New Delhi: Indian home furnishing market is expected to witness CAGR of around 8 percent growth during 2013-2018, says a report by Research and Markets.
Furniture industry in India is still considered as non-organized sector as the market share of branded retailer is low. In smaller towns, a local carpenter is the most favorite choice when it comes to home improvement solutions.
However, home furnishing is one of the fastest growing sectors in India.
Share of the unorganized sector in furniture segment is about 70 per cent, says Vipin Kumar, Regional Manager-South Godrej Interio.
This segment is in transformation phase as many international and domestic players setting up their shop. In addition, local retailers are moving towards smaller towns now.
Tier 2 and 3 cities are showing tremendous growth in this segment. Home grown brands like Evok, Styles Spa are rapidly expanding in tier 2 cities.
Branded home furnishing category is growing fast and is being taken seriously by the consumers especially in smaller towns, explains Puneet Verma, Managing Director, Sealy India.
There are various factors which are contributing to the changing face of this industry.
Small town consumer is changing
Over the years, there is a sea-change in consumer’s behavior. With growing urbanization, people are increasingly moving to modern lifestyles.
Earlier furniture items were created to pass-on to generations. Now consumers prefers to redone their home decor at regular intervals, DK Jairath, Managing Director, Styles Spa.
The lifestyle habits of Indians have shifted from minimalistic and utility based to diverse and progressive, says Dhananjay Chaturvedi, Managing Director – Miele India.
Growing Tier II market
Growing middle class with higher disposable incomes is creating a big chunk of aspirational buyers for branded goods. And this augurs well for the industry.
“Both the Tier I and II markets have shown good responses in terms of sales,” says Puneet Verma.
“We observe that some of the Tier II markets in India are very exciting. Cities like Ludhiana, Hyderabad, Cochin, Surat, Ahmedabad, Pune and few others have shown great receptivity,” added Dhananjay Chaturvedi.
Interestingly, most of the brands have altered their offering while expanding in Tier II market. However, some of them have altered their marketing strategies to reach out to their target audience.
Brands planning growth
Home furnishing brands are expecting reasonable growth this time around.
Style Spa plans to open 15-20 stores in the next three years, primarily in smaller cities. Jairath from the company said, “At the end of the third year we are targeting to have about 168 stores, with a proportionate expansion supply chain network. Our current revenue is about Rs 225 crore and we are looking to doubling it over 3 years”.
Studio Creo is looking to enhance its distribution by local tie-ups. Studio Creo has just bought Italian furniture brand MAB.
Miele plans to expand by 129 percent in 2014 and 120 percent again in 2015.
The growth of this segment is just not restricted to offline retailers. In fact, online players like Fabfurnish, Pepperfry are craving niche in this segment, and are leveraging small town dwellers.