year in review | Dec 20, 2023 |
6 stories that defined the design industry in 2023

Pop the champagne and cue up “Auld Lang Syne”—that’s a wrap on 2023. Many in the industry will look back on this year with mixed emotions. With Covid fading firmly into the rearview mirror (no surer sign than the Kips Bay Decorator Show House’s return to New York), the reality of the post-pandemic era came clearly into focus. It was the best of times: normal lead times, a full event schedule, a welcome downshift from the home boom craziness. It was the worst of times: a sluggish housing market, some high-profile industry collapses, a general anxiety about the future. Amid all that, the rise of AI alarmed and delighted designers in equal measure. Here, we take a look at the news stories that defined an eventful year.

The Housing Market’s Big Chill
The biggest thing to happen in the design industry this year was nothing—that is, a lack of movement on the housing market, as 2023 saw sales decrease to their lowest level in 13 years. The culprit was obvious: By raising interest rates to combat inflation, the Federal Reserve had sent the cost of a 30-year mortgage to a level we haven’t seen in two decades, dramatically chilling the market. The ripple effect, too, was clear: When people don’t move, demand for furniture (and designers) goes down.

The Saga of Mitchell Gold + Bob Williams
There were plenty of companies that had dramatic years, from the top of the market—Jean de Merry’s high-profile collapse comes to mind—to lower-tier brands like Z Gallerie and Klaussner. But no name captured as many headlines in 2023 as Mitchell Gold + Bob Williams.

First, the news broke in late August that MG+BW was shuttering its factories and ceasing operations—a shock to the thousands of designers who had built a long-term relationship with the famously progressive brand. As details trickled out, it became clear that the company had been struggling for some time, and a breakdown in the relationship between its private equity owners and its bank led to an abrupt shutdown. What followed was messy: bankruptcy, millions of dollars in missing orders, and an eventual split acquisition, with Surya buying up the brand’s IP and Virginia-based liquidation chain The Dump picking up much of the inventory.

For close watchers of the furniture industry, the saga of Mitchell Gold + Bob Williams might have felt like a familiar story about softening demand, the dangers of private equity and a bungled leadership transition. For designers, the news was a wake-up call: The end of the home boom had come for what had long been one of the trade’s most trusted resources.

Here Come the Robots
Last year, artificial intelligence tools like ChatGPT and Midjourney debuted for the general public. This year, they found their way into the design industry, with AI popping up everywhere from a so-so design tool unveiled by Wayfair to a bonanza of overnight startups like RoomGPT and Reimagine Home. Designers got in on the action, using AI for everything from marketing copy to inspiration images for clients. It’s unclear yet how big of an impact the tech will ultimately have on day-to-day business in the trade, and a recent 1stDibs survey found that only 9 percent of designers say they use AI software. But with tech companies rolling out miraculous new tools daily, expect the number to be much higher in 2024.

Global Moves
The year saw two of the industry’s most conversation-starter-y companies—RH and Material Bank—expand internationally for the first time. In June, RH Chairman and CEO Gary Friedman unveiled RH England, a 73-acre country estate two hours outside of London, followed by two Galleries in Germany in the fall. Meanwhile, the Adam Sandow–founded sampling platform opened up operations in Europe and Japan over the course of the year.

Both moves are big bets made by companies with something to prove. Since its founding in 2019, Material Bank has raised $325 million, and it needs to demonstrate to its investors that it can operate on a global scale to justify its $1.9 billion valuation. For his part, Friedman sees the European market as both a business objective and part of his personal vision for RH: a necessary step in ascending the “luxury mountain” to join the likes of Hermès and Louis Vuitton. The stakes for both companies are sky-high.

E-Design’s Next Chapter
With the launch of companies like Laurel & Wolf, Decorist, Havenly and Modsy, the late 2010s saw e-design’s frothy rise. In 2022—with the collapse of both Modsy and Decorist—we charted its dizzying fall. This year saw the remaining e-design companies trying new things in an attempt to chart their next chapters. The biggest move: Havenly’s January purchase of beleaguered DTC brand Interior Define, which, overnight, made the venture-backed startup into a unique e-design/retail hybrid. Meanwhile, The Expert also got into product early this year, launching its Marketplace feature, which allows the brand’s high-profile roster to curate e-commerce capsule collections. Finally, Modsy resurfaced in August in a surprising fashion: It had been acquired by homebuilding giant Lennar.

Major M&A Moves
Baby boomers are retiring in droves and are selling their companies. Fed up with the craziness of the Covid era and confronting the post-pandemic crash, business owners of all ages want to get out. This should be a period of frantic mergers and acquisitions. It isn’t—largely because banks have spent most of 2023 in a defensive posture, unwilling to loan out the cash necessary to fund large-scale transactions.

But there were a few big deals that went through this year, aside from Mitchell Gold + Bob Williams and Interior Define (see above). One of the most high profile was Overstock’s June purchase of the Bed Bath & Beyond brand for $21.5 million, which doesn’t appear to be paying off: The CEO who oversaw the deal has already been fired. The most overlooked but intriguing purchases of the year? Luxury staging firm Vesta’s November rollup of subscription furniture startups Feather and Fernish, which Vesta founder and CEO Julian Buckner says will help him create a “cradle to grave” design offering.

The world of design media saw some shifts as well, with Sandow acquiring Design Milk from its troubled Australian owner in June. Though neither publication changed hands, Galerie and Aspire ended a short partnership in October. And in a fun full-circle moment, Lonny founder Michelle Adams bought her blog back from Recurrent Ventures in June, 15 years after starting the publication.

Finally, perhaps the most “this just feels right” move of 2023: Pierre Frey’s October acquisition of legendary 200-year-old wallpaper maker Zuber. Discussing the deal with Business of Home, Pierre Frey chairman Patrick Frey framed the buy as both a business transaction and something of a mission. “I hope it will be a good business, and I hope it will be very profitable,” he said. “But I bought it more to keep this incredible name in France and in our family. Because it’s a privilege to have Zuber. … It has been nearly 150 years in one family, 50 years in another; now, it has come to us. [As a business], it will go up and it will go down. We will try to see that it goes up, naturally. But for me, it’s not even a question of money. It’s more a question of preservation.”

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