The growth in the real estate market has always had a rippling effect on the Indian home retail segment. For home retailers, including Natuzzi, Evok, Hometown and others, who offer a complete range of home décor, the business has been booming, driven by real estate growth.
Additionally, according to a recent study by ASSOCHAM, in a survey on ‘Current Investment Patterns in Working Urban Indians’, 65 per cent of working individuals in urban India prefer to invest their hard-earned money in real estate for long term as on one hand, it guarantees them higher future returns and on the other, it helps them stay off other investment options involving more risk like stock market, equity, mutual fund, gold, etc. It is turning out to be a prospective investment option.
“With the boom in the home retail segment and the younger profile of home owners emerging, there is a demand for newer and innovative home solutions products. EVOK, with its wide range of products and services, is a perfect solution partner of this discerning customer,” says Yash Manik, Head - Sales & Marketing, Evok.
The numbers are growing
The growth and people’s inclination towards real estate has, in turn, given a boost to the home retail industry as more and more people are now buying home décor, furniture and furnishing.
In fact, it is also seen that the number of buyers for luxury home retail is also growing, “Real estate development has surely had a positive effect on our business. As the number of houses in the premium market is growing, we are experiencing better business,” says Nitin Bahl, Country Manager, Natuzzi India.
“With more and more spending power in people’s hand, the way of growth for us is paved. We are virtually doubling our growth every year. In terms of stores, we have 11 stores across India at present, which we plan to grow to 15 in 2012.” he adds.
Manik says, “Evok, as a brand, will be achieving a revenue milestone of Rs 100 crore and is growing aggressively year-on-year with CAGR of 70-75 per cent. In 2011, we opened stores at 7 new locations and expanded to 16 locations.”
The trends suggest that gone are the days when different showrooms offered different solutions for home décor. But now, things have changed and most of the organised retailers are now offering complete solutions for home décor, which includes both hard furniture and soft furnishing. It’s now about selling a complete look to a customer customised according to his/her need.
Individual customers vs projects
The home retail segment, now along with serving individual customers, is also finding a prospect growth in the projects when it comes to real estate. The companies are also eyeing larger projects in one go, which offer better returns. As of now, retailers, both Evok and Natuzzi, are doing 60:40 in terms of individual customers and projects, respectively.
Right step at the right time
India is growing big in terms of real estate and looks like a perfect market to set up home retail. But what is the right time to enter this market?
Pankaj Renjhen, Managing Director, Jones Lang LaSalle India, says, “The Indian market looks like a good market to enter the home retail segment. Ideally, anyone who plans to set up home retail should do it not at the time when construction of projects or real estate is on, but when the occupancy is about to start.”
“Occupancy”, he adds, “comes only after 1-3 years of the construction period and this is when the home improvement segment starts making profit. Moreover, looking at the status of real estate, the right time to reap benefits out of home improvement will be in the next two years.”
The market is going good, the aspiration levels are only going up and people are becoming more and more specific about what they want. It’s a favourable time for manufacturers, especially those who can live up to customer’s expectations.