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::: CLEANING IN ITALY: future developments?
focus on by Uberto Marni
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Pre-crisis results are
still had to match.
In any case, many
companies are now
feeling optimistic
about growing
turnover figures.
The Italian economy saw few signs of
growth last year. While it is true that the
situation is improving – to the point that
several companies in the Cleaning sector now
foresee a rise in turnover – it is equally clear
that pre-crisis figures will not be matched for
some time to come. Nevertheless, the sector
saw a few percentage points of growth over
the past year, compared to major losses in
2009, especially in the machinery segment.
Sales were better for detergents, chemicals
and tools for more rational consumption
(such as dispensers and consumables management
systems).
The official data for 2010 are not available yet,
but in the light of what people have
been saying recently growth
in the Cleaning sector is expected
to be far higher than
the estimated overall rise in Italian GDP. In fact, the Banca d’Italia and
ISTAT had forecast a somewhat slow turnaround
in the Italian economy by the end of the
year, with estimated growth of 1.2% in 2010;
the Cleaning sector, on the other hand, saw
a minimum rise in sales of 2-3%. It is, however,
important to stress that the present crisis
has had a significant effect on domestic
sales: Mario Draghi, Governor of the Banca
d’Italia, has recently said that the economic
events over the last couple of years have seriously
affected the Italian economy, bringing
annual GDP in 2009 down to that seen at the
end of the 1990s. Obviously, there have also
been repercussions on employment levels:
more than half a million workers lost their
jobs between the Spring of 2008 and
the end of 2009, with negative
consequences for the buying
power of Italian families.
::: Exports – Sales are
looking up
International trade is also
promising: exports and
imports rose in 2010. One
must here bear in mind
the market conditions in
2009, the year when foreign
trade virtually fell to an alltime
minimum and, according
to some, growth was to be expected
as the result of a demand for goods and services on international markets: a need
that could not be put off any longer. Nevertheless,
we believe that, even if demand in the
various countries can only grow, companies
must have a good market position to benefit
from this, given the current levels of competition.
Companies must therefore have a well
thought-out approach to the market and a
policy capable of satisfying both existing and
potential customers. The very nature of the
Italian industrial fabric – based on small and
medium-sized enterprises (SMEs) – has the
advantage of offering greater flexibility. And
smaller companies are more flexible than big
business and the multinationals. Of course,
big business can draw on greater financial resources
to face cash flow problems, but it is
also true that companies with smaller reserves
are forced to adapt to the market faster and
the time to market of the fruit of their research
is much quicker.
::: Italian SMEs – Efforts and Commitments
Italian industrial development policies seem to
be oriented at satisfying these requirements:
Confindustria undertook a study in 2010, according
to which many SMEs (almost 70%)
have managed to alter their growth strategies
during the current recession. The goal is always
an increase in sales, of course, and, according to
this study, small business has concentrated its
efforts on improving the sales channels, entering
new markets, increasing the product range
and, last but not least, providing a wider range
of services, which have been much appreciated
by customers. The developing countries are the
most attractive in terms of new markets: China,
India, Brazil and South America, plus Australia
and the “old” United States and Canada. Trade
relations have also been strengthened by bilateral
agreements between the governments
of some nations with a higher rate of imports,
such as Brazil and Russia, to name but two.
::: SMEs and Distribution
On the domestic market and the EU market
(often crucial to Italian companies in terms of
turnover and clientele), Italian SMEs have concentrated
their efforts in finding “overlooked”
or poorly served markets.
Distribution channels have often been reviewed,
depending on the size of a firm and
the need to create divisions in order to ensure
development or greater focus. This has even
had an effect on what the larger distributors
now offer. Generally speaking, therefore – and
even if it is still difficult to see the effects of
these development policies in terms of turnover
– we can say that small companies have
been able to “learn” from the situation, often
improving their market positions.
::: SMEs - Cleaning
While these positions are valid in general
terms, i.e. considering Italian manufacturing as
a whole, our monthly surveys confirm and support
the “historical” positioning of the Cleaning
sector both in terms of exports to new markets
and those of technological innovation, broader
product ranges and, especially, the supply of
integrated packages containing both products
and services. This is particularly true in the case
of cleaning machinery, but also for the supply
of chemicals and detergents.
::: Environmental Awareness – An Emerging
Theme
A large number of cleaning operators view
ever increasing “environmental awareness”
(whether spontaneous or induced by law) as
one of the key concepts behind future growth
in the sale of more eco-compatible products,
and services. In our sector, the increased perception
of the importance of this has had a
“rebound” effect on company results, even
though mainly due to the need to make savings by avoiding wasting detergents and other
chemicals. Waste levels can be effectively cut
by using machinery instead of manual tools.
There are now many quality professional
cleaning services with lower water consumption
levels and better results: word of these is
now spreading and so means better sales in
the Cleaning sector. The paradigm “ecological
is beautiful” is the new catch-phrase, even if, as
we have said, companies tend to adopt these
solutions mainly to save money and resources
by rationalizing their consumption levels. Having
said this, however, corporate images are
also beginning to improve, leading to advantages
in terms of B2B and domestic sales.
::: Marketing Mix
The companies we have interviewed over the
past year have stressed how “price war” policies
were rarely successful in 2010, i.e. policies
based on lowering prices or offering low quality
products at attractive cheap prices. In general,
the “Price” lever was seen as an ineffective
means to penetrate the market in 2010, especially
when compared to better distribution
channels or product innovation. Where possible,
therefore, Italian manufacturers in the
Cleaning sector tend to aim for the higher end
of the market, offering greater performance
and auxiliary services as “added value” to fight
off and stand out from the competition with a
low-cost strategy. The “Image and Communication”
lever has proved to be less important,
held by virtually every one we interviewed as
being less effective than “Price”. In this case,
however, we should point out that the products
in the Cleaning sector are relatively complex
and highly personalised. That is why, once
again, efforts are needed to improve distribution
(and “word of mouth”) and so lead to better
results in terms of communication. All too
often customer satisfaction is the best means
of communication in our sector.
More specifically, the Cleaning
sector enjoys great benefits
from aspects of eco-compatibility
and environmental
awareness. Product innovation
leads to improved turnover
and, as a result, a better
corporate image and more effective
communication.
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