Market Analysis – 56111601 – Screens for panel systems

Market Analysis: Screens for Panel Systems (UNSPSC 56111601)

1. Executive Summary

The global market for office furniture, including panel systems, is estimated at $65.4B in 2023, with screens representing a significant sub-segment. The market is projected to grow at a modest 3-year CAGR of est. 3.5%, driven by office reconfigurations rather than footprint expansion. The primary opportunity lies in supplying flexible, acoustically superior screens for hybrid work environments. Conversely, the most significant threat is the continued reduction in corporate real estate demand, which could depress long-term volume.

2. Market Size & Growth

The Total Addressable Market (TAM) for the broader commercial and industrial furniture family is substantial, with panel systems and screens being a core component. Growth is stabilizing post-pandemic, driven by the need to adapt existing spaces for new work styles. The three largest geographic markets are 1. North America, 2. Asia-Pacific (led by China), and 3. Europe (led by Germany).

[Source - Grand View Research, Feb 2023; Analyst Estimates]

3. Key Drivers & Constraints

1. Demand Driver (Hybrid Work Models): The shift to hybrid work necessitates redesigning offices from high-density layouts to collaborative, multi-purpose "neighborhoods." This fuels demand for modular, easily reconfigurable screens to create zones for focus work, meetings, and socialisation.
2. Demand Driver (Acoustic & Visual Privacy): Open-plan office backlash continues, increasing demand for screens with high Noise Reduction Coefficient (NRC) ratings and visual separation to improve employee concentration and well-being.
3. Cost Driver (Raw Materials): Pricing is highly sensitive to fluctuations in aluminum, steel, and petroleum-based derivatives (textiles, foam), which constitute a significant portion of the bill of materials.
4. Demand Constraint (Reduced Office Footprint): Companies are consolidating real estate portfolios due to permanent remote work policies, reducing the overall square footage requiring furniture and panels. [Source - CBRE, Q4 2023]
5. Technology Shift (Integrated Solutions): Demand is growing for "smart" panels with integrated power, data, and lighting, shifting the product from a simple divider to a functional piece of infrastructure.

4. Competitive Landscape

Barriers to entry are High due to significant capital investment in manufacturing, established multi-tier distribution networks (dealers), and strong brand equity.

⮕ Tier 1 Leaders * MillerKnoll, Inc.: Design-led innovator with a powerful portfolio of premium brands (Herman Miller, Knoll) and strong architect & designer relationships. * Steelcase Inc.: Market share leader with a vast product portfolio, extensive global dealer network, and deep expertise in workplace research. * Haworth, Inc.: Global player known for its integrated "Organic Workspace" solutions and a strong presence in both North American and European markets. * HNI Corporation: Owns a portfolio of high-volume brands (HON, Allsteel) excelling in mid-market operational efficiency and distribution.

⮕ Emerging/Niche Players * BuzziSpace: Specializes in acoustic solutions and furniture, using innovative materials like PET felt. * Poppin: Focuses on a direct-to-business model with modern, colourful, and flexible office furniture solutions. * Framery: Leader in the high-growth acoustic pod and private space category, a direct competitor to traditional panel systems for focus work. * Teknion: A major Canadian-based manufacturer known for its design-forward systems and commitment to sustainability.

5. Pricing Mechanics

The price build-up for panel systems is a classic manufacturing model. Raw materials typically account for 40-50% of the manufacturer's cost, followed by factory labor and overhead (20-25%), logistics (10-15%), and SG&A/margin (20-25%). The final price to the end-user includes a significant dealer margin (25-40% off list price), which is a key point for negotiation.

The three most volatile cost elements are raw materials, directly influenced by global commodity markets. 1. Aluminum Extrusions: Price is linked to LME aluminum, which has seen ~12% volatility over the past 12 months. 2. Cold-Rolled Steel: Used for frames and internal components, steel prices have fluctuated by ~15% in the last year. 3. Petroleum-Based Textiles & Foam: Costs are tied to crude oil prices (WTI/Brent), which have experienced price swings of over 20% in the last 18 months.

6. Recent Trends & Innovation

• Sustainable Materials (Q1 2024): Major suppliers, including MillerKnoll and Haworth, have launched new panel fabrics and acoustic substrates made from 100% post-consumer recycled PET. This addresses growing corporate ESG mandates.
• Rise of Freestanding & Mobile Screens (2023): There is a marked shift away from monolithic, floor-to-ceiling panel systems toward lighter, freestanding screens on casters. This supports the "agile" office concept, allowing teams to reconfigure spaces on demand without facility support.
• Acquisition for Capability (Aug 2023): HNI Corporation completed its acquisition of Kimball International, consolidating its position in the mid-market and gaining access to Kimball's hospitality and healthcare furniture segments. [Source - HNI Corporation, Aug 2023]

7. Supplier Landscape

8. Regional Focus: North Carolina (USA)

North Carolina remains a critical hub for furniture manufacturing, including panel systems. The state offers a deep ecosystem of skilled labor, component suppliers, and established logistics networks centered around High Point, Hickory, and Charlotte. Demand is robust, driven by corporate headquarters in the Research Triangle and Charlotte financial sector. While the labor market is tight and the workforce is aging, the state's favorable tax structure and proximity to major East Coast markets provide a compelling total cost advantage. Sourcing from North Carolina-based facilities can significantly reduce freight costs and lead times for North American operations.

9. Risk Outlook

10. Actionable Sourcing Recommendations

1. Consolidate spend for standard panel systems with a Tier 1 supplier that has a major manufacturing presence in the Southeast US (e.g., North Carolina). Leverage volume to negotiate a 5-8% price reduction and lock in freight rates for 12 months. This will mitigate raw material volatility and reduce logistics costs, which account for 10-15% of landed cost.

2. Initiate a pilot program for 15% of office reconfiguration projects using freestanding, acoustically-rated screens from a niche supplier (e.g., BuzziSpace, Poppin). This diversifies the supply base away from traditional systems and directly addresses the top employee request in hybrid offices: acoustic and visual privacy. Measure total cost of ownership and employee satisfaction to validate a broader rollout.