International markets driving growth for Finnish Design Shop

The Finnish online-only furniture retailer was the only Finnish furniture retailer able to grow in the challenging marketplace, as described in a recent update. The company grew by 12,5%, while others declined. The growth of the Finnish Design Shop illustrates how one can succeed against a great international retailer like IKEA.

The growth of Finnish Design Shop shows that Finnish specialty retailers should focus on two things in order to become more resilient against international retailers: online and internationalization.

Online has enabled Finnish Design Shop to expand to foreign markets. The international business grew much more rapidly than the Finnish business (+2% vs. +21%).

International has become bigger than the Finnish already during the pandemic. Last year, International already represented 56% of the revenue for the Finnish Design Shop.

Challenging market leading to decreased profitability

The difficult market situation in 2022 reflected on the Finnish Design Shop regarding declined profitability. The company reported, somewhat unusually for them, a negative EBIT. During the last 15 years, the Finnish Design Shop has only reported negative EBIT thrice.

The increased other costs partly drove the declined EBIT. Marketing spending has possibly increased due to a more difficult online trading environment. On the other hand, Finnish Design Shop could narrow down its inventories by -35%. This gives the company more leverage to be even more competitive. With Finnish Design products' unique positioning, there must be ample room to grow in the coming years.