India Furniture Market Report – 2020: Ken Research

The furniture market in the country has been immensely driven by a substantial growth in the real estate, tourism and hospitality sector over the years. In FY’2015, the furniture market in India clocked revenue worth INR ~ billion which increased by ~% from INR ~ billion in FY’2014. The furniture market has experienced a substantial growth in the last few years. There are several factors which have led to this growth such as surge in real estate and housing activity, increasing growth in the information technology and services sectors, growing affluence both in the urban and rural areas and higher proportion of middle class Indians aspiring for better lifestyle. Additionally, the import of furniture from countries such as China, Malaysia, Indonesia and Bangladesh is also being driven by the urban affluent households. The organized furniture market has been observed to grow from ~% in FY’2010 to ~% in FY’2015

The establishment of MNCs in metropolitan cities in the country has also impelled the sales of office furniture, thereby aiding the overall market growth in the last few years The Office segment in the furniture market has garnered ~% of the market revenues as observed in FY’2015 which is relatively smaller proportion of the furniture market in the country. Over ~% of the office furniture is covered by contract furniture which is customized by various organized stores especially in big retail chains In FY’2015, hotel furniture accounted for a share of ~% in the overall sales of furniture in the country garnering revenues worth INR ~ billion. The major reason for its low demand is that most of the furniture in offices, hotels, cafes and industry are contract furniture and this demand is majorly catered by unorganized sector while a minor share is also catered through customized furniture from organized retailers.

The retail sales of home furniture products through organized retail outlets in India generated revenues of INR ~ million in FY’2015 and represented a CAGR of ~% during the period, FY’2010-FY’2015. Companies such as Godrej Interio, Home Center, Nilkamal, Durian Furniture, and Style Spa among others have grabbed significant positioning in the domestic organized home furniture market. In spite of the fact that ~% of the furniture market belongs to the unorganized players, the growing western culture in the country coupled with increasing consumers’ preference for branded products have given a considerable surge to the branded furniture segment in the recent years. In order to cater to the mounting demand of branded furniture in India, the competition amongst the organized players has further intensified.

The arrival of international brands from Italy, Germany, Sri Lanka and other countries has brought a change in consumer perception and has resulted in the purchase of more expensive furniture products, which have in turn propelled the overall revenues of the market. However, a large number of Indian citizens have still opted to purchase customized furniture from carpenters at highly competitive prices. The employment of on-site carpenters has provided Indian customers with the flexibility to customize design, wood material and make any modifications to the product as necessary at their comfort. The growth of the organized home furniture industry has played a key role in the development of the overall furniture market in India. The future of this industry has been expected to witness an increase in number of foreign brands in the country.

Along with that, more number of companies in the organized segment will look forward to provide additional services such as customization, free home delivery and more. Moreover, with the substantial growth of the Indian e-commerce industry, many players have entered the online market for the sale of furniture products. Companies such as Pepperfry, Urban Ladder and Fabfurnish have revolutionized the sale of home furniture products in India by not only providing significant discounts but also through value added services such as free product demos, customizations, complete home solutions and others. Bedroom furniture held ~% of the total revenue of home furniture market in India, as recorded in FY’2015. Bedroom furniture has stood as the highest revenue-generating segment as furniture items placed in bedroom have been the utmost priority for Indian customers.

The living room furniture was the second most important choice as it garnered ~% share in revenues for the year FY’2015. This segment encompasses a wide range of coffee tables, sofas, center tables, corner tables, chairs, bookshelves, TV stands, ottomans, display cabinets, consoles and upholstered furniture like sofas and overstuffed chairs. Sofas have been the highest selling product in the living room as they are the primary items to be placed in the living room. They accounted for ~% share of the living room furniture market.The dining room furniture also includes other items such as bar stools, sideboard cabinets, serving carts and wine storage units. This segment accounted for a revenue share of ~% in the home furniture market in FY’2015. The average selling price of a dining set in a branded showroom is usually in the range of INR 35,000 to INR 70,000.

The demand of modular kitchen has bolstered the total sales in the market from INR ~ million in the year FY’2010 to INR ~ million in the FY’2015. In the year FY’2015, nearly 85% of this market was governed by the unorganized Johnson summarized ~% of the market in terms of revenues sector, whereas big players such as Sleek and H&R. Sale of home furniture in the western region of India was observed to be the highest at ~% due to the high demand of solid wood. The Indian market for home furniture products has observed a varied/mixed demand from different income classes. The upper class of the Indian society has considered cost as a secondary factor and has laid emphasis on design and durability of the product.

In House Manufacturing Model: The operations in domestic manufacturing of furniture in India can be divided into 2 basic forms, namely, ‘make to order’ and ‘bulk manufacturing’. The raw materials can be obtained either through the local market or through imports from Malaysia, Indonesia or China. After procurement of raw materials from timber suppliers, the furniture manufacturer develops the designs and produces the product based on the customer requirement. The manufacturer though pays the cost of transportation of furniture but transfers it to the customer by including it in the final bill of purchase.

The requirement is routed to the manufacturer through exclusive, franchise or dealer stores. These stores retain a gross profit margin of ~% and ~% respectively. The wholesalers keep a gross profit margin of ~% to cover their costs and sell furniture products to a wide range of dealers. One of the major draw backs of selling through an in-house manufacturing business model in the home furniture market is the higher cost of production in comparison to imports. Heightened labor expenses, raw material costs and operating costs in India have reflected ~% higher prices of products in comparison to imports from countries such as China and Indonesia. Import Based Model: Import of furniture products has been observed significantly in the Indian market. The presence of large number of dealers and traders has been largely due to the higher fees obtained through trading of furniture items in comparison to domestic manufacturing. The payment can also be taken in installments; importers generally pay ~% of the total cost at the time of order placement and transfer the remaining amount at the time of shipment.

The importer charge a margin of ~%, who sips the product to the retailer or the exclusive stores which further charges a margin of ~% on the furniture products. The major drawback of this business model is the high turn-around time. In case the required piece is not available with the furniture dealer/ supplier, it can take significant amount of time (several weeks) to import it from the source country. This would lead to loss of customer interest in the product and hence create loss in sales. Moreover, this model also possesses a higher risk of furniture damage during transportation as products have to be delivered through different means (sea and land) and require multiple loading and off-loading points.

Online Marketplace Model: Market place business model enables the third party retailers to sell and advertise their products on an online platform. It has gained its prominence during the last few years majorly since the refurbishment of ecommerce sector in India. The online portal further develops sync with the merchant by means of an agreement on partnership, assessment and operation model. The product is then sent to the market place that acts as a storage place/ inventory.T he B2B2C Model is useful in the case when merchants are located in different regions and come together to form an online virtual shopping mall. The major profit sources include fixed fees from merchants and price charged from transaction and additional services.

In order to establish a furniture manufacturing unit in Chakan, Pune, India, there are several parameters that need to be considered. Pune has been selected as prime location due to its central geographical presence and presence of a strong industrial base. The usage of both manual labor and automated machinery has been most widely used in the industry. For the first year, the annual production capacity will be near to 60%. The factory floor has been divided in a specific proportion in order to facilitate easier flow of material and smooth operation. The quality of wood used to produce furniture is considered of high grade. Human resources have formed a critical aspect of every organization. In a furniture manufacturing unit, carpenters, machine men, polish men, CAD operators and other skilled laborers form a vital aspect to process wood either manually or through machinery.

Children’s furniture has slowly gained its share in the Indian furniture market. The younger generation of parents has looked to provide the best surroundings for their children at home and have generated the demand of specialized children’s furniture items. These target groups not only have purchased individual furniture items, but have also looked to remodel their child’s room to provide a unique look to their room. With an average budget of INR 0.2 to 0.25 million, these buyers have showcased a mixed demand of theme based and non-theme based furniture. The overall children’s furniture market in India has been observed to grow at a CAGR of ~% during FY’2010-FY’2015 and reached INR ~ million in FY’2015. This has represented ~% of the overall furniture market. Beds and wardrobes have been the major products sold in the India Children’s furniture market. These two products were observed as the most essential products purchased by parents.

The mattress market of India has been dominated by small and unorganized players which cater to nearly ~% of the overall requirement of mattresses in the country. The major types of mattresses observed in the Indian market include, spring, coir, foam and hybrid mattresses. The market has been dominated by domestic brands such as Kurlon, Sleepwell, Springfit and Nilkamal. However, the gradual influx of foreign mattress brands such as Tempur and King Koil has heightened the competition in the market. The revenues generated by retail sales of mattress in India amounted to INR ~ million in the year FY’2015. The popularity of spring mattresses has increased over the years as more companies have begun to provide springs which cater to varied requirements of customers. Coir mattresses were followed by spring mattresses which held a share of ~%. South India has been considered as a production hub of coir mattresses, particularly rubberized coir mattresses. The customers in this region have been early adopters of good quality products and have been shifting towards spring mattresses.

The organized home furniture market encompasses numerous numbers of players and hence the market has been witnessed as highky fragmented. The market is moving more towards organised segment. This is marked by increasing customer preference for readymade, branded furniture. Therefore, the share of organized players in the market has been observed to grow but still major six players have commanded 8% share in the organized home furniture market. Style Spa has commanded ~% share in the organized home furniture market, with revenues worth INR ~ million in FY’2015. The company had 115 retail stores as on March 31st 2015.

In order to strengthen their position in the market, offline retailers have begun to expand to tier-2 and tier-3 stores and have continuously updated their product catalogues with new designs at cost-effective pricing. These retailers have also provided customers free demonstrations of re-modeling of their home space through consultations with in-house furniture designers/ experts. The residential real estate market has witnessed balanced growth in the last couple of years owing to the increasing population and growing demand for affordable housing accommodation. Major metropolitan cities such as Delhi, Mumbai, Kolkata and others have also showcased growing demand for luxury housing complex such as villas, penthouses and apartments in the recent years.

• Source: https://www.kenresearch.com/consumer-products-and-retail/home-and-office-furnishings/india-furniture-market-research-report/8520-95.html

• Contact: Ken ResearchAnkur Gupta, Head Marketing & CommunicationsAnkur@kenresearch.com+91-9015378249

• Website : www.kenresearch.com

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