IN­DIAN HOME­WARE & FUR­NISH­ING SEG­MENT GETS A FACE-LIFT

Images Retail - - CONTENTS - – By Shubhra Saini

The con­sumer is chang­ing. Ur­ban­i­sa­tion is on the rise and in­di­vid­u­als are evolv­ing, adapt­ing to a mod­ern way of liv­ing. A rise in dis­pos­able in­comes means peo­ple are look­ing at a smarter way of liv­ing.

The con­sumer is chang­ing. Ur­ban­i­sa­tion is on the rise and in­di­vid­u­als are evolv­ing, adapt­ing to a mod­ern way of liv­ing. A rise in dis­pos­able in­comes means peo­ple are look­ing at a smarter way of liv­ing. They want beau­ti­ful homes with bold de­signs, and in­no­va­tive tech­nol­ogy cou­pled with smooth func­tion­al­ity to be in­stalled in th­ese homes. The struc­ture may still be passed down from gen­er­a­tion to gen­er­a­tion, but the in­te­ri­ors, dé­cor and gad­gets have all changed. The life­style habits of In­di­ans have shifted from min­i­mal­is­tic and util­ity based to di­verse and pro­gres­sive...

The boom in the res­i­den­tial real es­tate in­dus­try over the last few decades has given an im­pe­tus to the home dé­cor mar­ket. Also driv­ing the growth of this sec­tion is an in­creased con­scious­ness among home own­ers for stylish in­te­ri­ors and beau­ti­ful in­doors. Tra­di­tion­ally, the In­dian con­sumer’s fo­cus on fancy fur­ni­ture and fur­nish­ings was re­stricted to the liv­ing room – a room where guests were en­ter­tained. How­ever, grow­ing as­pi­ra­tions and in­comes have changed spend­ing pat­terns and th­ese changes are spilling over into other liv­ing ar­eas, in­clud­ing the kitchen, the din­ing room and even the very per­sonal bed­room.

Says Ur­ban Lad­der’s Chief Mar­ket­ing Of­fi­cer, San­jay Gupta “One of the fac­tors that has con­trib­uted to this growth is that peo­ple have started tak­ing their home as the re­flec­tion of them­selves and so, a lot of peo­ple are now spend­ing more on both fur­ni­ture and fix­tures and also on home decor. The se­cond big change seen is that work­ing women are spend­ing a lot on home fash­ion. A lot of our cus­tomers are work­ing women.”

A space crunch – with homes grow­ing smaller and the pop­u­la­tion ex­plod­ing – has dic­tated a surge in de­mand for space-con­scious goods. Mul­ti­func­tional home­wares are grow­ing in pop­u­lar­ity to of­fer added con­ve­nience, and make far bet­ter use of avail­able house­hold space.

Trends Driv­ing the Home­ware, Decor & Fur­nish­ing Seg­ments

The home­ware, decor and fur­nish­ing mar­ket in In­dia has wit­nessed phe­nom­e­nal growth, par­tic­u­larly in the last 10 years. De­spite this, the sec­tor is in nascent stages in In­dia as com­pared with de­vel­oped coun­tries.

How­ever, if brands un­der­stand cus­tomer re­quire­ments and of­fer them what they want, or­gan­ised home fur­nish­ing re­tail has the op­por­tu­nity of a dream run. This sec­tor’s growth has been driven by so­cio-eco­nomic changes, a large base of

young pop­u­la­tion with high dis­pos­able in­comes and the will to spend on im­proved life­styles. The real es­tate boom in the last few years has al­lowed the young pop­u­la­tion to own homes with easy loan schemes given by the banks and the gov­ern­ment.

New – more com­pact homes – de­signed for nu­clear fam­i­lies, have been a ma­jor driv­ing fac­tor for the home dé­cor and fur­nish­ing sec­tor.

Talk­ing about some re­cent trends wit­nessed in the home dé­cor seg­ment, Vishnu Vard­han Reddy, Re­search An­a­lyst at Euromon­i­tor In­ter­na­tional, says, “Home and home fur­nish­ing stores ac­counted for 87 per­cent sales of in­door fur­ni­ture in In­dia in 2016. With the in­crease in the num­ber of on­line re­tail­ers, de­mand for prod­ucts on­line is also in­creas­ing as In­ter­net re­tail­ers of­fer a wider va­ri­ety of prod­ucts and at a lower price.”

Fur­ther talk­ing about mar­ket dy­nam­ics of this cat­e­gory, Reddy, says, “Due to de­mon­eti­sa­tion, which was an­nounced in Novem­ber 2016, the sale of home fur­nish­ings wit­nessed a slow­down as con­sumers faced a cash crunch. Con­sumers were forced to post­pone their pur­chases. For the same rea­son, the real es­tate mar­ket in In­dia took a hit that has in­di­rectly af­fected sales of new fur­ni­ture in the coun­try. Growth of home tex­tiles was stag­nant in 2016. Con­sumers con­tin­ued to opt for low­value, un­branded prod­ucts, which is the rea­son for the slower growth. The in­dus­try in In­dia is highly un­or­gan­ised with pres­ence of many lo­cal man­u­fac­tur­ers.”

With re­spect to the fur­ni­ture cat­e­gory, Reddy says, “Within in­door fur­ni­ture, din­ing and sofa beds are the fastest­grow­ing cat­e­gories in In­dia. How­ever, with in­creas­ing dis­pos­able in­come con­sumers have started buy­ing din­ing ta­bles for din­ing ar­eas, par­tic­u­larly for their new homes.”

“With more peo­ple re­lo­cat­ing to dif­fer­ent parts of the coun­try for work or ed­u­ca­tion, the pro­por­tion of renters has in­creased when com­pared to home own­ers. Hence, the de­mand for sit­ting fur­ni­ture like chairs is in­creas­ing. A lower re­place­ment cy­cle of th­ese prod­ucts aids growth too,” he adds.

Talk­ing about the trends wit­nessed in the Home­wares cat­e­gory, Reddy, ex­plains, “Home­ware and home fur­nish­ing stores ac­counted for 70 per­cent of the home­wares sales in In­dia in 2016. Th­ese stores of­fer more va­ri­ety and have higher pres­ence com­pared to other for­mats. Many con­sumers like to ex­am­ine the qual­ity of prod­ucts be­fore buy­ing home­wares; hence they pre­fer off­line stores and/or di­rect sell­ers when look­ing to buy home­ware.”

“Con­sumers are opt­ing for bet­ter-qual­ity prod­ucts, which has in­creased the de­mand for branded prod­ucts. Th­ese prod­ucts have longer life cy­cles and also make the process of cook­ing eas­ier,” he adds.

And it’s not just tra­di­tional play­ers like Bom­bay Dye­ing

and Wel­spun that are cash­ing in on the trend. Funkier, Gen X brands like Chum­bak and niche play­ers like Masper, and Tan­ger­ine are ex­pand­ing their reach across the coun­try as well.

What’s Mak­ing the Mar­ket Tick?

In­dia is a rapidly grow­ing coun­try with a GDP that is grow­ing at a steady rate of 7.5 per­cent. Sixty-five per­cent of our pop­u­la­tion is be­low 35 years of age. This gen­er­a­tion am­bi­tious and far more fo­cused about achiev­ing growth, at­tain­ing en­vi­able life­styles and liv­ing in dream homes.

Women are work­ing, earn­ing their own and spend­ing a lot on home fash­ion. Dis­pos­able in­comes, bet­ter ed­u­ca­tion and also the grow­ing trend of in­di­vid­u­als opt­ing for pro­fes­sional ser­vices to do up their in­te­ri­ors have to­gether led to a rise in this cat­e­gory.

Also, to­day’s In­dian is well-trav­elled and ex­posed to life­styles in other coun­tries, which in­spires him to at­tain a sim­i­lar style of liv­ing.

Go­drej In­te­rio’s As­so­ciate Vice Pres­i­dent, In­te­grated Mar­ket­ing Com­mu­ni­ca­tions, Be­draj Tri­pa­thy says, “In the de­mog­ra­phy pyra­mid ac­cord­ing to fam­ily in­comes, there is a high growth in mid­dle class fam­i­lies than the lower and up­per class. We find the mid­dle class to be around Rs 48,000 crores as com­pared to up­per, which is at Rs 7,000 crores and the lower Rs 10,000 crores. Also, the av­er­age age of a buyer has changed from 45 years to 37 years over the span of last five years.”

Durian’s Vice Pres­i­dent – Com­mer­cial, San­deep Gan­guli adds, “Fac­tors like rise in dis­pos­able in­come, bet­ter ed­u­ca­tion and also the grow­ing trend of in­di­vid­u­als opt­ing for pro­fes­sional ser­vices to do their in­te­ri­ors have to­gether led to a rise in this cat­e­gory.”

Tanay Agar­wal, Di­rec­tor, Skip­per Fur­nish­ings, says, “In­dia is a grow­ing econ­omy, and real es­tate sup­ply in to­day’s econ­omy is huge. This has in turn re­sulted in a huge de­mand for home dé­cor and fur­nish­ings brands. To­day, your mod­ern, ur­ban In­dian doesn’t just want a house but also needs to live in a well dec­o­rated home, which meets his needs, tastes and pref­er­ences. This has in turn re­sulted in a growth of an or­ga­nized mar­ket for sup­pli­ers and an in­crease in the in­ter­est of in­di­vid­u­als in the de­ci­sion mak­ing.”

“The fur­ni­ture mar­ket in In­dia has his­tor­i­cally wit­nessed a pro­lific boom in the coun­try. There were a num­ber of fac­tors that led to a growth in fur­ni­ture de­mand in In­dian house­holds over the last few years. The grow­ing econ­omy of the coun­try has en­cour­aged the spend­ing ca­pac­ity of the peo­ple, which in turn has en­cour­aged sales of branded fur­ni­ture items in the mar­ket. The grow­ing phase of in­fra­struc­ture and real es­tate mar­ket has also aug­mented the de­mand for fur­ni­ture prod­ucts in the coun­try. Fur­ther­more, this in­creas­ing brand aware­ness amongst In­di­ans in the re­cent years has led to the emer­gence of fur­ni­ture re­tail­ing in In­dia,” says, Arun Biyani, Di­rec­tor, Mo­bel Fur­ni­ture.

“In­crease in the knowl­edge of the avail­abil­ity and the us­age of the prod­ucts in the home fur­nish­ings in­dus­try is re­sult­ing in the need for well trained and knowl­edge­able sales staff. There has been an in­crease in the avail­abil­i­ties of in­te­rior de­sign­ers and con­sul­tants in the more de­vel­oped cities of In­dia, how­ever there is a plenty of scope of the same in smaller towns,” he adds.

“With the ad­vent of so­cial me­dia and smart phones to every in­di­vid­ual the ex­po­sure has in­creased hun­dred-fold. Every in­di­vid­ual is aspir­ing

for more and wishes to make it big. Buy­ing fur­ni­ture has be­come more ac­ces­si­ble and con­ve­nient in the re­cent years. Styles, de­signs and trends are chang­ing more rapidly than ever. Cus­tomi­sa­tion of prod­ucts ac­cord­ing to one’s needs is in. Also, the ser­vice (in­clud­ing af­ter sales ser­vice) de­manded by cus­tomers is at an all-time high,” says Nikunj Ke­dia, Di­rec­tor, Seven De­signs.

On­line re­tail plat­forms have added to the trendy home party. Con­sumers pre­fer buy­ing on­line ow­ing to the avail­abil­ity of a huge ar­ray of home decor prod­ucts at dis­counted/af­ford­able prices – this de­spite in­creas­ing cost of raw ma­te­ri­als, such as leather and su­pe­rior qual­ity wood which may have oth­er­wise lim­ited the mar­ket growth.

Ac­cord­ing to Ashish

Shah, Founder and COO, Pep­per­fry, “In the next three to five years, lead­ing home play­ers are set to reach global stan­dards. Pep­per­fry sees a huge op­por­tu­nity to lead this growth. On­michan­nel is go­ing to be a key growth driver for im­prov­ing the cus­tomer ex­pe­ri­ence. Pep­per­fry is geared to­wards scal­ing the Stu­dio pres­ence from present 21 and has re­cently rolled out a fran­chise model with an aim to build the largest Omni-chan­nel net­work in the coun­try. We will open 46 stu­dios by March 2018. Lastly, there will be a spurt in the growth of an­cil­lary ser­vices. Pro­vid­ing ad­di­tional ser­vices es­pe­cially in the home seg­ment like de­sign­ing and con­sult­ing are set to be­come im­por­tant fea­tures. We started the trend as early as 2014 and have been pro­vid­ing com­pli­men­tary con­sult­ing to our cus­tomers since then.”

Adds Nathasha A R Ku­mar, Founder – Va­jor, “The In­dian con­sumer, specif­i­cally in the decor seg­ment, de­mands not only looks but util­ity as well. Hence, a good home decor item needs to meet three strong needs – Util­ity, Aes­thet­ics and Pric­ing. Home dé­cor and fur­nish­ings is a very ‘need’ driven seg­ment which, es­sen­tially, takes a leap dur­ing fes­tive sea­sons. Va­jor is pen­e­trat­ing the mar­ket and reach­ing to th­ese con­sumers by ful­fill­ing both their de­mands and de­sires.”

Neerav Jain, Founder & CEO, Ci­ty­fur­nish has a dif­fer­ent point of view. He says, “Fur­ni­ture e-re­tail­ing has plateaued in In­dia over the past few years with ma­jor fur­ni­ture on­line brand hit­ting same sales fig­ure for two to three years now. This is ma­jorly due to the emer­gence of rent­ing and se­cond-hand pur­chases of fur­ni­ture and fur­nish­ing prod­ucts. Nowa­days, con­sumers pre­fer on­line re­tails plat­forms for rent­ing fur­ni­ture, ow­ing to avail­abil­ity of an ar­ray of such prod­ucts at af­ford­able prices and con­ve­nience of rent­ing.”

Cat­e­gories That Rule the Roost. Chal­lenges Faced by the Sec­tor

The fur­ni­ture and home decor in­dus­try in In­dia is largely un­or­gan­ised, some­thing which is a ma­jor hin­drance for its growth. The per­cep­tion and out­look of the in­dus­try also needs to change. It is still not open to in­no­va­tion and ex­per­i­ment. The se­cond ma­jor is­sue is the sky­rock­et­ing real es­tate price, which makes it very dif­fi­cult for new ven­tures to be prof­itable.

Talk­ing about the chal­lenges, Ke­dia of Seven De­signs, says, “Meet­ing the de­mand of the cus­tomers be­comes an is­sue some­times.

Among the var­i­ous seg­ments within the sec­tor, some that come out on top are fur­ni­ture, tex­tiles (in­clud­ing rugs, bath tex­tiles, bed tex­tiles, kitchen and din­ing tex­tiles, liv­ing room tex­tiles), floor cov­er­ings (in­clud­ing tiles, wood & lam­i­nate, vinyl & rub­ber, car­pet & rugs).

As the mar­ket is grow­ing, the de­mand is in­creas­ing and each cus­tomer they have their own pref­er­ences and re­quire cus­tomiza­tion.”

Agar­wal of Skip­per says, “This sec­tor is largely un­or­ga­nized, and to con­vert it into an or­ga­nized seg­ment is the big­gest chal­lenge of them all. Due to pre­dom­i­nance of the un­or­ga­nized sec­tor the sup­ply chain is not as ef­fi­cient as prob­a­bly in other in­dus­tries. Con­sumer knowl­edge and ed­u­ca­tion has been on a rise but still the im­por­tance of home fur­nish­ing is lack­ing. Home fur­nish­ings is a highly per­son­al­ized and ser­vice ori­ented seg­ment, and a lot of cus­tomiza­tion is needed thus, ex­pan­sion with mul­ti­ple stores is dif­fi­cult.”

Ac­cord­ing to Mo­bel’s

Biyani, a high rate of tax­a­tion, un­or­gan­ised sec­tor deal­ing in black money and lack of or­ga­nized in­dus­trial in­fra­struc­ture to sup­port the man­u­fac­tur­ing ac­tiv­i­ties are the main chal­lenges that the sec­tor is fac­ing.

So­lu­tions

The ris­ing gov­ern­ment fo­cus and fa­vor­able poli­cies do sup­port the in­dus­try. In­creased pen­e­tra­tion of or­gan­ised re­tail, favourable de­mo­graph­ics, and ris­ing in­come lev­els help drive in­dus­try de­mand and take it for­ward.

Abun­dant avail­abil­ity of raw ma­te­ri­als like cot­ton, wool, silk and jute and the fact that In­dia en­joys a com­par­a­tive ad­van­tage in terms of skilled man­power and in cost of pro­duc­tion rel­a­tive to ma­jor tex­tile pro­duc­ers are big boosts to the in­dus­try.

Tech­nol­ogy

Re­tail­ers in the seg­ment are giv­ing due im­por­tance to tech­nol­ogy. They have got cus­tomised soft­ware to have in­sights in buy­ing be­hav­ior of their loyal cus­tomer groups and real time in­ven­tory sta­tus at each stage in the en­tire value chain.

Work­ing on Con­cepts

This comes into play when a new house / of­fice is be­ing planned. This will re­quire every­thing in­clud­ing de­sign, ar­chi­tec­ture, in­te­ri­ors, fur­nish­ings, fur­ni­ture and dé­cor new to cre­ate a “con­cept” to live or work in.

Although this mar­ket has low fre­quency of con­sump­tion, it does drive huge ticket sales and will al­ways sur­vive on in­no­va­tion and as­pi­ra­tion.

R for Re­fur­bish­ment

This is a more reg­u­lar mar­ket that thrives on up-gra­da­tion, ren­o­va­tion and im­prove­ment

within ex­ist­ing liv­ing or work­ing space. The con­sump­tion fre­quency is rel­a­tively high but with lower ticket sale items.

Serv­ing the Mil­len­nial

A high per­cent­age of In­dia’s pop­u­la­tion is made up of Mil­len­ni­als. An Ac­cen­ture study de­scribe Mil­len­ni­als as peo­ple born be­tween 1980 and 2000. They are both the 20th cen­tury’s last gen­er­a­tion and its first truly dig­i­tal one. This old cen­tury/new tech­nol­ogy di­chotomy gives pause to mar­keters at­tempt­ing to un­der­stand and con­nect with this key de­mo­graphic. Home fur­nish­ing re­tail­ers are in­no­vat­ing them­selves to meet the dis­creet de­mands of this Mil­len­nial shop­per.

“They want every­thing at their fin­ger­tips and do not have much time to go out and shop. That is why we have our own e-com­merce web­site to give them a quick and easy way to pur­chase prod­ucts from us. At the same time, we also

The fur­ni­ture and home decor in­dus­try in In­dia is largely un­or­gan­ised, some­thing. The per­cep­tion and out­look of the in­dus­try also needs to change. The other ma­jor is­sue is real es­tate price, which makes it very dif­fi­cult for new ven­tures to be prof­itable.

keep our clients, part­ners and cus­tomers up­dated with the new trends of the in­dus­try and the col­lec­tions in-store with our so­cial me­dia ac­counts and blog Home&heart. Finally, and the most im­por­tantly, we have made prod­ucts like ready­made cur­tains, cush­ion cov­ers and ser­vices like cus­tom­ized stitch­ing eas­i­est to ac­cess for them,” says Agar­wal.

Biyani, says, “The young gen­er­a­tion is now very aware of lat­est in­ter­na­tional trends and are very de­sign con­scious too. Af­ford­abil­ity from a brand adds brownie points – along with in­ter­na­tional de­signs – and racks up sales. We have launched smart, trendy, mod­ern de­signs in af­ford­able prices.”

“At Ci­ty­fur­nish, our ser­vice is pre­dom­i­nantly tar­geted to­wards the mil­len­ni­als who are look­ing to break the shackle of own­er­ship and li­a­bil­ity by car­ry­ing the bur­den of pur­chases. With Ci­ty­fur­nish they are free to ex­plore and at the same time save a lot of money by rent­ing fur­ni­ture and com­plete fur­nish­ing prod­ucts in­stead of in­vest­ing in ex­pen­sive prod­ucts whose value is bound to de­pre­ci­ate over time,” adds Jain.

Ke­dia, ex­plains, “We are de­vel­op­ing our e-com­merce site www.sleepair.in which will show­case all our sleep re­lated prod­ucts. It is sched­uled to go live in a cou­ple of months. We also have a web­site for Seven De­signs (Fur­ni­ture and Fur­nish­ing both) which show­cases our en­tire prod­uct line and the ser­vices we of­fer. We are ac­tive on so­cial me­dia plat­forms and try to en­gage with the au­di­ence as much as pos­si­ble, in­form­ing them about the lat­est styles we house and any on­go­ing of­fers. Th­ese steps were taken mostly keep­ing the Mil­len­ni­als in mind.”

Fu­ture Prospects

Many on­line play­ers have en­tered in the cat­e­gory and are do­ing well in terms of busi­ness. Ur­ban­lad­der, Pep­per­fry, and Fab­fur­nish are few such play­ers.

Talk­ing about the fu­ture prospects, Shah of Pep­per­fry, says, “We has set out a mis­sion to help cre­ate 20 mil­lion beau­ti­ful homes by 2020 and tak­ing cog­nizance of the need to have mul­ti­ple en­gage­ment touch-points for its con­sumers. Pep­per­fry pi­o­neered the Om­nichan­nel ap­proach by open­ing 20 stu­dios across the ma­jor metro cities in In­dia. Th­ese stu­dios es­sen­tially serve as off­line ex­pe­ri­ence cen­tres for dis­cern­ing Pep­per­fry cus­tomers who are seek­ing de­sign in­spi­ra­tion. Here they can not only ex­pe­ri­ence a se­lect Pep­per­fry range but also avail com­pli­men­tary de­sign con­sul­ta­tion.”

He fur­ther adds, “Pep­per­fry is geared to­wards scal­ing the stu­dio pres­ence and re­cently rolled out a fran­chise model with an aim to build the largest Om­nichan­nel net­work in the coun­try. We will ex­tend our stu­dio cover­age to Tier II and III towns, and in keep­ing with Pep­per­fry’s sharp fo­cus on cus­tomer ex­pe­ri­ence sig­nif­i­cant in­vest­ments will be made be­hind sup­ply chain au­toma­tion and the big box lo­gis­tics net­work will ex­pand to 1,000+ cities. In a nut­shell, right now our fo­cus

Abun­dant avail­abil­ity of raw ma­te­ri­als like cot­ton, wool, silk and jute and the fact that In­dia en­joys a com­par­a­tive ad­van­tage in terms of skilled man­power and in cost of pro­duc­tion rel­a­tive to ma­jor tex­tile pro­duc­ers are big boosts to the in­dus­try.

is to be present wher­ever our cus­tomers are present be it through stu­dios or mar­ket­ing.”

Clearly, fur­ni­ture and home­wares man­u­fac­tur­ers are bet­ting big on key growth op­por­tu­ni­ties in the mar­ket over the next few years.

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