Recliner boosts design company
A Wellington company's office chair design was worth nearly $60 million in the United States last year.
But it is taking its work from the office to the lounge, as it eyes new designs in the "traditional and established" recliner market.
Lower-Hutt based Formway Design Studio, originally established in 1956 as Petone Engineering, launches its first domestic furniture product in March.
The recliner, called Re-vive, was the result of about three years' research and design and a move away from the company's traditional office furniture products.
Co-general manager Kent Parker said high-end household chairs tended to be "design savvy" but not very functional, while the other end of the market was traditional and established.
"So we started to look at the opportunity of delivering a high-performance, high-aesthetic recliner for the market.
"It's acknowledging we all do our form of nothing, and when you are doing it, it should be a healthy, beneficial, relaxing experience."
The product was being manufactured in partnership with Italian furniture maker Natuzzi, which in 2012 had a turnover of over $750m.
Formway's business model is based on identifying opportunities or niches in the market, designing a solution, and partnering with a manufacturer to make it available for sale.
It licenses the products to manufacturers for a fee, before earning royalties on chairs sold thereafter.
Its Life chair, which launched in 2002, became the seat of choice for former United States president Bill Clinton and Apple boss Steve Jobs.
The Be chair, which retails for about US$925 (NZ$1100), was last year worth about $60m in sales to its United States distributor Knoll. This was on sales of more than 100,000 chairs, just in the United States.
Co-general manager Paul Wilkinson said Knoll was one of the five biggest contract furniture companies in the United States.
Formway-designed products made about two-thirds of Knoll's turnover in seating furniture.
"Having gone from Formway who they hadn't heard of, back in 2001, to two-thirds, is huge."
Formway's office chairs were sold by Zenith Interiors in New Zealand.
The company had made a conscious decision to license its designs, instead of manufacture and distribute them themselves, Wilkinson said.
This was necessary because the amount of sales required to justify the expense of high-end ergonomic furniture would be about five times what it could do in Australasia.
"[Manufacturers] invest heavily in the tooling and plant and equipment and build the relationships with the manufacturers in China and around the world."
He said the company wanted to stack up more royalty streams this year, as licensing fees only covered a proportion of the initial investment.
"We bank on a certain amount of royalties and then beyond that is where we make money. As long as the product's successful on the market we do really, really well."
Formway was one of 31 companies awarded research and development grants by Callaghan Innovation in January, which combined were worth more than $140m over the next three years.
A new product design can take about three years, and uses a variety of techniques to research and formulate ideas.
Parker said Formway had video recording set up around people's homes in Wellington, observing what they did during the day in order to design products better.
This was done with the homeowner's permission, but various office spaces had also been filmed to better understand how people interact with furniture.
The Dominion Post