Designer planks now affordable

Over the year’s, home or office furniture has taken a new shape as designers are experimenting with innovative ideas and giving the same old wooden planks a new look and feel and the customers are ready to buy something that is different from the stereotypical, drab looking furniture. Still, the furniture market is dominated by the unorganised players, though the organised sector is bound to take over by collaborating with international players and giving the furniture industry new and interesting design concepts.

Factors responsible for growth

Nuclear families, husbands and wives both working and new lifestyles have further boosted the growth of the organised furniture market and the middle class is able to afford it with no huge maintenance costs. Gone are the days when buying new furniture was a tough task and people used to wait for months to place an order for the making of the furniture and its delivery. Now the delivery is immediate, as the customers are buying readymade furniture. Stating on the same Mr Hiten Parekh, Executive Director of Nilkamal Ltd says, “Readymade furniture is now available and one does not need to place the order and then wait for months to get it. The process to buy furniture has become quick and convenient.” Organised retailers are trying to catch the right pulse of shoppers by offering world class furniture products at affordable prices. Mr Subodh Varma, Vice Chairman, Usha Shriram Enterprise says, “The changing face of the construction industry and the increasing aspiration of the consumers to use branded products are driving the organised sector.” Moreover the imported furniture has seen a surge in sales due to globalisation and changing human desires and trends. Says Mr Sajjan Dokania, Chairman, Durian Industries Ltd, “After the trend of imported furniture in India started about a decade back, for the first time, Indian consumers who had no proper means to acquire this international range of furniture, are now able to buy the same locally.”

Changeover to organised

The share of unorganised sector of furniture market is around 80 to 85 percent. Commenting on the industry steadily transforming into an organised and more competitive sector, Mr Mahesh M, Chief-Furniture, HomeTown, HSRIL says, “Organised furniture is slowly, but surely evolving. With the advent of furniture retailing in a big way - led by annual occasions like Maha Bachat in Big Bazaar, Mano Ya Na Mano in Hometown and Exchange Schemes, the acceptance of organised retail has increased and the trust element is stabilising.” With the entry of global companies in the sector and large retail players, the organised furniture industry has witnessed a steep growth. Ms Namrata Dugar, MD, Ikian Furnitures Pvt. Ltd says, “In fact, a huge growth in the import segment is the major reason for the growth of the organised sector. The key countries that imports are made from are Italy, Germany, Spain, China and Malaysia.” Some of the prominent players in the organised segment are Durian, Godrej & Boyce, Zuari, Kian, Tangent, BP Ergo Ltd, Featherlite, Usha Lexus Shriram, Nilkamal Ltd, Steelcase, etc. And furniture import, to a large extent, has contributed fairly to the transformation from unorganised to organised sector. The major retail players such as Pantaloon retail, Nilkamal Ltd, Godrej & Boyce, etc. have come up with exclusive furniture outlets which are Furniture Bazaar, Collection-i, HomeTown, Godrej Interio, @home and many more. Mr Ajay Pimple, General Manager – Marketing & Shop Fittings, BP Ergo Ltd says, “The imports in the office furniture market are pegged at around 40 per cent, while in the retail segment the imports amount to 80 per-cent of the total market share.”

Home & office furniture

Home furniture is the largest category in the Indian furniture market which accounts for about 65 per cent of furniture sales. The office furniture segment follows with a 20 per cent share and the contract segment, accounts for the remaining 15 per cent. With the booming retail and foreign companies opening their offices in India, furniture requirements have received a further boost. Commenting on the same, Mr Pimple says, “Indian furniture industry is gradually transforming into a more organised and competitive sector. The entry of global brands in the sector, emergence of large retail players and the resultant consolidation, are trends that highlight this transformation.” Mr Mahesh says, “Office furniture has evolved over the last decade and the presence of many domestic and foreign brands has helped in stabilising the industry.” Wooden furniture acquires the maximum share of furniture products in homes and offices, however, goods made of steel, wrought iron and plastic too have witnessed an increase in demand from all the quarters. Mr Ramesh Dugar, CEO and Ms Dugar opine that the Indians primarily in their middle-age and beyond prefer wooden furniture, whereas, plastic and wrought iron is largely bought for functional purposes. Out of the total Indian furniture market which is around USD 7,922 million, wooden furniture accounts for USD 1,358 million. Mr Parekh states, “The organised furniture sector is growing by over 35 per cent and is expected to become a Rs 1,200 crore industry by 2011-12.” As the office space and retail is bound to increase by around 20 per cent in the next four to five years’ time, it is making the office furniture segment more attractive among organised furniture players.  

Growing real estate sector

As the Indian economy grew over 8 per cent in last few years, the real estate sector witnessed huge growth. In 2004, the entire commercial space absorbed in India was 16 million sq.ft, which was mainly contributed by Bengaluru (7.7 million sq.ft), followed by NCR (2.9 million sq.ft), Mumbai (2.5 million sq.ft), Hyderabad (2.2 million sq.ft) and Chennai (1.6 million sq.ft). Both the Dugars say, “The Indian furniture industry is currently riding on the crest of the Indian real estate boom wave- more like a 'constructive' Tsunami, not a destructive one. As the furniture sector is highly unorganised, we have to look to the real estate sector to glean clean analysis - as the two are joined together like Siamese twins.” The demand for office space in India by the end of 2008, is estimated to be in excess of 85 million sq.ft. About 80 per cent of real estate developed, is in residential space and the other includes office, retail, hotels, malls and entertainment avenues. The Indian furniture industry offers immense growth opportunities for multinational players due to growth of real estate segment. Mr Varma states, “Indian domestic market is a huge market and it has lots of opportunities for both domestic, as well as international brands. We, as a player have already created a niche for ourselves and have been experiencing good growth.” The imports of furniture products into India grew by nearly 64 per cent last year.

Key furniture players

In India, though the furniture is largely retailed through local or small manufacturers, the industry is gradually moving towards the organised mode as well. Some of the key players in the organised furniture segment are:

Usha Lexus Shriram: Usha Shriram Furniture Industries is a part of the Shriram Group of Enterprises- one of the largest and premier groups of industries in India. Presently, Usha Shriram has 25 showrooms across the country, both dealerships as well as company owned showrooms. The company has its own production facility. The products are conceptualised by designers from the National Institute of Design (NID) who are well versed with international trends.

BP Ergo: Established in 1992, Bp Ergo is India's dominant office furniture company and markets modern modular furniture. The company has sales branches across the country and a state-of-the-art factory in Nagpur. In 2006, BP Ergo entered the shop fitting market, and is executing orders for some of the world's leading retailers in cities in India and globally. BP Ergo has its own state-of-the-art factory in Nagpur which is spread over 3 lakh sq.ft. The company has over 30 designers based in Nagpur and qualified CAD/ CAM professionals in each branch office.

HSRIL: Home Solutions Retail (India) Limited (HSRIL), is a group company of the Future Group and entered the organised retail of furniture in late 2005, through Big Bazaar. Over the last three years the company has revolutionised home furniture offerings through different formats, i.e., Hometown, Furniture Bazaar and Collection-i stores. The company has its own Design and Development cell, which continuously works on trends, value enhancement and consumer studies.

KIAN: KIAN India is led by the entrepreneurial Nepal based Dugar Group. The company introduced the concept of lifestyle furniture in India. Besides residential furniture, KIAN offers total furniture solutions, i.e., furniture for cafés, bistros, restaurants, hotels and the corporate sector. The company sells middle-range Asian imports from its Kian single stores in Bengaluru, Chennai, Hyderabad and Mumbai. KIAN also retails Italian furniture which is sold under the brand Friuli, in Bengaluru for high end clients. Other than having its own manufacturing unit, the company has deployed designers from NID and NIFT at its showrooms, who provide complete furniture solutions for the different sectors.

Nilkamal: Nilkamal is the world leader in the field of plastic molded furniture. The company diversified into the lifestyle furniture business by launching @home - the complete Home Solutions Store with contemporary readymade wooden furniture and home accents. The company has its own plastic molded furniture units. Nilkamal has its designing team which has designers from IIT, NID and interior designers for @home brand outlets.

Godrej Interio:  Godrej Interio is a part of Godrej and Boyce conglomerate. Godrej Interio offers expertise in the business of Furniture and Interior solutions. With the range of Home furniture & decor solutions, Godrej intends to provide the warmth and comfort to the buyers at great prices.

Durian: Durian played a vital role in stepping towards converting the imported furniture segment into an organised sector in India. The company started importing furniture in 1999 with its first showroom in Mumbai.  Today, within a decade, the imported furniture segment has grown by leaps and bounds. Durian has spread its wings, covering the major metros and going to semi metros and small towns of the country and has 50 stores all over the country. Durian started with a full-fledged factory at Palghar, near Mumbai and to further strengthen its hold, set up a new factory to manufacture high pressure decorative laminates for the use of their modular systems and employed around 30 skilled designers.

Style Spa Furniture: The company is promoted by the Zuari-Chambal group of K.K Birla and was established in 1997. Style Spa has over 90 exclusive retail showrooms throughout the country.

Featherlite: The company has been retailing from the last 21 years and opened its first outlet in 1987. Featherlite is the first office furniture company that started furniture retailing from exclusive outlets and at present has over 25 exclusive outlets in the country.

Export, import policies

For furniture, the Indian government reduced tariff rates from a peak rate of 300 per cent in 1991, down to 36 - 40 per cent on stated value of goods in 2006. However, different players in this segment have different views regarding the government’s import/export policies. Mr Pimple says, “Some clients get duty exemption (VAT exemption) for buying imported furniture. The government should have a level playing field for the domestic players and imports.” Adding to it, Mr Mahesh states, “Imports is a major constituent, be it raw materials  and components for Indian manufacturers or finished goods from overseas- hence an even  more positive view towards liberalising the duty structure, etc. would make the product offerings to the Indian consumer more attractive.” Expecting from the govt, Mr Dokania states, “Liberalisation of the government’s import policies has played a very important factor. We expect the government to liberalise the policy further and to trim down the import duty for the benefit of the end consumer.” Adding to the expectation, Mr Parekh feels, “The time taken in India to clear the things takes many days, whereas, in developed countries it just takes a single day. VAT, excise duty, and sales tax should be reduced by the government - they are the biggest hurdles the furniture players are facing.”

Annotation

Irrespective of the expectations and the market share of the unorganised and organised sector, the furniture industry is bound to grow and would be quite affordable to the consumers in the near future. And one thing is assured- the consumers can expect to get the value of every plank they buy!