"Italian Furniture Manufacturer Wants to Sell in the US"
03/03/23 Edition Stephen Says Column
I own an Italian manufacturing company in #Milano. We make “Bellissimo” wood furniture which includes desks, case goods, and conference tables. We also manufacture luxury upholstery and home furnishings that can also be used in an executive environment. Naturally, we think we are one of the finest products in the world. We are one of the few European companies not eaten up yet by private equity like #Investindustrial or #haworth.
I’m writing for some advice because the war in Ukraine is dramatically affecting our European business. I realize that this is a side issue compared to the misery felt by the Ukrainian people, but the war is having a devastating effect on the European economy. For instance, we’re now seeing half the sales we used to in London. Ironically, a lot of our business was with #Russian oligarchs; that’s gone. In general, businesses and individuals are simply spending less because of the war, rich or poor. Even companies with money are holding back and waiting to see some positive signs before investing in the future.
I need to increase our global revenue by selling more of our stunning Italian furniture in the United States. We will be at #salonedelmobile. When I talk to my colleagues who own other furniture companies in #scandinaviandesign, #Spain and #Germany, everyone is saying the same thing. We want more business from the U.S. market, where the American consumers are way less affected by the war than we are in Europe. Right now, we have a showroom in New York that we’re planning to expand. What’s your suggestion for building additional sales and distribution in the U.S. in the fastest way possible?
First let me say, anyone in #america who goes to fill-up their car today would not agree that we’re not affected by the war, but it’s simply not happening in our own backyard like it is for you.
The Viscusi Group has many clients from Europe, all in the same boat. They tell us that the European Union and the U.K. are affected far more broadly than the U.S. economy by the war in #Ukraine. You’re a step ahead of many of our companies I hear from in Europe because you already have a showroom here in the United States, and New York is a good starting point. I will see many of them at Salone del Mobile in Milan in April. Many European companies are uncertain on how to jump start their sales here to make up for the business they’re losing due to the war. The first step should always be to contact your country’s trade commission. In your case, that’s the #ItalianTradeCommission - they send us a lot of referrals and we help those companies hire strong sales leaders who have existing relationships in the U.S. I’ve observed that a mistake many Europeans make is to send someone over from their country of origin. I see why coming to the US is highly desirable from someone from Europe as a learning experience; however, it usually ends up as an international boondoggle that costs their company a lot of money without bringing in any revenue.
Let me be specific as to why companies send people over from Europe and what are the pros and cons of that. You have the advantage of probably paying a European less than you would an American. You also have the advantage that they speak your language and understand your culture. However, on the negative side, they have no customer base in the United States, they have very little understanding or relationship to the A&D community or dealer network, and they know nothing about establishing independent reps nationally in the US if that’s the distribution form you decide to use. Just about every international furniture company that tries to break into the U.S market chooses the independent rep form of sales because it’s just too expensive to hire your own employee sales reps to cover the expanse of this country.
Companies that start by sending one of their own tell me they end up having a negative experience and they regret expanding into the U.S. Our recommendation is very simple, yet a bit self-serving: Hire us, or any recruiter, to hire an American for you who can serve as your Managing Director of Sales for North America. Chances are, you may find an American who actually knows your native language (yes there are Americans who know how to speak Italian!), but what they will certainly know is even more important. They have a strong understanding of how to jump start US sales by immediately identifying and hiring independent rep groups or direct employees. The best candidates will also have a rolodex of existing relationships nationally within the A&D community and dealers. They will be willing to work hard, either from their home office or a showroom, to help launch your brand in the U.S. You’ll need to pay them a generous salary in return for their skills and connections. You may have a beautiful bespoke brand, but they own the customers that they are willing to share with you. You also need to offer them a quality medical/dental program along with a 401k. For your company to now sell in America, you need to become… a little more American.
You may be asking, “How can I pay for a headhunter and everything you just mentioned?” You could finance this expansion by temporarily closing showrooms in Europe that you’re not using, or that are not attracting customers and you could temporarily cut down you're advertising in Europe, if the customers are distracted. Just face the fact that the American salaries are usually higher, then you pay in Europe, and that you have to be willing to pay the price to enter the most affluent market in the world. Most of our clients tell us it’s worth it. I hope this answers your question on how to expand your European brand into the United States.