Growth slows in the specialized design services industry in 2023

Following two consecutive years of double-digit growth, operating revenues in the specialized design services industry rose 3.6% to $4.5 billion in 2023.

Specialized design services include interior, industrial, graphic and other specialized design services. Interior design services continued to be the largest industry in 2023, accounting for 46.3% of sales, followed by graphic design services (27.2%).

At the provincial level, Ontario accounted for just over half (50.9%) of the operating revenues in specialized design services, at $2.3 billion in 2023, up 3.6% compared with 2022. Quebec (19.6%), British Columbia (17.2%) and Alberta (8.5%) were the next largest contributors, with a combined share of 45.3%. Revenues were up in every province in 2023, except in Newfoundland and Labrador and Prince Edward Island.

Operating expenses increased by 5.8% to $3.6 billion in 2023. As the increase in operating expenses outpaced growth in operating revenues, the operating profit margin (20.8%) continued to decline, reaching its lowest level since 2013 (20.6%).

Salaries, wages, commissions and benefits accounted for 30.7% ($1.1 billion) of total operating expenses in 2023, edging up 0.4 percentage points after two consecutive years of decline. However, this was still below the level of 33.5% in 2019, before the COVID-19 pandemic. The cost of goods sold dropped from a record share of 29.3% in 2022 to 27.8% in 2023.

Industry trends

While digital design tools have been around for several years, their use surged during the pandemic and continues to rise, particularly in the interior design services industry, where they were previously less common. These tools enable quicker design adjustments and expand reach, allowing designers to easily connect with clients beyond their local market.

Similar to other artistic industries, artificial intelligence (AI) is being integrated into various aspects of the design process, from enhancing workflows to automating image rendering and generating design samples. As AI continues to evolve, designers will have to adapt to stay competitive.

Additionally, the industry is experiencing rising demand for web-based design services, driven by the growth of e-commerce and increased consumption of online content.

Looking ahead to the 2024 reference year, it will be interesting to observe how these trends affect growth as lower interest rates ease household budgets and reduce investment costs. Mild growth is expected. Detailed financial statistics for the industry for the 2024 reference year will be provided when survey data are published in 2026.