Indian homeware and furnishing segment gets a face-lift

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 shift ed 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 Chief Marketing Officer, Urban Ladder, 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. Multi-functional 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, Research Analyst at Euromonitor International, Vishnu Vardhan Reddy says, “Home and home furnishing stores accounted for 87 per cent 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 demonetization, 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 low value, 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 fastest growing 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 Homeware category, Reddy, explains, “Homeware and home furnishing stores accounted for 70 per cent of the homeware 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 homeware; 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 per cent of our population is below 35 years of age. This generation is 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.
Associate Vice President – Integrated Marketing Communications, Godrej Interio, 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 crore as compared to upper, which is at Rs 7,000 crore and the lower Rs 10,000 crore. Also, the average age of a buyer has changed from 45 years to 37 years over the span of last five years.”
Vice President – Commercial, Durian, 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.”
Director, Skipper Furnishings, Tanay Agarwal 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 among Indians in the recent years has led to the emergence of furniture retailing in India,” says, Director, Mobel Furniture, Arun Biyani.
“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 smartphones 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 Director, Seven Designs, Nikunj Kedia.
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 Founder and COO, Pepperfry, Ashish Shah, “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 Omnichannel 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 Founder, Vajor, Nathasha A R Kumar, “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.”
Founder & CEO, CityFurnish, Neerav Jain 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 retail 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. As the market is growing, the demand is increasing and each customer 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 favourable 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 behaviour 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 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 is to be present wherever our customers are present be it through studios or marketing.”
Clearly, furniture and homeware manufacturers are betting big on key growth opportunities in the market over the next few years.