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Sep, 07 2010

HOMING IN ON HOME DÉCOR

THE unorganised home décor segment is rapidly getting branded.

THE unorganised home décor segment is rapidly getting branded. The number of players in the segment is on the rise and so are the opportunities for aspiring franchisees, with extensive expansion plans via franchising.

Business potential

The Indian home fashion and décor market is valued at over Rs 14,000 crore with an average growth rate of 10 per cent YOY. Aloke Banerjee, CEO, Rosebys, says, “The present size of the industry is Rs 12,000-14,000 crore. At the mass level, the growth is 8-10 per cent while at the premium level, it is 15-20 per cent.”

A large number of international brands have started making investments on Indian shores to create a niche in this burgeoning industry. In the next two years, the furnishing industry is said to touch the Rs 20,000-crore mark. Welspun, Creative Portico, Rosebys, Bombay Dyeing and Carmichael House are the well-known known franchise brands.

Loopholes

In India, customers in tier I and II cities have not been able to grasp the concept of purchasing expensive home decor merchandise. Awareness at high price points is one of the key issues in this market. The store staff needs to be competent to convince the customers about the value for money. The sales staff should be imparted timely knowledge about the latest collections and innovations in this segment.

Location is a very critical issue, as the locale demand varies from concept to concept. Locale requirements and catchment areas need to be studied carefully before opting for a location.The Indian market is very seasonal in nature. Dussehra and Diwali and wedding season is the peak time when more than 50 per cent of sales generation can be garnered. These timeframes can help you pocket extra money to add to your share of profits.

As the industry is highly fragmented, competition is playing a healthy role in setting the dynamics in proportion.

Anil Mathur, CEO, Godrej Interio, feels, “The rate of competition is steadily increasing in the industry. The players are constantly elevating the benchmarks in terms of product performances, services, response time. Overall, like many other industries, competition is helping to shape up the industry.”

Franchisability

The opportunity for entrepreneurs is endless in the organised furnishing market. Mostly, franchisors prefer to expand their brand presence in metros where people have more awareness with respect to new brands. Franchisors offer a training module to the franchisees, which include business understanding, product know-how, customer servicing, visual merchandising and customer relationship management, which will make it easier for franchisees to carry out the day-to-day functions in the store. Franchisors also offer assistance in marketing of the business at the local level keeping in mind the vitality of making customers aware of their product offerings. Banerjee says, “At Rosebys, training is an integral part of store functioning. We have a dedicated in-house resource team for providing training in attitudnal behaviour and product knowledge to the store staff. Store staff and the franchisee are trained every quarter.”

Replicating the business format is easy and the credit goes to the franchisors, who work out all the business dynamics and know-how for the franchisees. Mathur says, “Replicating the business models comes easy only with the right partners. The basic ingredients required are pretty simple, some basic discipline, regard for processes and customer service orientation. Once these are in place, replicating the business model is fairly easy.”

Financial viability

As a franchise concept, the segment seems to be a sensible investment. The initial investment includes the cost of interiors and merchandise, which sums up to around Rs 20-30 lakh. The average margin the franchisee makes on a product ranges from about 10-30 per cent, which is good keeping in mind the dynamics of the market. The average working capital falls around Rs 17 lakh.

Exit option

The home decor market is an ideal opportunity for an aspirant to enter in the industry by taking up the franchise of a well-established player, either Indian or international. The franchisors in the segment do not wish to offer the franchisees the option to sell the business further. The average franchise term is three years with the option of renewing it.

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