Home Is Where The Growth Is!

VMRD - - Contents -

Good liv­ing is fast be­com­ing a ne­ces­sity for young and am­bi­tious In­dia. The fur­ni­ture and home­ware re­tail­ers are re­lent­lessly scal­ing, up­dat­ing and im­prov­ing the re­tail chan­nels to cater to this sec­tion. As the coun­try ush­ers in the fes­ti­val of light, VM&RD throws the spot­light on some of the lead­ing home im­prove­ment re­tail­ers and how they are pen­e­trat­ing rapidly into In­dian house­holds.

Amidst much an­tic­i­pa­tion, the iconic Swedish fur­ni­ture and home­ware re­tailer brand, Ikea made a gi­gan­tic de­but at In­dia’s re­tail shore ear­lier this year. The 400,000 sq ft of shop­ping ex­pe­ri­ence looked more like a cel­e­bra­tion of re­tail affin­ity, es­pe­cially at a time when the over­all phys­i­cal size of brick-and-mor­tar is shriv­el­ling. With their enor­mous ex­pan­sion to reach over 200 mil­lion In­di­ans through large for­mat stores, abet­ted with the “af­ford­abil­ity” tag, is Ikea throw­ing big chal­lenges to their In­dian coun­ter­parts? An in­dus­try es­ti­mate will per­haps suf­fice as an an­swer. Fur­ni­ture mar­ket is es­ti­mated to be $20 bil­lion, out of which, about 10% is or­gan­ised re­tail whereas home prod­ucts mar­ket in In­dia is es­ti­mate to reach $32 bil­lion by 2019. The league of par­tic­i­pat­ing or­gan­ised brands seem to be­lieve that Ikea is set­ting the path of home re­tail ex­pe­ri­ence for them to gain more trac­tion in the mar­ket.

Onus On Large For­mat Re­tail­ing

While the over­all re­tail space around the globe across all cat­e­gories is bear­ing the brunt of shrink­ing store sizes, home re­tail­ing is one cat­e­gory that can­not do with­out large for­mat stores. Is it af­fect­ing the store num­bers? Not re­ally. Even if we keep aside the or­ganic phys­i­cal re­tail­ers, In­dia’s two omni-chan­nel home re­tail su­per­heroes, Ur­ban Lad­der and Pep­per­fry have al­ready un­furled large ex­pan­sion story, with 15 and 37 stores re­spec­tively, apart from hav­ing a strong on­line foothold. Look­ing at the chal­lenge of lo­gis­tics, Pep­per­fry took a step ahead in set­ting up state-wise ful­fil­ment cen­tres along with a num­ber of com­pany-owned as well as fran­chisee-op­er­ated stores. Go­ing beyond only fur­ni­ture re­tail­ing, Ashish Shah, COO & Founder, Pep­per­fry, said, “We want to be present where our cus­tomers want us to be and will con­tinue ex­e­cut­ing to our om­nichan­nel strat­egy by open­ing many more Stu­dios across the coun­try. The Stu­dio is also en­vis­aged as a co-work­ing space for the de­signer and ar­chi­tect com­mu­nity who can be­come our chan­nel part­ners and help

us in our over­all vi­sion to help build 20 mil­lion beau­ti­ful homes by 2020.”

If we look at some of the lead­ing phys­i­cal home re­tail­ers, Land­mark Group’s Home Cen­tre has a wide net­work of 41 stores and Shop­pers Stop Lim­ited’s Home Stop has an in­de­pen­dent store net­work of 12 stores.

Win­ning Over Square Feet Chal­lenges

In­ter­est­ingly, many home re­tail­ers are of­ten opt­ing for sig­nif­i­cant pres­ence over the large num­ber of square feet. Here comes the con­cept of var­i­ous store for­mats. Si­taram Ku­mar, Se­nior Vice Pres­i­dent, Home Cen­tre, said, “Within our stores, we al­ways had two cat­e­gories – fur­ni­ture and house­hold items. Last year, we came up with only “house­hold” for­mat, es­pe­cially for tier-II ci­ties. While the reg­u­lar stores span across 25000 sq ft, this new for­mat can be ac­com­mo­dated in 10,000-15000 sq ft or in even smaller ci­ties, can fit un­der 10,000 sq ft. More than strength­en­ing our pres­ence in new mar­kets, we must add that house­hold is a fast-con­sumed cat­e­gory, which is giv­ing us good ROI.”

In­dia’s sec­ond largest mat­tress brand Kurl-on came to home im­prove­ment re­tail­ing only a cou­ple of years back and al­ready has about 5 store for­mats de­pend­ing upon mar­ket, space avail­abil­ity and catch­ment. Cur­rently at a mark of 1000 stores and tar­get­ing about 2000 ex­clu­sive stores in less than cou­ple of years, Kurl-on’s Man­ag­ing Di­rec­tor, T Sud­hakar Pai, shared, “We cur­rently op­er­ate

through 5 re­tail for­mats – Kurl-on Home, Sofa World, Mat­tress In­ter­na­tional, Home Kom­forts and Bud­get Mat­tress. If you look at our for­mats, we cover a wide band­width of cus­tomers, con­sump­tion pat­terns and buy­ing ca­pac­i­ties.”

Com­press­ing the store sizes and in­no­vat­ing for­mats is even catch­ing up with tra­di­tion­ally large store re­tail­ers like Ikea. With the knowl­edge of 60 years in distri­bu­tion of goods and lo­gis­tics, Ikea is cur­rently test­ing with its smaller for­mats like one kitchen show­room in Stock­holm and bed­room show­rooms in Madrid. These city-cen­tric stores will have only 10-15% of av­er­age store size of home re­tail­ing gi­ant.

VM Scheme –Home Away From Home!

What kind of vis­ual mer­chan­dis­ing works ef­fec­tively for home stores? The home re­tail­ers col­lec­tively be­lieve in giv­ing a vis­ual ef­fect of the homes that the shop­pers came from. How­ever, is it dif­fi­cult to create the on­line wow in an off­line space?

Pradeep James, Di­rec­tor of De­sign & VM at Ur­ban Lad­der, seems to dis­agree, “Hav­ing a strong brand iden­tity and con­sis­tent user ex­pe­ri­ence helps you trans­late the phi­los­o­phy into any for­mat. The prod­uct avail­abil­ity, pric­ing, and prop­er­ties need to be con­sis­tent across chan­nels. We en­sure that the vis­ual mer­chan­dis­ing and com­mu­ni­ca­tion in all the stores is con­sis­tent whether it’s with a pro­mo­tion, sale and new ar­rival. We also as­sess prod­uct per­for­mance across the re­tail floor as well as the web­site. Through a data backed model, we se­lect the prod­ucts on dis­play/fea­ture that is most rel­e­vant in that lo­ca­tion.”

Home Cen­tre rather takes a close and elab­o­rate look at even small mer­chan­dises. “The buy­ing, de­sign­ers and VM pro­fes­sion­als work seam­lessly at Home Cen­tre stores. There­fore, even if you see a mer­chan­dise as small as a lan­tern, it will be part of an over­all VM story, which may prompt you to buy two other co­he­sive prod­ucts. Our VM schemes are pre­planogrammed to re­main uni­form across win­dows, fo­cal ar­eas and all stores,” Ku­mar of Home Cen­tre added.

While talk­ing on VM strate­gies, Home Stop spokesper­son quipped about the plan, “For us, P-L-A-N stands for Pur­pose, Lo­ca­tion, At­ten­tion and Num­bers. The pur­pose is to create the vis­ual per­cep­tion for the cus­tomers to buy, the lo­ca­tion part prompts us to fol­low planogram and zone dis­play ar­eas, at­ten­tion is sim­ply the one grabbed from cus­tomers and the num­ber denotes the math and sales con­ver­sion.”

Tech Take­away

Like any other cat­e­gories in or­gan­ised re­tail, home re­tail is fast blur­ring the wall between on­line and off­line chan­nels. For ex­am­ple, Go­drej In­te­rio, which has been in the phys­i­cal re­tail space across home and of­fice fur­ni­ture cat­e­gories, al­most for a decade will soon launch their own e-com­merce en­tity. Su­bodh Me­hta, Sr. Vice Pres­i­dent Go­drej In­te­rio (B2C), shared, “Bring­ing dig­i­tal to real and link­ing both of them is crit­i­cal for us to en­gage with our con­sumers. As a brand that has a prod­uct port­fo­lio that is ex­tremely di­verse, it’s es­sen­tial for us to be present across plat­forms. While we cur­rently have a strong dig­i­tal pres­ence through multi brand on­line re­tail­ers like Flip­kart and Ama­zon we will be launch­ing our own e-com­merce plat­form by March 2019. Hav­ing said that, we be­lieve that the fur­ni­ture in­dus­try is such that it’s im­por­tant to have an on­ground pres­ence for pro­vid­ing an ideal pre and post pur­chase ex­pe­ri­ence. Hence, while e-com­merce is an op­por­tu­nity, we do look at this plat­form as a chan­nel to drive the on­line con­sumers to our on-ground re­tail stores.”

While phys­i­cal space is cru­cial for home re­tail­ers, they are also am­pli­fy­ing their brickand-mor­tar ex­pe­ri­ence through var­i­ous in­store tech gears. Home Cen­tre has al­ready en­abled its store staffs with tab to pro­mote their off-store range of mer­chan­dise thereby help­ing cus­tomers ac­cess to their larger of­fer­ings. The re­tailer has dis­closed their plan to in­tro­duce End­less Aisle Kiosks to of­fer di­rect-to-con­sumer ac­cess. Omni-chan­nel fur­ni­ture re­tailer Ur­ban Lad­der took the in-store tech en­vi­ron­ment to a rather dif­fer­ent plane. James of Ur­ban Lad­der added, “We be­lieve that real-es­tate should not limit the num­ber of prod­ucts a cus­tomer is able to ex­pe­ri­ence on a visit. We have taken into ac­count the many prod­uct vari­a­tions and mul­ti­ple cat­e­gories to ar­rive at the most sci­en­tific dis­play in our stores. With the aid of our on­line cat­a­logue, our AR and VR apps, and de­sign con­sul­ta­tion, we are able to of­fer a holis­tic prod­uct ex­pe­ri­ence in terms look, fit, and feel. We didn’t want to create a big box ware­house of all our prod­ucts but rather economise the re­tail space to do more.”

Home Re­tail­ing – the Suc­cess story from Floor to Rafter

Backed by global ex­po­sure and as­pi­ra­tions, fur­ni­ture, home­ware and dé­cor present a promis­ing mar­ket, though we are talk­ing about only 10% of $20 bil­lion busi­ness, a large part of which is still de­pen­dent on lo­cal re­tail­ers, niche bou­tiques, de­sign­ers and car­pen­ters. If we have to gauge the suc­cess of or­gan­ised home re­tail In­dia, we must look at two home­grown he­roes, Ur­ban Lad­der and Pep­per­fry, who have stayed ahead in busi­ness for about close to a decade now. For them, what started as mod­est on­line fur­ni­ture mar­ket­place, flour­ished into ro­bust store web, strong omni-chan­nel ca­pac­i­ties and even some­thing as as­pi­ra­tional as turn­ing their stores into co-work­ing space or get­ting into fur­ni­ture rental busi­ness. By some ac­counts, big fur­ni­ture chains in In­dia, cur­rently reg­is­ter about INR 500 crore an­nual sale. Adding to these num­bers is Swedish gi­ant Ikea’s en­try into In­dia, carv­ing new niche for home re­tail­ing. Cer­tainly, the growth looks un­stop­pable.

Ur­ban Lad­der Store Façade

Pep­per­fry

Home Cen­tre In-store VM

Ashish Shah, COO & Founder Pep­per­fry

Si­taram Ku­mar, Se­nior Vice Pres­i­dent Home Cen­tre

Kurl-on Store

T Sud­hakar Pai, Man­ag­ing Di­rec­tor Kurl-on

Pradeep James, Di­rec­tor of De­sign & VM, Ur­ban Lad­der

Go­drej In­te­rio

Go­drej In­te­rio

Su­bodh Me­htaSr. VP, Go­drej In­te­rio (B2C)

Pep­per­fry

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