At NeoCon a lot of the hallway chatter concerned the fact of Knoll’s having opened its new showroom in the already up and very fast coming neighborhood of the Fulton Marketplace, along with Herman Miller’s announced plan to relocate to a space of its own, somewhere outside theMart. The chatter I heard seemed to fall into more or less two big questions: “What does this mean for NeoCon?” and “What does this say about our industry?”
The real answers will unfold in the future, but I have ideas to share about it what it means and where it will lead. But before wading into what might happen in the future, I think it’s prudent to take a quick look at the past track record of the industry and of Knoll in particular.
There are many ways to define the industry, but for relative consistency I look at the size of the market as reported by BIFMA. I realize this is an oversimplification, but it falls pretty near the fact – and the fact is the industry has been stuck at about $13 BN for more years than we like to admit. Market share among the five biggest furniture manufacturers: Steelcase, Herman Miller, Haworth, HNI and Knoll hasn’t changed much either – despite the best efforts of the companies to do so.
Of those companies only Haworth remains privately held, which means the rest of them have shareholders to answer to, and in our system that means management needs to deliver growth. So, if the industry isn’t growing and it’s very hard to increase market share against entrenched competition, what is management to do? The two most common answers to be found in American business thinking are 1) acquire and 2)diversify, although not necessarily in that order. So, what have we seen the industry leading companies do? Acquire and diversify. And what has been the direction of the acquisitions and diversification – toward filling the market needs expressed by the blurring of lines between office, residential and hospitality, with education and healthcare thrown in for good measure.
Here is an example of how this plays out, taken from comments by Knoll Chairman and CEO, Andrew Cogan in his discussion of Knoll’s first quarter 2019 results.
“We are very pleased with our strong start to 2019. Our strategy to diversify our sources of revenue into higher margin Lifestyle categories with both residential and crossover workplace applicability, combined with efforts to improve the profitability of our Office segment, is delivering strong top line growth, margin expansion, and EPS growth. Furthermore, it has positioned us to meaningfully benefit from the trend towards more social and hospitality-based workplaces as evidenced by the accelerating penetration of ancillary spaces we saw this quarter.” (Italics mine).
So why does a strategy of this type necessitate moving out of theMart? Well, there are many answers to that one too, but it isn’t hard to remember the kerfuffle last year when Steelcase required more space to adequately represent its expanding needs, leading to Bernhardt’s storming out of theMart, maybe never to return. The bottom line is that the strategies of the biggest companies in the industry are out of synch with staying in theMart given its perceived limitations on space and access.
So all that said, what are the implications for the industry and for NeoCon? In my opinion the implications for the industry depend on how you define the industry. If you define it by the value of workplace furniture and furnishings shipped each year, the industry has been relatively flat for so long it seems foolhardy to predict that it will start growing anytime soon.
But if you define the industry as the combined sales of the companies who belong to BIFMA and/or see themselves as office furniture manufacturers, the sales to the various vertical markets – residential, hospitality, healthcare, education begin to allow for some confidence that the industry has room to grow. And that is good for all the other companies in the industry. And if Knoll and Herman Miller move out of theMart, there are plenty of companies eager to backfill the space. I cite the award-winning entry of Hightower into part of the space formerly occupied by Knoll as a prime example.
I’m already on record with my opinion that these move-outs will have little impact on NeoCon. My reasoning is based upon my observing Orgatec and Salone del Mobile.Milan as major companies have come and gone. The “majors” come and go and the trade show thrive. It seems to be a fact that there is a need for large centralized trade shows, based upon a whole complex variety of factors. In North America that position is firmly held by NeoCon and the strength of NeoCon transcends the presence of any one or several of the largest companies.
So primarily for those of our subscribers who either didn’t make it to NeoCon this year, or at least didn’t make it to see the new Knoll space on Fulton Street, here are some pictures for your viewing pleasure.
The inaugural Knoll Design Days was a celebration. For Knoll it was a celebration of the realization of the next step in its evolution. For visitors the new space, as designed by a collaboration among Gensler, the Rockwell Group and the Knoll Design Team is a celebration of space, light, color and, of course, Knoll products from its entire “constellation of brands.”
At least during the show, access to the showroom was peopled by friendly, energetic staff who guided visitors to the elevators that took them directly to the 6th floor, opening there to a welcoming view highlighted by a large atrium leading up to an attractive skylight. The atrium and skylight tie the 6th and 7th floor together and give the whole space an amazing light, airy feel.
The design of the 6th floor is definitely informed by the hospitality experience of the Rockwell Group. Your eye is drawn immediately to what Knoll has dubbed a “Work Bar.” That is partly because of the orange glow of an enormous supply of Aperol bottles that just happen to be very near the color of “Knoll orange”. The intent is for the 6th floor to provide a warm welcome and an introduction to the breadth of the “constellation.” While the Work Bar features stools from Knoll Studio’s Mies Van der Rohe Collection, café style booths have been created using the Rockwell Unscripted Collection’s Creative Walls with banquettes adapted from the K. Lounge series along with FilzFelt acoustic baffles.
The 7th floor is designed as a showcase for what I consider the traditional Knoll products for the office – systems furniture, task and executive seating, conference rooms, private offices, etc. But it also features a healthy selection of Rockwell Unscripted Creative Walls that demonstrate the room-in-a-room planning option, along with other modes demonstrating Knoll’s ability to respond to the need for highly flexible and mobile workspaces.
As Knoll says on its website, “Much of Floor 5 serves as the North American flagship showroom of Scandinavian design brand Muuto, the latest addition to the Knoll constellation of brands. Muuto collaborates with the best of today’s contemporary designers to bring new perspectives to Scandinavian design through forward-looking materials, techniques and bold creative thinking.”
All in all, the new space is what you’d expect from Knoll – a delight. And weighing-in at roughly 35,000 sq. ft. it’s hard to see where that much room could have been found within theMart. As for more open access to the general public, that remains to be seen. I have questions about access to the floors, positioned as they are starting on the 5th floor, but time will answer those and many other questions. And for us the watching will be great fun and provide the opportunity to comment and conjecture.