Grandeco : How a company under pressure transformed itself to become future-proof

Grandeco : How a company under pressure transformed itself to become future-proof

Wallpaper used to be common in many households. But trends and tastes changed. By the time Gimv invested in Grandeco in 2007, the wallpaper sector had experienced several decades of pressure and the company was looking for growth opportunities. How did this wallpaper firm shift from volume to value and reinvent itself as a thriving interior decoration company?

Founded in 1978, today Grandeco Wallfashion Group Belgium is one of the most important wallpaper producers globally. With a cumulative 6% average growth rate over the last four years, it boasts a booming Belgian production plant, sales offices in Belgium, France, the UK, Poland, Germany and Russia, a dynamic team of over 300 employees and exports to more than 80 countries.

Grandeco‘s secret? Sticking to its strategy. Top of the list was aligning with a shift in the sector from volume to value, which had created a growth opportunity. While lower-value segments were declining, upper segments were on the rise. Wallpaper is back, explains Grandeco CEO Patrick Molemans, but in a more creative way. “Paint feels a bit boring. So people are papering one or two walls as an expression of their identity.”

Also figuring into the strategy was the evolution of distribution. Grandeco sells to specialty shops, wholesalers and editors: wallpaper designers who outsource production. But the powerhouse segment is DIY. Unlike the paint business, which is extremely consolidated, the wallpaper sector has local and national champions, but no global giants. No one in the sector has the scale to go directly to the consumer. Instead, Grandeco aims to facilitate product selection: in a showroom, consumers face a tsunami of up to 2,000 choices.

How to stay ahead of market changes and consumer preferences?

This means getting inside the customer journey, the next strategic item. It starts with having the mindset of an interior decorator. “Every year we create up to eight collections that appeal to the mass premium market,” says Patrick. “For example, take the fashion for industrial elements. It may sound strange, but people love walls that resemble concrete. We look out for these trends in discussions with clients and consumers.”

In 2007 less than 40% of the production volume were designed in house and sold with a Grandeco brand label on the role. Now the figure is already above 65%. Designs are given a local touch for different countries. “It’s what makes our company unique,” says Patrick. “We’re a Belgian company that can bring different styles to a global market, in contrast to European competitors.”

The final strategic focus is innovation. In 2016 Grandeco acquired a small German firm with deep expertise in another PVC wall covering technique called expanyl. Adding this technology has broadened the customer base and opened new markets. And in September 2017 Grandeco launched a groundbreaking digital printing press. It promises to do for wallpaper what digital book printing did for publishing: enable small, individualized runs. It offers a totally new market. Animation companies and the soccer industry have expressed interest: cartoon characters or sports figures could be typical products.

Building a growth company: the investor's perspective

The firm’s successful transformation didn’t happen overnight. Soon after Gimv invested in Grandeco in June 2007 the road got bumpy. The company was hit by a crisis in its most important market, Russia. Moreover, the French wallpaper market collapsed, causing the bankruptcy of its French branch Grantil with the loss of 162 jobs and EUR 22 million in revenue. This forced the company to reinvent itself to get out of this negative spiral. Grandeco could thereby rely on Gimv’s network that offered access to international contacts and expertise.

We were fortunate that even in adverse times we could rely on Gimv’s international network to enlarge our footprint in Europe and abroad.

Patrick Molemans - CEO Grandeco

Gimv gave the company the necessary space and resources for its growth initiatives, foregoing short-term profitability in order to secure long-term growth potential. Gimv shares Grandeco’s ambition to make the company future-proof. The last few years, the board of Grandeco was reinforced by people who had useful experience: in interior decoration, distribution and operations.

Today Grandeco is back, focusing on growth and armed for the future. Not only are sales steadily growing, but profitability is too. What else? “We urged people to be more open to the world and network with peers,” says Tom. This certainly fits with the Grandeco slogan: “If walls could speak what would they tell?”

Entrepreneurial tips

  • Network to succeed. By being more connected to the outside world, for example to similar businesses, you’ll better see the evolution in your sector.
  • Be prepared to prioritize investing over short-term profits. This can create value in the medium-term, making the company more solid and growth-oriented. 

Would you like to know more about this partnership? Don’t hesitate to contact Tom Van de Voorde, Gimv’s investment manager for Grandeco and Grandeco Chairman.

Connected Consumer

Today’s consumers are looking for better and more attractive products and services, for example more value for money and greater convenience. Our Connected Consumer team invests in companies with a strong vision about what and how these consumers will buy. It focuses on firms with a clear perspective on growth through anticipating consumer demands, on-trend products, and services, as well as innovative channels and concepts.

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