Hafele, one of the global leader in manufacturing and distribution of sophisticated hardware fittings for Kitchen Interiors, Hafele, today has marked presence in India via franchising. In an interaction, Jurgen Wolf, Managing Director, Hafele India Pvt. Ltd shares brand’s growth plans for India.
Namita Bhagat (NB): Kindly share the origin and concept of ‘Hafele’?
Jurgen Wolf (JW): Hafele was founded nearly 90 years ago in Nagold, a town near Stuttgart in Germany. From a small hardware shop Hafele has since grown into a global company which operates with its own subsidiaries in 40 countries and employs 6,500 people worldwide. Despite its considerable size of more than 7,000 crore, Hafele remains entirely in family control both in regards to ownership as well as management. Hafele is today one of the global leaders in the manufacturing and distribution of sophisticated hardware fittings for the use in interior design. With over 1.5 lakh products we have the largest product range worldwide and service through our subsidiaries and the export dept in Germany nearly customers in 120 countries.
NB: When and how did the brand enter India? What makes your brand promising for this market? Why did it opt for franchising route?
JW: Hafele India Pvt. Ltd was established in 2003 with a small team which has since grown to 310 employees who operate from seven offices and 18 locations throughout India. We saw a big business opportunity in supplying quality kitchen fittings into one of the fastest growing economies. The main driver for establishing the franchise concept was because we simply could not find sufficient quality outlets in the market where we could present our products in the right retail environment and deliver on our brand promise. The franchise route seemed obvious given India’s size. It would have been prohibitively expensive to attempt to open company outlets in so many locations out of our own steam. It would have simply not been financially viable.
NB: Share the brand’s current presence in Indian market through company owned as well as franchisee stores?
JW: Even though we have our own Design Centres in 6 locations in India, Hafele is operating under a Cash and Carry license which prohibits us from selling there to end users. Therefore, the franchise shops fulfill this function. By the end of 2012 we will have 52 Hafele franchise shops up and running. Presently, we are majoring in the south and west but a large franchisee expansion is underway in the north of India which will put the Hafele name on the map there as well. We also have a smaller presence in the Eastern India.
NB: Tell us about the brand’s product portfolio? What is the targeted clientele?
JW: We sell kitchen fittings apart from fittings for many other applications. We do not make the furniture. For kitchens we now have the most sophisticated and extensive range of cutting edge fittings available in India. This extends into appliances, sinks, taps and even lighting. There is really nothing which you cannot find which is required to make an attractive quality kitchen which is on a European quality level. Given that all our products for kitchens come from Europe it becomes quite clear that we are targeting an upper middle to premium clientele. For many Hafele products remain aspirational but given the fast development of incomes in India this customer niche is becoming larger and larger every year.
NB: What are your further expansion plans? How lucrative is the franchise opportunity offered by you for the prospective investor?
JW: We are systematically expanding our network of franchise shops all over India. We will on average have 25 franchisee opportunities a year. More is physically difficult to do given the infrastructural issues which we are facing. We will also start to roll out a high- end appliances shop concept next year in three to four cities. This is another opportunity to participate in the Hafele success story for a few entrepreneurs.
NB: Kindly provide brand’s franchise facts. How does the brand train and support its franchisees?
JW: The investment varies from shop to shop depending on its size. Typically what we are looking for is an area from 1,500 to 3,000 sq. ft and the investment will accordingly be roughly between Rs 20 – 35 lakh. The location is of course the most important aspect. We are looking at shops in established or new markets which receive good footfall. A ground floor location is always preferred over upper floors. In regards to the ROI we expect most of our franchisee to get their investment back after two years. Often this has happened also after one year but again this depends somewhat on the location and many other variable factors.
Hafele has a very professional training dept. which makes sure that all our franchisees receive regular trainings in regards to product and sales arguments. After the opening, our franchise operations team looks after the day to day support of our partners.
NB: Could you provide an overview on current retail scenario in Modular Kitchen market. Where do you see your brand five years down the line?
JW: The retail scenario for kitchen and other interior fittings is not a very happy one. Contrary to the sanitary and tiles segments the hardware trade has not moved up the value chain yet. Kitchen studios are starting to present their products in a better way but also here much more needs to happen. What is one of the most important weaknesses presently is the absence of strong local kitchen brands. I can think of only one brand which has managed to establish some brand equity all over India. All others remain regional players with insufficient retail presence even in their limited geography. This is where Hafele can add fantastic value. By associating with us the franchisee can take advantage of our strong national brand presence and aggressive marketing activities. This ultimately compensates for the weakness of theirown brand. Kitchens which are equipped with Hafele fittings ultimately provide superior quality and functionality. Hafele will continue to push this advantage into the market through our franchise expansion drive.
In five years we see over 200 outlets in India which should make us into the acknowledged leader in our category.