Five years after lighting firms Flos and Louis Poulsen merged with Italian sofa maker B&B Italia to form “Design Holding,” the luxury furnishings group owned by Carlyle and Investindustrial has rebranded its operation as Flos B&B Italia Group.

The moniker hardly rolls off the tongue, but the rebrand could help to boost the group’s profile as it seeks to scale its brands in the fragmented design space. Unlike the vaguer, more passive “Design Holding,” the new name trades on the appeal of the group’s two biggest and most internationally recognisable units, as well as helping to set the company apart from competitors including Cassina-owner Lifestyle Design Group and its licensing subsidiary Luxury Living (which manufactures the furniture extensions for Versace, Dolce & Gabbana and Bentley).

“It made more sense to go out in front with our two best-known names,” said chief executive Daniel Lalonde, who joined the group in 2021. “It says more exactly who we are… It helps to clarify things — including that we’re not in the licensing business. We’d rather own and develop our own brands.” (The company does operate one luxury fashion extension, Fendi Casa, but as a joint venture with LVMH rather than a licence.)

Lalonde is no stranger to acronyms, nor to the power of leveraging a group structure to accelerate growth: the Canadian executive worked at LVMH for 10 years before joining French contemporary group SMCP, where he led a period of rapid international expansion and orchestrated a sale to China’s Shandong Ruyi at a billion-dollar-plus valuation.

Since joining Design Holding in 2021, the executive has been working to understand how a group structure could have similar benefits for luxury design, a sprawling, fragmented market in which few players have managed to achieve global scale. “As an example, Flos is the global leader in lighting, and it’s only reached around $300 million in revenues,” he said.

The group’s other businesses include Arclinea kitchens, Maxalto furniture and Danish brand Audo.

While design sales slowed amid rising interest rates last year, the $4.4 trillion lifestyle segment — including homeware and hospitality — is nonetheless expected to grow at a compound average rate of 7 percent through 2026, according to a BoF Insights analysis of Euromonitor data. Interest in the high-end design segment has boomed since the pandemic — with events like Milan’s Salone del Mobile drawing record-beating crowds from around the world — but distribution has struggled to keep up. In the last year, design emporiums like The Conran Shop shuttered in France (and will soon close its store in London’s Marylebone), while Habitat declared bankruptcy in both France and Switzerland. Such shifts underscore the tricky retail economics of the design category—as well as abundant white space in the market.

In March, Flos B&B Italia opened a flagship to house the group’s brands on Madison Avenue in New York, a strategy it has also pursued in Washington DC, Miami’s Design District, Tokyo and Dubai. Those locations can leverage the group structure to cross-sell its products to end consumers, as well as architects and designers looking for a “one-stop shop” to supply hotel, restaurant and real estate clients, Lalonde said.

Still, retail expansion only makes sense in certain key locations, as the economics of showcasing large, infrequent purchases like sofas is radically different to selling shoes and bags. “Our journey has been to accelerate directly-operated stores, but only in certain design hubs,” Lalonde said.

Elsewhere, “brandisation” is the focus: setting up branded shop-in-shops within wholesale doors at a clip. Last year, the group added 200 shop-in-shops, versus 30 freestanding stores. The group has also sought synergies in its e-commerce business, sharing resources and best-practices across brands as well as acquiring US online design emporium Lumens.com.

Design sales boomed during the pandemic in 2021 and 2022, and then faltered amid rising interest rates and slowing construction last year. 2023 revenues at Design Holding/Flos B&B Italia fell 9 percent year-on-year to € 785 million ($852 million).

Lalonde expects the first half of 2024 to remain sluggish before trends improve in the second half: housing starts have begun to pick up in the key US market, while slowing inflation has fuelled hopes of interest rate cuts on both sides of the Atlantic this year.