Accelerated growth in home retailing

The age-old practice of visiting nearby furniture and furnishing markets to see, evaluate and order products largely seems to be pass now in urban and semi-urban areas, as consumers prefer visiting the online version of the brick and mortar home retailin
ACCELERATED  GROWTH IN HOME RETAILING

As the adage goes, home is where the heart is, but making a home liveable is a daunting task, as it requires collecting a lot of supplies.

Capitalising this sentiment, the domestic home retailing market is appropriately taking measures and coming up with innovative product designs and innovative retailing platforms. Industry estimate says, Home Decor alone (both online and offline) constitutes almost $15-$20 billion size market in India, and out of this, a total of $20 billion market, or 40-50 per cent, is furniture and rest are pure home decor items such as cutlery, kitchen items, fancy lamps etc.

In furniture, out of the total 40 per cent, 25 per cent is bigger furniture items such as sofa, beds etc and rest small furniture items such as linen, bar table, chair, stools etc. There is a huge scope of this 25 percentage of smaller furniture items and rest 60 per cent of pure home decor items to do well in online platforms because of their smaller sizes with not much need for touch and feel and comparatively involving easy logistics.

The market scenario

The market for home retailing that consists of home decor, furnishing, utility products, flooring, tableware, painting etc in India has huge prospects because of people's inclination towards purchasing is on the rise. These days, people do not wait to arrive at the age of 40 or 50 to own a home. Their idea of having home as early as possible is now the trend.

Also, their demand for modern, classy and decorative interior design and décor to furbish their own home with an amalgamation of all the styles is currently on rise. As per industry experts, the new government has also infused positive sentiment in the minds of the business owners and there is hope of prosperity in the overall business in India.

Nikita Desai, Lead-Business Excellence, D Decor commented, "There is a clear demographic divide in the consumer groups, especially in the post-liberalised India.

On one hand, is the 400 million middle class, whose consumption pattern has only seen a growth and purchasing power further fuelled by easy consumer finance schemes and competitive pricing. Lifestyles are changing with living spaces shrinking from sprawling suburban bungalows to smaller urban dwellings. The changing tastes are dictated as much by needs of space and pockets."

In Delhi NCR alone, approximately, 50000 apartments are ready to be built, which automatically creates a demand for home retailing simultaneously. Syed Hamid, Business Development Manager, Danube Home observed, "I assume that the whole of India is falling under the bracket of constructions of homes which when delivered, increases the demand for home furnishings. The home furnishing business will rise 25-35 per cent from the present in the next five years."

Sharing perspective on the flooring segment, Gaurav Saraf, Joint MD, Square Foot said, "The share of flooring in the total home retailing segments would be approximately 10 per cent. In retail environment, people use laminate flooring and vinyl flooring in the medium to low end segment, whereas hardwood flooring is preferred in the higher end segment."

Inclusion of eCommerce in home retailing

The Home Decor category is seeing a huge scope and acceptance among consumers when it comes to digital buying. Popularity of this category in online space is a consequence of higher average ticket size and profit margins when compared to other categories.

This is a niche category where both sellers and consumers are comfortable in e-tailing, as the market was unorganised up till now with few brands and rest mom and pop shops catering to the needs that prevailed. Inclusion of home decor in online retail has provided a reach and option for enthusiastic buyers and young couples who otherwise had to rely on local retailers for designs and quality.

Commenting on the same, Alphonse Reddy, Founder and CEO of Fabmart said, "At Fabmart, we ensure that the customer gets value for money.

It does not mean that we discount the products nor does it mean we sell at MRP. We work together with brands to make sure that we price things really attractively but we primarily focus on providing better customer experience through high quality video and web content and features such as 'ask-an-expert'."

Vikram Chopra, Co-founder, FabFurnish said, "The future is certainly bright for the eCommerce industry in India. As per the Internet & Mobile Association of India and KPMG reports, the e-retail market that stood at just $3.8 billion (Rs 19,249 crore) in 2009 should grow to $12.6 billion (Rs 62,967 crore) by the end of this year.

This clearly shows the potential in this space. We are, indeed, a potent force that can take on physical retail head on."

On the flipside

In the home retailing segment, supply chain and inventory management are the biggest challenges. Also, demand forecasting is very hard in ever changing economy as the interests and trends are  changing rapidly with communication and Internet taking over. If the demand for a particular product soars up then it's hard to fulfill it from the backend in comparison to other categories such as apparel or groceries where more options are available.

Addressing solution to this, Chopra suggested, "To face such issues in home segment, centralised ERP, and other technology solution should be in place so that one does not run out of stock."

Emerging trends/markets

In the home retailing segment, furniture generally is a high ticket business, reason being, there are a lot of new players coming into this segment. Names like Zansaar, Pepperfry etc have started their furniture retailing a couple of years back and online players like Flipkart, Amazon, and Jabong already have been retailing home products.

Striking a similar thought, Reddy shared, "Our average ticket size is about Rs 40K. It is one of the highest in the industry not only in India but even globally. Our ticket size is about 20x more than the average ticket price of mass-market player in eCommerce. We primarily deal in home furnishing products, electronic items and fitness equipments."

Along with furniture, kitchen and tableware is a burgeoning market altogether. India's huge population falling under the age group of 30-35 is a great impetus to accommodate international player like Berghoff. The brand's Chairman, Rafael Vanthoor shared, "Indian market is a fast growing market. People in India have the buying potential, but at the same time, they are very price sensitive in nature. They have the right preference for quality products and that's what we offer."

According to market estimates, the tableware market is pegged at around Rs 2,000 crores, which includes glassware, ceramics and kitchenware.

The luxury tableware market is anywhere close to 15 per cent of the total volume of this industry. Among different product categories, ceramics tableware is slowly picking up as people are getting more aware about the health hazards from other forms of tableware be it melamine, plastics, steel, nonstick or any other material.

Clearly, the India story of home retailing consumerism coupled with many domestic and international players has created an environment where only the best players can survive and substantiate their business formats in the long run.

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