Profits are down in design – but is this just a phase we’re going through?
Taking the temperature of the design industry – gauging its optimism or pessimism - is always an interesting exercise, and one that often results in a significantly rosier outlook than you might expect.
The design sector, of course, has always relied on having a sense of positivity, and this remains in spite of an ongoing financial crisis now rumbling on into its fifth year.
But what’s interesting about the current situation is evidence – both empirical and anecdotal – that the design industry is growing both in size and positivity, and that this growth is, in the short-term, affecting its profitability.
A recent report from Kingston Smith W1 suggests that headcounts and employment costs at design consultancies are rising, as they take on more staff, but that this is affecting profitability as revenues aren’t rising to match.
While this may be a problem in the short-term, it does suggest a strong wave of hope in the industry. Taking on more permanent staff is not a decision taken lightly by design consultancies, who have, over the uncertainty of the past few years, become heavily reliant on freelance cover.
Meanwhile Elmwood chairman Jonathan Sands, among those who gave us their opinion on attitudes in the industry in today’s Voxpop, broadens this expansion out.
Design – as he points out – is now a global industry. And for most large independent consultants the only option is to invest in chasing international clients and, beyond that, to open offices around the world.
This is clearly an expensive business, and as Sands points out, one that can have a hugely negative effect on short-term profitability – but can lead to significant long-term rewards: ‘plenty of opportunity but it will come at a cost to short-term profit’.
So there is a growing suggestion that despite the seeming doom and gloom in the figures, there is a growing positivity and expansion in the design industry, one that in the coming months should, we hope, lead to rich rewards.