Take an expensive piece of furniture and add some poor packaging to it. Result? A disastrous delivery and extra costs for the retailer.
With fast changing trends across industries, challenges are also increasing for the retailers. Same is the case in the furniture, furnishing and décor industry. Many factors remain a brainteaser for the players. Let’s know how the key players are combating the challenges in the industry.
The furniture and home décor industry is around Rs 40-60,000 crore and is expected to grow robustly to Rs 160,000 crore by 2020. Majority of the brands in the furniture, furnishings, home decor and lifestyle sector are facing many challenges, like entry of the international players.
Logistics & stock availability - roadblocks in furnishings industry
As far as logistics is concerned, it is a major challenge. Many furniture companies prefer to use specialised carriers to avoid damages. Another challenge in this industry is readily availability of the stock in demand. Even when the demand for any furniture product soars up suddenly, it gets very difficult to provide it from the back-end, unlike other sectors like apparel that has ready stock. Leading player, Godrej Interio counts anyone as its target audience who is keen on getting their home done, who is experimental and willing to try out new trends. The brand understands and translates these needs and requirements and comes up with a décor look working along with the customer. Subodh Mehta, Vice President- Marketing, Home Products, Godrej Interio says: “E-commerce players are increasing the appetite of the customers by providing enablers like COD, easy returns, try and buy etc but the biggest challenge for the brands as a whole is design obsolescence, changing trends and staying relevant to the customer on the e-commerce trends.”
Challenges behind the wallcovers
Another sector is the wallpapers arena, that is a small market currently not exceeding Rs 200-250 crore but it has grown by 300 per cent in the last five years and this is only getting better every year. Reckoned as the top brand in its category, Marshalls Wallcoverings is also expanding via franchisees and now has 38 franchisee run outlets. Just like any other industry, furniture, furnishings, décor and lifestyle sector also has its limitations and challenges to face. Karan Sharma, Director, Marshalls Wallcoverings says: “The biggest challenge is the process of removing negativity about the product from the consumers’ mind which needs a lot of education. The presence of large unorganised sector in this industry also does not let the product or the service of the product get standardised. This sometimes gives an unpleasant experience to the customer.”
Local carpenters & unorganised market hinder growth
EVOK is a leading player in the modular kitchen segment. Ajay Seth, Chief Operating Officer, EVOK, HHRPL (Hindware Home Retail Pvt Ltd) says: “The major challenges for organised modular kitchen segment are high prices of branded/imported modular kitchen, low replacement demand and threat from foreign vendors. Due to high prices of branded modular kitchens, customers often opt for personalised designs offered by local carpenters, impacting the market share of the organised segment. Low replacement demand of modular kitchens also poses a threat to the growth of the market. Customer satisfaction is also a major challenge as the highly customised modular kitchens have a lot of customer touch points. From initial enquiry to installation and handover, customer experience is important at each level, which makes it challenging to satisfy each and every customer at all the levels.”
Mahesh Jain, Business Head, Stellar Furniture & Lifestyle quips: “A drastic increase in the number of corporate offices & MNCs, in the last few years is definitely driving the industry. These people not only demand comfortable but stylish and designer furniture but they spend more on their style, quality and status too. But again, the major challenge for us is the unorganised market.”
Real estate and trained designers
Besides logistics, the industry is trying to tackle the issues like real estate and lack of trained designers. Brick and Mortar stores will surely continue to drive furniture and home décor sales especially for quality and mid-high ticket-size items and real estate remain an issue for the players. Ranjan Kant, Director, The Furniture Republic says: “Rent management and getting involvement of the owner are significant challenges for my sector.” The growing phase of infrastructure and real estate market has also augmented the demand for furniture products in the country. In the organised retail segment, the market is occupied by many leading companies. The entry of number of international brands and increased brand awareness and options in the Indian market has further more strengthened the Industry. Another issue is availability of trained designers. Sumit Dutta, CEO, Nesta from CenturyPly says: “The biggest challenge in this business is availability of trained designers for Modular Kitchens. There is a gap in the market and therefore an opportunity to create new job opportunities too.”
As per the Internet & Mobile Association of India and KPMG, the e-retail market that stood at just $3.8 billion (Rs 19,249 crore) in 2009 should grow to $12.6 billion (Rs 62,967 crore) by the end of this year. This clearly shows the potential in this space. Most players are smoothly entering this domain. Top online player in the category is Fabfurnish.com that has over 60, 000 products to offer. Vikram Chopra, CEO and Founder, Fabfurnish.com says: “Online furniture buying is a very nascent segment and we are proud to be the leader in developing this category. We, initially, had concerns over the touch-and-feel factor involved in furniture buying, especially in Indian market scenario. However, the traction we have seen in last one year has been very encouraging.”
Now, that furniture companies are bravely facing the issues and trying to find out ways to manage them, the industry is sure to generate lot many opportunities for the investors. As the industry gets further organised, the scenario will not be the same in the approaching future.