Fashion Brands Piling Into Homeware?

The Salone del Mobile design fair has become such an important platform for fashion brands that, this week, Bottega Veneta closed its flagship on Milan’s Via Montenapoleone and transformed it into an art installation.

Thus far, over 10,000 visitors have waited in line for their turn to wind through the store, which had been remodelled by architect and industrial designer Gaetano Pesce to resemble a grotto. The only products on display were two handbags designed with Pesce.

Bottega doesn’t currently offer homewares beyond a limited edition run of the Pesce-designed “Come Stai?” chairs the brand debuted last November. But the move to close one of its key stores during Milan’s furniture fair suggests how important the category could become for the brand — and the luxury sector at large.

Bottega certainly wasn’t alone in staging activations this week in Milan, where both early movers with established home offerings and those with their sights on the category held a slew of events that rivalled fashion week in terms of investment and ambition.

Hermès exhibited its wide home range: sofas and chairs, rugs and lamps, even tableware. Loro Piana showcased a collection of Andes-inspired furniture. Loewe introduced a group of highly crafted chairs, adding to the candles, fragrances and throws it already sells. Marni launched tableware and wallpaper collaborations.

Globally, home design is a $643 billion market that picked up pace during the pandemic. According to Euromonitor International, it’s set to grow at a 5 percent annual growth rate through 2026 — much faster than it was growing in 2018 and 2019. But for luxury brands, a push into homeware can drive value beyond just the sales of furniture alone.

According to the latest research from BoF Insights, The Lifestyle Era: Luxury’s Opportunity in Home and Hospitality, lifestyle extensions can not only provide fashion brands with access to untapped revenue, but also boost brand equity and help grow customer lifetime value. Few brands break out the commercial performance of their home businesses, but experts suggest the category currently accounts for no more than 2 percent of sales for most brands, with a committed few driving as much as 15 percent. Expensive furniture — sometimes in the tens of thousands of dollars for a single piece — appeals mostly to a brand’s superfans. But the opportunity in lower-priced decor, textiles and home fragrances is likely to be much bigger. These categories are the exact ones that affluent shoppers want to spend the most on generally — and the ones that they are most interested in buying from fashion brands specifically, according to BoF Insights.

What’s more, consumers are placing added emphasis on upgrading their personal spaces since the pandemic enabled hybrid work for millions. While pandemic trends like greater e-commerce penetration have stabilised, increased spend on home seems likely to last. Already, consumers spend more on home design than fashion throughout their lives, according to a BoF Insights analysis of consumption data from the US Bureau of Labor Statistics. Even as their spending on fashion begins to decline in their forties and fifties, consumers continue to spend on home design well into their sixties and seventies. For brands, attracting home design consumers early could pay dividends for decades to come.

But retailing home design products presents its own challenges. Fashion executives are mixed on the relative profitability of the category, especially as direct retail is more difficult. Distributors and retailers play an outsized role, and interior decorators have unique sway with consumers relative to the niche, celebrity-oriented role that stylists play in fashion.

As Daniel Lalonde, chief executive of design company Design Holding, noted in a panel discussion moderated by BoF Insights during Salone, the real estate required to showcase a complete furniture collection makes it difficult to even open a city centre store, let alone do so profitability. The creation of city design districts ease the issue but then require consumers to more purposely travel to them.

The brands best placed to tap the homeware opportunity are those that have already created a universe of product categories, so the addition of homeware feels like a natural extension of the brand and not just a land grab. It is no surprise that Dior, Chanel, Gucci, Hermès and Ralph Lauren were the fashion brands from which affluent consumers were most interested in buying homeware, according to a survey by BoF Insights.

Critically, homeware can also help less developed brands to build their universe of product categories, creating a halo for the core business. Indeed, the opportunity in homeware is as much about brand development as driving sales of furniture and cushions. The vast majority of affluent shoppers surveyed by BoF Insights viewed fashion brands that introduced lifestyle collections more positively overall.

If the number of luxury brands piling into Salone this week was any indication, a shift is underway.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Gucci Milan site inspected in EU antitrust inquiry. European Union antitrust regulators have started inspecting a facility of luxury goods company Gucci as part of an EU investigation spanning several countries, Gucci’s French owner Kering said on Wednesday, confirming a Reuters report.

Brunello Cucinelli posts 33 percent rise in Q1 sales, confirms 2023 revenue growth forecast. Sales at the Italian luxury group Brunello Cucinelli rose 33 percent at constant exchange rates in the first quarter, driven by strong growth in the Americas and a rebound in Asia.

Luxury e-tailer Mytheresa bets on post-Covid China expansion. German luxury e-tailer Mytheresa is refocussing its efforts to grow its business in China, a notoriously competitive e-commerce landscape dominated by local giants Alibaba and increasingly, Douyin, the Chinese version of Tiktok.

LVMH raises €1 billion in oversubscribed bond sale. Investors piled in for LVMH’s first debt sale in three years, as the luxury goods maker seized on stellar quarterly results as well as calmer conditions in Europe’s credit market.

Ferragamo sales declined slightly in Q1 as US weighs. Sales at Italian luxury group Salvatore Ferragamo declined by 6.5 percent at constant exchange rates in the first quarter, hit by a slowdown in the US market, the company said on Thursday.

Luxury resale platform Cudoni shuts down. The London-based start-up said the current economic climate had made it “impossible” to continue doing business.

Investors call on fashion brands to join worker safety initiative ahead of the Rana Plaza anniversary. More than 190 investors representing $1.3 trillion in assets under management urged fashion brands to join the International Accord, a legally binding worker safety agreement, in a joint statement Thursday.

Italy’s Prada to invest €60 million to help boost production capacity. Italy’s Prada is planning to spend €60 million ($66 million) on industrial capital investments this year, a large chunk of which will help double the size of its knitwear factory in Torgiano, in the central region of Umbria, the luxury group’s industrial director said on Thursday.

Walmart shareholder meeting to hold votes on workplace safety, China risk. Walmart Inc shareholders will be asked to vote on a number of new proposals including revealing its exposure to China and conducting an independent review of its safety practices related to gun violence at its annual general meeting next month, a securities filing on Thursday showed.

‘Better’ materials aren’t enough to dent fashion’s climate impact. Fashion brands are sourcing more recycled polyester, certified cotton and deforestation-free viscose than ever, but emissions from the industry’s raw material supply chain have bounced back from pandemic lows.

Push for faster fashion squeezes European manufacturers. Big brands have stepped up sourcing in Europe over the last few years, but the push for faster fashion has come at the expense of European manufacturers and their workers, a new report finds.

David’s Bridal files for bankruptcy and may close all stores. David’s Bridal LLC filed bankruptcy for the second time and could close all of its nearly 300 stores if the company is unable to find a buyer in the coming weeks.

Uniqlo’s $20 shoulder bag tops Lyst Index of fashion’s hottest products. The ranking comes after the bag went viral on TikTok, generating 59 million views on the platform.

Shein to invest nearly $150 million in local production in Brazil. Online fast-fashion retailer Shein said on Thursday it will invest 750 million reais ($148.85 million) in Brazil in the coming years to establish a network with thousands of textile manufacturers in the country.

THE BUSINESS OF BEAUTY

THG shares soar after retailer confirms Apollo takeover bid. THG Plc shares soared as much as 47 percent after the embattled UK online retailer said it received a non-binding acquisition proposal from Apollo Global Management Inc.

L’Oréal Q1 sales rose 13 percent, lifted by the US, and Europe. L’Oréal reported a 13 percent rise in first-quarter sales, beating expectations thanks to strong business in the US and Europe as shoppers shrugged off rising prices, but said it had not benefited yet from the end of Covid-19 curbs in China.

PEOPLE

Kim Kardashian hires Wall Street talent to bulk up buyout firm. Kim Kardashian’s private equity firm hired a half-dozen financial-industry professionals, including a new chief operating officer who previously worked at alternative investment giant Apollo Global Management Inc.

Farfetch taps TikTok exec Nick Tran for CMO role. Tran will oversee the global marketing activities of the company’s luxury e-commerce marketplace, reporting into chief marketplace officer Edward Sabbagh.

PrettyLittleThing founder Umar Kamani steps down as CEO. The British businessman founded the brand in 2012 and grew it to become a fast-fashion giant which generated revenues of £712 million ($882 million) in 2022.

Sally Holmes named editor-in-chief of InStyle. The top editor of Marie Claire is joining the DotDash Meredith-owned publication effective May 1. InStyle had been without an editor-in-chief since it discontinued its print edition in February 2022.

MEDIA AND TECHNOLOGY

South Korean e-tailer Musinsa sees annual sales surge 54 percent. The rapidly growing fashion e-commerce company reported sales of 708.3 billion won (US$545 million) in 2022.

British Vogue highlights disability justice. For its May 2023 issue, called “Reframing Fashion,” British Vogue is collaborating with Tilting the Lens, writer Sinéad Burke’s accessibility consulting agency, to recognise and celebrate the disabled community in the fashion industry.

Compiled by Sarah Elson.