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Nov, 01 2011

CASH IN KITCHEN CABINET

The modular kitchen industry in India is headed towards a much desired proliferation. With numerous global and home-grown brands making a beeline to court this USD 300 million kitchen couture, franchising opportunities galore in this segment!

CALL it the aftereffects of urbanisation or the much burning desire to go upscale; Indians are cooking a new change!  According to a recent report by The Trade Council, Embassy of Denmark, Bengaluru, ''The awareness of home interior among Indians was recently reflected in a market study on consumer spending, which showed that 38 per cent were willing to invest in home improvements and furniture.” No wonder, the Indian desire for a custom-build kitchen is no longer confined to an archetypal kitchen setup. It has gone much beyond with the installation of the European as well the stylish modular kitchens with the state-of-the-art facilities.
Talking about this modern kitchen world, Anant Maloo, Chairman & Managing Director, Timbor Home Ltd, feels: “If you look at the size of the modular kitchen industry, the share of the organised players is not more than Rs 1,500 crore out of Rs 20,000 crore industry! We have not even touched a mere three per cent of the industry. It's just a tip of an ice berg.”

Modular mode
According to Subodh Mehta, Assistant Vice-President, Godrej (Interio-Home, Marketing): “The modular kitchen industry has great potential and is growing in excess of 25 per cent per annum. As per estimates, modular kitchens' penetration in large towns is less than 10 per cent so the opportunities are immense.” Besides, rising disposable incomes and demand for a perfectly tailor-made kitchen has provided the much desired impetus to the brands in this industry.
Interestingly, the Indian modular kitchen industry has recently seen the advent of globally acclaimed names like Kohler, Kaff, Poggenpohl. Likewise, home-grown brands have multiplied manifold, sensing the huge business opportunity that still remains untapped in this segment. Brands like Timbor Cucine, TTK Prestige, Godrej Home Interio, Adeetya's Kitchen System, Aran Kitchen World, Wood Pecker etc are tasting success like never before. Though this industry is in a nascent stage and remains unorganised, still there has been a steady shift towards being organised.
 

 

Beyond kitchen cabinet
The urge for modular kitchens in small towns have lead the 'kitchen kings' to find shelter in small towns too. And as far as their foray and expansion in small towns is concerned, majority of brands have cooked their business model via franchise to garner great returns!


With this transation in the kitchen industry, franchise brands are keeping no stones unturned to have a fair share here. An entire gamut of such brands swear by the franchise format, as the best and the easiest gateway to profits. Informs Chandru Kalro, Executive Vice-President, Marketing, TTK Prestige Ltd: “We believe franchising is the best way. Prestige's core competence is its brand and product development. We will like to create business opportunities to knowledgeable stakeholders to implement the concepts in the field. While doing so we ensure quality assurance at all stages.”
But doesn't this segment, which is still in a nascent stage poses risk to franchisees and franchisors?  Dispelling the risk factor, Maloo explains: “Franchising can't be a risk business in this segment. It can never be! All our franchisees have received their return on investment in less than six months. Modular kitchen segment is the safest and the best business option these days, as our franchisees don't have to invest even a penny for stock. There is no dead stock for franchisees.”
Turning on the knob of profits, the modular kitchen industry has also percolated as a mammoth business opportunity for women entrepreneurs. With kitchens being essentially considered a female dominated bastion, the huge rate of success can also be witnessed among women franchisees as well as entrepreneurs. Citing an instance of a successful woman franchisee, Anand Ambekar, Director, Adeetya’s Kitchen System feels: “Suman Vij is our lady franchisee operating her outlet at Dehradun from over one year. We helped her in understanding the market and finalising marketing strategy.” While Rajesh Bohra, Chairman and Managing Director, Aran Kitchen World, believes that their single woman franchisee in Coimbatore is doing exceptionally well. Similarly, for Timbor Cucine, at least 50-60 per cent women franchisees, who are involved, if not full-time but they are there! Maloo explicates on this aspect: “The modular kitchen segment is a golden opportunity for ladies, as they understand this product better than anyone else.” Likewise, Kalro quips: “We have two women franchisees for modular kitchens. We have various other formats of Prestige Smart Kitchens. We find that these franchisees are better in creating a deep relationships, since they can understand customers' needs much better.”
With the modular kitchen segment invariably different from any other brand and the customer involvement being much deeper, the kind of training and support for franchisees is more consumer-centric with a hands-on-experience. Explicates Mehta: “Kitchen galleries have helped us in offering the right customer experience as well as a turnkey solution to our customers. Our franchisees are fully equipped to do a complete kitchen, including the plumbing, tiling, flooring and selling of appliances like hob/chimney /sink. Thus, they act as a one-stop-solution provider for our kitchens. The aim is to create more values for customers through partnership with franchisee.”

Customised curve
Going by the typical Indian cooking conditions, which includes a lot of water and oil, brands, too, have settled for a more customised mould to adhere to the Indian kitchens. Tweaking in localisation, brands are chipping in that extra effort. Asserts Ambekar: “Adeetya's Kitchen System has developed a concept of 'Modern Indian Kitchen' after thorough research into modern lifestyle and Indian cooking tradition. That's why for Indian kitchens Adeetya's introduced 'Tubular steel framework', which lasts long than particle board or wooden carcass.“ Besides, pricing has also been an important aspect. Going by the price sensitive Indian market, brands have ensured that their products continue to remain affordable.

Breaking boundaries
With the modular kitchen industry growing manifold, franchise brands, too, have been expanding across the nook and cranny of India. And if one thought that these custom-made, stylish modular kitchens were just meant for metros then take a look at this- as per industry experts, a sizeable chunk of the modular kitchen outlets are located in the tier-II and III cities. For instance, majority of the Timbor Cucine kitchen solutions stores are in these locations churning out huge profits for the brand as well as its franchisees. States Maloo: “We are more in small towns and are present in 72 cities at present. We have more than 700 cities on our radar that have a potential for modular kitchens. In fact, we even have presence in cities where the population is just about 50,000.”
Talking about the expansion plans through the franchise format, Ambekar informs: “In Adeetya's Point of prospects we are looking forward for expansion through franchising. Today, we have 17 exclusive outlets all across India and we wish to extend this to 100 outlets in the next three years.” While Godrej Interio is looking to expand its footprint through 80 operational franchisees (kitchen galleries) across India by 2013-14.
Though brands are registering a northbound growth, coping with unorganised players and making a mark in Indian kitchen bastion has never been a cakewalk for them. Likewise, Kalro says: “The challenge was getting the product mix and the back-end right. We achieved the right mix after detailed research of competition and market research.”

What's in store?
Looking at the potential of this industry, brands are in mood to cash on this opportunity. Ambekar says: “The future of this industry is bright.” However, amidst the bustle of brands vying for this segment, sustainability and having a terra firma in the gruelling Indian kitchen conditions can be a bit tough for brands. Kalro justifies with a word of caution. “The opportunity is amass. But sustainability of brands is the key to development of this category. Modular kitchen as a product offers the biggest advantage of standardisation and work flow management unlike a carpenter-made kitchen, which is more aesthetic than functional,” he adds.

The modular kitchen industry has great potential and is growing in excess of 25 per cent per annum

The Indian desire for a custom-build kitchen is no longer confined to  an archetypal kitchen

The modular kitchen industry has percolated as a mammoth business opportunity for women entrepreneurs

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