The Indian furniture market today is estimated at `71,000 cr. It accounts for approximately 0.5 percent of the country’s total GDP, and provides employment to over 3,00,000 people. However, the furniture segment is largely composed of the unorganised sector, with organised players constituting a stake of about 15 percent. A redeeming fact is that the organised sector is growing at an annual rate of 30 percent CAGR. Wooden home furniture comprises a major segment of the furniture industry, with the states of Gujarat, Rajasthan, Uttar Pradesh, Punjab, Kerala, Andhra Pradesh and West Bengal being the key production centres for wooden furniture.
The furniture industry in India can be broadly categorised into residential, office and contract, and institutional segments. Household furniture constitutes 65 percent of the market share, office furniture accounts for 20 percent and contract manufacturing makes up the remaining 15 percent of the industry. Based on their applications, there are other furniture segments such as kitchens, bathrooms, bedrooms, etc; and based on raw materials, wooden, plastic, metal, bamboo, etc. These industry segments include several major players from the formal sector such as Godrej & Boyce Manufacturing Co. Ltd., BP Ergo, Featherlite, Haworth, Style Spa, Yantra, Renaissance, Millenium Lifestyles, Durian, Kian, Tangent, Furniture Concepts, Furniturewala, Zuari, Truzo, N R Jasani & Company, V3 Engineers and PSL Modular Furniture, etc.
|Anant Maloo - Managing Director, Timber Home Ltd
The real estate boom, during which, housing and real estate construction have been on a gradual incline since the economic slowdown in late 2008, has proved to be a major driver for the Indian furniture industry. The expansion of residential and commercial infrastructure across metros and smaller cities has led to an increase in the demand for furniture and allied products.
Besides, with the growth of the hospitality and tourism sector, the tourist inflow has increased dramatically. This, in turn, has led to a greater demand for space and infrastructure. In Gujarat, for instance, the state tourism budget has been increased from $21 mn in 2008–09 to $35 mn in 2009–10.
The change in consumer demographics is another crucial influencing factor for this industry. According to McKinsey Global Institute, India’s real GDP is expected to grow at an annual rate of 7.3 percent through 2025, with urban India accounting for over two-thirds of the total market growth. With income levels rising, the consumption of lifestyle products, including furniture, modular kitchens and similar products, is expected to increase too.
Modular Kitchens: The Latest Emerging Segment
Of the approximately $8 bn industry, the modular kitchen segment has emerged as the fastest growing segment. As per the last available industry statistics, the modular kitchen segment is valued at `20,000 crore. Modular kitchens account for about 40 percent of the entire furniture and fittings industry, with products in the market being largely focused on establishments in urban India. The emergence of nuclear families, rising disposable incomes, and better affordability, underline the fact that the modular kitchen industry is expected to grow at a rate of 40 percent per annum.
Modular kitchens is based on functional practicality, and their entry into the design of domestic furniture market indicates a new consumer consciousness about the fact that even kitchens can make a style statement while being comfortable and elegant. Today, Indian readymade kitchens are sold at the rate of 10,000 units per month, and the next three years should see this rate grow 10 times over.
Although at a nascent stage, the modular kitchen segment has tremendous potential. It is largely unorganised, with a hefty presence of local and small players. The unorganised market includes carpenters making self-designed kitchens based on household requirements. Timbor Home provides kitchen solutions under its ‘Timbor Cucine’ brand. The ‘IKI Kitchen’ brand of the company, targets the high-end segment, and uses ‘Hettich’ technology in its modular kitchens.
Modular kitchens are customised as per the requirements and preferences of individual customers. Based on consumer needs, they can be furnished with various additional accessories such as chimneys, burners, etc.
The Impact of FDI in Retail on the Furniture Segment
The approval of FDI in retail will provide this industry the required boost that it needs. Some of the benefits or opportunities that FDI in retail shall bring to the table include new products that have improved quality and lower prices, along with additional resources such as capital, technology and management. This approval should provide updated technologies, management techniques and quality control processes that will enable better and cheaper goods with inputs to producers. It will encourage newer and novel activities, and local operations shall get upgraded either via imitation or due to competition. FDI in retail will aid penetration into international markets, as well. The current holdback has been a dampener not only for the furniture industry, but for other segments, too.
Challenges that the Industry Faces
The furniture industry in India still has a long way go to be able to reach its full potential. One of the major roadblocks is the fact that most of the industry is unorganised. None of the buyers are fully integrated—all outsource at least a portion of their activities. Large retailers have to offer low prices with high quality as well as variety. There is a necessity to improve production processes, which includes upgrading new machinery, equipment and logistics systems, and continuous quality improvement along with control measures. In conclusion, it is generally observed that today’s consumers have opened their doors to new concepts and ideas, and the Indian furniture industry is poised for rapid growth—all set to reach great heights.
Courtesy: Timbor Home Ltd