Commercial (B2B) and residential (B2C) furniture and lighting markets have historically been separate realms. B2B suppliers focused on delivering durable, standard-compliant products tailored for businesses, while B2C suppliers provided a range of consumer-focused options for home settings.
Today, however, these lines are blurring. Economic pressures following the pandemic, along with the growing dominance of online retail, have prompted manufacturers to consider entering new markets. This shift raises an important question when it comes to business planning: should manufacturers and suppliers diversify into new markets or double down and stay in their lane?
Both strategies have their advantages and risks, and the best choice isn’t always obvious. Here we explore these two approaches and consider how furniture and lighting manufacturers as example niches can decide where to focus their efforts.
The Case for Diversification
Risk Mitigation and Revenue Streams
Diversifying markets can help manufacturers hedge against economic downturns or unexpected events that impact one sector more than another. Take, for instance, the pandemic’s impact on the commercial furniture and lighting industries.
Many companies, seeing reduced demand for office furnishings, pivoted to the residential market, providing ergonomic home office chairs, lighting, and desks to meet the needs of remote workers. Expanding into B2C can thus serve as a lifeline, allowing manufacturers to tap into new revenue streams when B2B sales slow down.
Broader Customer Base
Expanding into the residential sector can significantly enlarge a manufacturer’s customer base. In the case of furniture, ergonomic products initially designed for corporate environments are now popular among home users, as health-conscious consumers seek quality items for home offices.
Lighting is another area with crossover appeal. Fixtures and technologies designed for corporate offices—such as energy-efficient LED lights or smart lighting systems—can appeal to residential customers seeking sustainable, intelligent solutions for their homes.
Trend-Driven Demand
Certain trends in the interior industry overlap across both markets. The shift toward sustainable materials is one example. A commercial furniture maker already familiar with sustainable wood sourcing could market eco-friendly options to consumers, appealing to the rising B2C demand for sustainability.
Similarly, as more homeowners embrace “biophilic” design—integrating natural elements like greenery and natural light—manufacturers of commercial-grade, low-energy lighting fixtures have found a new audience.
A company like Herman Miller, one of the few commercial brands that is a household name and which is known for high-quality ergonomic office chairs, successfully diversified many years ago into the residential sector. By marketing chairs like the Aeron to home-based professionals, they leveraged their reputation and design standards to appeal to a new customer segment. This move provided them with new revenue streams while cementing their brand as a leader in ergonomic seating.
Challenges and Risks of Diversifying
Market Positioning Conflicts
Diversifying can pose brand positioning challenges. Consumers may struggle to reconcile a brand’s B2B image with its B2C offerings. A lighting company well-regarded for its commercial installations in corporate offices could face difficulty repositioning itself as a consumer-friendly brand. Misaligning product design or marketing can dilute brand identity and create confusion among potential customers.
Operational Strain and Cost
Entering a new market is rarely seamless. A furniture manufacturer entering B2C, for instance, would need to alter its distribution strategy, possibly partnering with retailers or establishing an online presence. This requires a new set of resources and often a recalibration of logistics, inventory management, and customer support.
Marketing strategies, too, need to shift. While B2B sales may rely heavily on trade shows and corporate events, B2C marketing would likely require social media campaigns, influencer partnerships, and product demonstration videos, all adding to the operational burden.
Cannibalisation Risks
In some cases, diversification may result in one market eating into the other’s revenue. If a commercial lighting brand introduces affordable, home-friendly lighting solutions, there’s a risk it could draw business away from its higher-margin B2B products. Balancing product lines for different markets, without allowing one to undercut the other, is a complex challenge.
Example Pitfall
An example of this challenge can be seen in companies that expanded hastily into the home office furniture market during the pandemic. Some of these brands struggled to adapt to the nuances of a B2C supply chain, facing unexpected costs and logistical hurdles. Without the right marketing or support infrastructure, many found that their residential offerings fell short of meeting customer expectations, damaging their reputation in both markets.
The Case for Doubling Down on Core Markets
Expertise and Brand Authority
For many interior product manufacturers, focusing on their core or niche can strengthen brand identity and reinforce customer loyalty. Companies that specialise in high-end office furniture or corporate lighting systems, for example, build a reputation for expertise, quality, and consistency.
For customers in B2B markets—who often seek durability, safety compliance, and a streamlined purchasing process—this commitment to specialisation can be a major selling point.
Enhanced Customer Loyalty
In the B2B market, long-term customer relationships are highly valued. By focusing on serving these clients, companies can nurture loyalty and trust.
For instance, a furniture manufacturer that caters specifically to commercial offices can position itself as a reliable partner for large corporations, offering customisation options that align with the specific ergonomic, spatial, and aesthetic needs of corporate clients. This loyalty often translates into repeat business, favourable referrals, and an edge in competitive contract bids.
Operational Efficiency
Focusing on a niche can also help companies streamline their operations. For a lighting manufacturer, for instance, specialising solely in office lighting allows for more precise production, less variability in materials and design, and lower overheads. In turn, these efficiencies can lead to lower production costs and improved margins, creating a strong foundation for growth within the established market.
Vitra, a high-end furniture manufacturer, exemplifies this approach. Rather than diversifying into mass-market furniture, they’ve continued to produce specialised, iconic designs for workspaces and public areas, allowing them to remain synonymous with quality and exclusivity in commercial interiors. By focusing on this niche, they’ve secured a strong brand reputation and a loyal customer base.
Deciding Factors: Is the Grass Really Greener?
For manufacturers of furniture and lighting, the decision to diversify or specialise requires a nuanced understanding of their resources, market dynamics, and brand positioning. Here are several key factors to consider:
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- Market Research and Demand Forecasting – Understanding growth potential, customer demographics, and purchasing behaviours in the target market is critical. Is there a genuine demand for the product in this new segment?
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- Competitive Landscape – How crowded is the new market? Can the company’s expertise, design, or sustainability practices provide a unique edge?
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- Brand and Customer Alignment – Consider the degree to which the company’s brand values and identity will resonate with new customers. Will a B2B company’s established brand image transfer well to B2C?
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- Financial and Resource Readiness – Expanding into a new market demands investment, not just financially but also in terms of human resources, time, and commitment to building relationships.
A Hybrid Approach: The Middle Path?
For many manufacturers, a middle path may offer the best of both worlds. Blending their existing B2B expertise with limited B2C offerings can allow companies to test the market with a lower risk level. For instance, a commercial lighting company could introduce a small line of smart home lighting, appealing to the residential market while retaining its corporate identity.
Another approach is seasonal or temporary diversification, such as launching a line of home office furniture that complements its B2B offerings, then re-evaluating based on demand.
Some office furniture brands have found success by creating versatile products that appeal to both markets, such as seating or lighting that works equally well in commercial and home settings. By strategically launching these hybrid lines, they reach new customers without compromising their core market.
In Summary
The decision to diversify or double down is complex and multifaceted. Both strategies offer unique benefits and risks, and ultimately, the choice depends on a company’s resources, brand identity, and the broader market landscape.
Diversification can offer new revenue streams and a buffer against market fluctuations, but it often requires a major shift in operations and brand strategy.
Meanwhile, doubling down on a niche can yield operational efficiencies and strengthen customer loyalty, but may limit growth potential.
For manufacturers and suppliers in the furniture and lighting sectors, careful evaluation is essential. Whether diversifying into new markets or reinforcing an existing niche, companies should consider where they can best leverage their strengths and maximise long-term growth.
