India home furnishing market prospects and opportunities

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.
The home and interiors category has varied constituents as different as chalk and cheese. The home textiles, household hardware, décor items, furniture for home and office, kitchenware, and such related items, constitute this vibrant category. No single item seems to be out of demand going by the housing sector’s growth and urbanisation of many cities in the country. The consumption is not limited to new houses but has even crept into the psyche of those consumers who are looking forward to redo their home or office space as well. These days such redoing is no more a once in a lifetime, one-off occasion but keeps repeating the cycle more often.
Market Size & Growth
Total retail market is worth Rs 102,750 crore (US$ 17.13 bn) growing at 12-13 per cent and is expected to be worth Rs 144,323 crore (US$ 24.05 bn) by 2017. Modern retail is estimated at 19 per cent of this total market and is expected to grow at 24-27 per cent. Retail expansion grew at 16-21 per cent in terms of number of retail outlets and retail space with same store revenue growth being around 15 per cent.
Market Segmentation
The category’s three broad segments – furnishings, furniture and décor, have been growing positively. There is a small shift of market share from furniture to décor during last couple of years. This is due to the reason of controlled consumption which resulted in spending less on high value items like furniture. Consumers continued to spend on furnishings as it has been and invested more in upgrading interiors and décor items to get refreshing look at home and office. The furniture market saw marginal drop of 1 per cent and décor gained with same since previous retail report.
The furniture segment contributes highest in the overall market with small furniture like chair, table, stools, cabinets, desks etc. Collection of such items generates volume business for the category. The large furniture items such as beds, sofa set, dining furniture set, large wardrobes, cup-boards are high ticket items which require higher investments. The market share of small furniture is 75 per cent and that of large is 25 per cent.
Home furnishings segment, on the other hand, contributes the lowest share of 26 per cent. The segment is further broken into sub-segments of bed linen, towels and robes, kitchen linen, curtains, upholstery, blankets, rugs and carpets. Among these sub-segments bed linen has the largest share close to half of total market. But the faster growing sub-segments are curtains, upholstery, blankets, rugs and carpets.
Consumption
It is true that frequency of buying products in the category has increased over last decade but the category still remains one among low consumption categories. It is not just because of low consumption appetite but also due to scarcity of players in the segment on one hand and low penetration of existing modern players in smaller cities on the other hand.
The retail presence of home decor and furnishing brands are more in south and west. Interestingly north is having lowest share of store count inspite of being densely populated region.
Challenges faced by the sector
The furniture and home décor industry in India is largely unorganised 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. Second major issue is the skyrocketing real estate price which makes it very difficult for new ventures to be profitable. Indian market is also susceptible to global economic volatility which makes an impact on the home furnishing players. However in spite of all this I feel Indian artists, designers brands have lot of potential to market themselves globally but a lot of effort needs to be there for marketing and promotion,” says, MD & Interior Stylist, SPACIO, Navin Kanodia.
Putting a different perspective, Founder and Owner, Buzzaria Dukaan, Mamtaa Gupta says, “Currently people like to shop online rather than to shop offline because of the many advantages and benefits available. There are many schemes, discounts and pocket-friendly offers that are offered by many retailers that attracts the customers and yet it is the another way to save money. Also, Government should start financial benefit programs for small scale workers who make very alluring handmade products and still not getting the enough wages to fulfill their needs to feed their family.”
According to Founder and Creative Director, Address Home, Rajat Singhi, “Improper distribution channels and retail infrastructure are the major factors affecting growth of this industry. Quality also has been an issue that needs to be taken a note off.”
How to Mitigate these Challenges
The rising Government focus and favourable policies do support the industry. Increased penetration of organised retail, favourable demographics, and rising income levels to drive the industry demand. Abundant availability of raw materials such as cotton, wool, silk and jute . India enjoys a comparative advantage in terms of skilled manpower and in cost of production relative to major textile producers.
Technology as an aid in improving performance – 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.
New concept market – This comes to fore when a new house/ office is planned. This will require everything including design, architecture, interiors, furnishings, furniture and décor new to create a concept to live or work in. Though this market has low frequency of consumption but drives huge ticket sales. This market will always survive on innovation and aspiration.
Refurbishment market – This is more regular market which thrives on upgradation, renovation and improvement within living or working space. The consumption frequency is relatively higher but with lower ticket sale items.
Thus industry needs to develop a healthy mix of these two markets which can complement each other. The optimum balance between both will strengthen its position and drive the category sales.
What’s influencing the growth of home décor and furnishing market
The home décor and furnishing market in India has witnessed phenomenal growth particularly in the last ten years. Still it is in the nascent stage in India if you compare it with any advanced countries. Organised home furnishing retail has the opportunity of a dream run if the brands understands the customer requirements and offer them what they want.
This sector’s growth has been driven by the socio-economic changes and rapid urbanisation in India. We are a country with a large base of young population who have a high disposable income and are also willing to spend for better lifestyle. Over the last few years, the real estate boom has allowed the young population to own a house of their own with easy loan schemes given by the banks and Government. The new homes for the small families have been a major driving factor as they are spending a considerable amount of setting it up. This has opened up a major market for home décor and furnishing brands.
“The home furnishing market in India has witnessed a prolific boom in the country. There were a number of factors which have led to a growth in home furnishing demand in the Indian households in the last few years. The growing phase of infrastructure and real estate market has augmented the demand for home furnishings products in the country. With a higher disposable income, home furnishings, once considered a luxury are becoming an everyday necessity. Exposure to global trends and design has inspired people to decorate their homes with more appeal. High Martindale canvas, cotton, poly blends, chenille and velvets have started being used alongside leather for upholstery purpose. Seasonal changes call for change in décor. Curtains, cushions, smaller pieces of home décor can be changed to bring in festivity along with each season. These factors are all leading to a growth and boom in the home furnishing sector and creating a very strong future for the same,” says Director, Rumors Fine Furnishings, Ramachandra Shastry.
“Expansion and developments in real estate industry, have supplemented the growth of world home decor market. Globalisation facilitates easier and wider availability of home decor products and designs for consumers,” says Director, Zynna, Retesh Sharma.
Surjit Singh of Arora Drape, opines, “India is one of the economy which means the demands of products related to home is growing at a faster pace. Market is highly flooded with lot of players. The growing demand of carpets, bedsheets, curtains and many other home furnishing is consciously growing. The increased demand of home fashion or continuously upgrading the look or filling with the basic necessity of home furnishing product has been witnessed in the industry. The home furnishing is anticipated to witness demand from retail industry. By 2018, home furnishing market is expected to grow at CAGR of 8 per cent. During the same period, curtains, upholstery and rugs and carpets will grow at CAGR of 8 per cent and 9.4 per cent.”
In the demography pyramid according to family incomes, there is a high growth in middle class families than the lower and upper class. 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.
The factors which are propelling the growth of Home Decor and Furnishing sector
– 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.
– Working women are spending a lot on home fashion.
– 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.
– Indians are well travelled now and have an exposure to lifestyles in other countries, this inspires them to have a similar lifestyle for themselves too.
Innovating to reach out to the Millenials
A high percentage of India’s population constitute of Millenials and even the home decor and furnishing retailers are trying their best to leverage this demography.
Kanodia of Spacio talks about the innovations that they have done, he says, “The new generation or the millennial generation is extremely media savvy and digitally active. They are also aware about the global trends and practices. To cater to this particular customer base we have launched www.justfordecor.com which is an online luxury boutique for home décor and accessories. We have brought together more than 20 international design and décor brands from different parts of the world to provide the latest, contemporary design and luxury products for the fashion savvy customers. Also we have created easy online navigation and payment gateway to ensure convenience and ease of shopping. We also strive to bring new designs and brands every week. We also do digital marketing aggressively to reach out to every single customer in a personalized way.”
According to Sharma of Zynna, online holds the key to Millennial hearts. The youth is moving towards the smarter choice in which they get value for money. The number of smart buyers is increasing and it has become a significant factor for the retailers to match the requirements of the consumers. The online websites offer a wide variety of products and people are going more towards online shopping. So there lies a challenge for covering up the online market competition.
“As high percentage of India’s population are youth so the retailers and manufactures are providing and delivering product according to the youth’s desire and want. Youth has become more sensitive to seasonal and fashionable home décor ideas therefore retailers are providing products according to the growing demands for style, quality and newness. The decorative accessories will drive the market ranges through their trend-led, cost-efficient options for updating the look of a home,” says, Gupta of Buzzaria Dukaan.
Way Forward
An industry report by Technopak reports that many online players have entered in the category and are doing fairly good business. Urbanladder, Pepperfry, Fabfurnish are few of such players. The main driver of this segment is increased use of Internet, enhanced reach due to shopping websites and an urge of getting exposed to various regional taste and preferences through virtual medium.
The modern players in the segment are giving due importance to marketing and consumer promotions. The idea behind such promotions is to provide opportunities for customers to experience new product lines, categories and brands introduced in the stores. These are planned either with season’s mood like Diwali, New Year, Valentine’s Day or are category-centric to draw attention towards some specific category. During such promotion the category is filled with complete and exhaustive range of products with various discounts and offers. Realising the importance of employees, retailers are investing in training them on products, soft skills, customer services and other technical knowhow of the merchandise. There are programs to develop skill and talent at every key level in the organization. The furnishing retailers, buoyed by huge growth opportunities, are investing in technologies like augmented reality and handholding customers to design theme-based homes.