The advent of E-Commerce Marketplace & Preferences of Multifunctional Furniture to Fuel Growth

1. INDIA FURNITURE MARKET
OUTLOOK TO 2021
Advent of E-Commerce Marketplace & Preferences
of Multifunctional Furniture to Fuel Growth
MATANG RAJ SAXENA

2. INDIAN
FURNITURE
MARKET
- The Furniture market in India clocked revenue worth 1049.1 Billion in FY’2015. CAGR of 14% from 2010
- Organized Furniture market has grown from 8% in FY’2010 to 20% in FY’2015
- Home Furniture segment clocked a 62% share in sales with Office & Hotel Furniture held at 19% & 12%
- Bedroom Furniture held 61% share of Home furniture sales, with Living, Dining at 23% & 11%
MARGINS
& TRADE
SCENARIO
FUTURE
ANALYSIS
&
RECOMMEN
DATIONS
INDIA ONLINE
FURNITURE
MARKET
&
COMPETITION
- Imports form significant portion of products sold to upper middle class customer. Beds with 55% share.
- China has emerged as the major import destination for furniture in every product category.
- Importers earn a Gross Profit Margin of 20-30% on an average to the sale to final customer.
- On the other hand, Domestic Manufacturers earn a 10% margin.
- Online accounted for 5.3%share of revenue, with showrooms’ share at 65% and small stores at 29%
- The GMV of furniture sold online in FY’2015 INR 6.8 Billion, Tier-I contributing 85% of sales.
- PF has been the leader with a share of 28% with 40% orders for furniture product rest being furnishings.
- PF’s avg. logistics cost per item reduced from INR 3000 to INR 600 recently.
- Godrej, Nilkamal, Durian are the major offline players operating at INR 3000-6900 per Sq.ft
- IKEA palnning to invest INR 125 Billion to open 25 stores with avg size of 350,000sq.ft
- Organized home furniture market will elevate to INR 311 Billion by FY’2020 from INR 127B in FY’2015
- Growth is primarily bolstered by increasing housing demand & high disposable income.
- Product mix of 60%-40% for imported & domestically made products for optimal margin structure
- The Optimal store size for furniture retail store is estimated to be 20,000 Sq.ft.
- Inclusion of soft furnishings will likely result in higher sales, since customer prefers one stop solution
- Sales reps must be trained with both comm’ skills & Technical knowledge to improve assisted selling.
- Strategic Alliances with Real estate developers to boost sales
EXECUTIVE SUMMARY

3. Indian Furniture Market - Introduction and Size FY’2010-FY’2015
Overall, revenue of Indian Furniture market grew at CAGR of 13.9% for the period FY’2010-FY’2015
Growth in Real
Estate & Housing
Growth in Information
Technology & Service
Higher Proportion of
Middle class aspiring
better lifestyle
Growth
Drivers
Real Estate Market Retail Market
Population of
India
Other Independent
Variables
Personal
Disposable Income
*Independent variables used in forecasting using regression models & other statistical techniques
- Furniture Market experienced a
substantial growth in the last few years.
- Alongwith below mentioned factors,
furniture manufactures have catered to
urban middle class requirements for
stylish homes in compact apartments.
- Additionally, imports from china, SE
Asia, Europe were driven by urban
affluent households
- The rising number of commercial
projects & along with greater spending
on infrastructure has also procided
enormous growth
- Gradual increase in prices, cost of
wood & Metal, declining revenue per
sq.ft were major hurdles of growth

4. Organized and Unorganized Furniture Market
Organized Furniture market is observed to grow from 8% in FY’2010 to 20% in FY’2015
Factors driving Growth in Organized Furniture Market
Rising Income levels
Increasing number of branded
furniture Players
Urban Working Professionals
attracted to Branded furniture
Arrival of International Players
- The Rising Demand of furniture from modern workspaces,
- Rapid establishments of MNCs in metros, increasing the number
of offices
- Improving economic conditions has provided strong driving force
to the growth of various verticals like hospitality, tourism,
healthcare, education.
- Number of Hotel rooms are growing at a CAGR of 13% Y-oY
Factors driving Growth in Commercial/Contract Furniture

5. Indian Home Furniture Market Segmentation - By Product Categories
Value Chain Analysis & Problems :
- Large proportion of Home furniture market belong to unorganized players and is degrowing Y-oY.
- Home Furniture revenue through organized retail is expected to be INR 311 Billion by FY’2020 (INR 26 B in FY’2010 & INR 127 B in FY’2015)
- Due to cheaper cost of labour & automated manufacturing processes, importers earn a gross margin of 20-30% with few high end products
commanding margins as high as 50%
- Domestic Manufacturers earn a gross profit margin of 10%, working in a 3-tier distibution model - Distributor, Wholesaler & Retailer
- Furniture Handling : About 10% of the products get damaged in the indian home furniture industry during transit. Lot of companies are
building In-house logistics to reduce this damage
- Turn-Around-Time : Avg. TAT is observed to be at 7 Days. But companies often exceed their stipulated delivery times causing inconvenience
INDIAN FURNITURE MARKET
INR 1049 Billion
Indian Organized Home Furniture Market
INR 127 Billion
Bedroom Furniture
INR 79.5 Billion
Living Room Furniture
INR 29.8 Billion
Dining Room Furniture
INR 13.9 Billion
Kitchen Furniture
INR 3.75 Billion
Beds
INR 38.2 Billion
Wardrobes
INR 34.9 Billion
Dressing Table
INR 4.8 Billion
Sofa Sets
INR 22.4 Billion
Center Tables
INR 4.5 Billion
By Product Categories, FY’2015
Category % Share
Living Room 23%
Bedroom 61%
Dining Room 11%
Kitchen 4.6%

6. Indian Home Furniture Market Segmentation - Living Room & Bedroom
Bedroom Furniture
● 61.5% of Home Furniture Market at INR 79 Billion ; Beds & Wardrobes
with major share
● Storage beds contributed 55% of Beds revenue (INR 21 Billion)
● Indian customers prefer having additional storage to stock up their item
● Young individuals & Nuclear families prefer non storage beds
● Regular wardrobes contribute 68% of Wardrobe revenue with 32%
going to Modular Wardrobe
Living Room Furniture
● 23% of Home Furniture Market at INR 30 Billion
● Indian customers choose design over durability while buying living room
furniture,as it gives overall perception of a home
● Sofas & Sofa Beds with major share, multi utility driving the demand for
sofa beds
● Materials : Leather has been the most preferred material with 32% revenue
share, with cotton, wool & linen at 23%, 18% & 12% respectively
● Seating : 53% 3-seater sofas, 33% 1-seater sofas
● Center Tables : Glass top (60%) has been observed to sell more than
wooden tables (35%) for they are considered to be premium & modern

7. Indian Home Furniture Market Segmentation - Dining & Kitchen
Dining Room Furniture
● Revenue share of 10.8% in the home furniture market in FY’2015
● Simple & Sleek designs in Demand. ASP between 35k t0 70k INR
● With shift towards modernization, increasing number of indians have begun to
purchase dining tables
● 6-Seater dining table clocked INR 6.7 Billion in revenues with market share of
48%
● Highest confused state while purchasing dining table than any other home
furniture products
● Material : Glass top dining tables are preferred over wooden top dining tables.
However, a gradual shift towards wooden tables is happening, and bench
seating instead of chairs strated to penetrate in India
Kitchen Furniture
● Kitchen furniture largely includes cabinets used to store crockery. Modular kitchens has been considered as a separate
segment.
● Kitchen contributed a share of 4.6% on overall home furniture market in FY’2015
● Contribution of Kitchen furniture in home furniture market revenue remained stagnant in the recent years, owing to the
fact that Indian customers strongly focus on customization of kitchen and less likely to change kitchen furniture
● Material : Most Indian Home owners utilized metal based furniture in Kitchen which possess high lifecycle and also
provides premium look at lower costs

8. Modular Kitchens in India
10x growth in 6 years at a CAGR of 60% from FY’2010 to FY’2015. Expected to grow at 50% CAGR in the coming years
Modular Kitchen Market in India
● The Demand for bolstered the total sales by 10x from INR 2.4
billion to INR 25 Billion in 6 Years
● Increase in PDI (Personal Disposable Income) of middle class
& increase in availability of cost effective solutions for
Modular Kitchens has bolstered the Total sales.
● Increase in information to customers about Modular kitchen
has also assisted the huge growth
● Price Range : Modular Kitchens are developed within INR
30k to INR 150k. However it can stretch up to INR 1.5
Million.
● Customers prefer custom-made kitchens over ready made
modular kitchens. The ideology to possess well organized
kitchen space has steadily risen in the past few years
● Organized Market : Big share of Modular kitchen market is
unorganized, but numerous players offering effective
solutions at the moment. Hettich being the leader (10%
market share), Godrej, Sleek & Hacker Kuchen have started
offering Modular Kitchens.
● Domination of Unorganized sector is due to flexibility in
development & Lower costs (Avg. Price < 1 Lac compared to
>1.5 Lac from branded players))

9. Modular Kitchens in India - City Trends & Projections
Market is expected to grow at CAGR of 31% during FY’2016 - FY’2020
By Cities
● Bengaluru & Ahmedabad generated highest demand with combined
share of 38%.
● Advancement of real estate & technological infrastructure in both
cities in recent years has assisted the growth to a large extent.
● Delhi, & Kolkata has 19% share of revenues in spite of huge
population. It has been observed that majority of people have still
resorted more traditional styles of Kitchens
● Young population has been the driver of change and has resulted in
stable growth in demand.
Increasing PDI & Ease
in FDI Policies
Need for Customization
& Convenience
Kitchen transforming to
Utilitarian space
Change in Outlook of
Kitchens
Innovative Kitchen
Designs
Automated cooking
through Kitchen
Appliances

10. Indian Home Furniture Market - Competitive Landscape
Make a Table

11. Indian Home Furniture Market - Competitive Landscape

12. Indian Furniture Market - KPIs of Urban Ladder & Pepperfry

13. Trends & Developments in India Home Furniture Market
3
4
- Organized home furniture market
contributed 20% of sales revenues
in FY’2015
- Customization is the major factor
- Furniture destination stores by
home town, home center
1
- Online furniture sales have
grown at a CAGR of 130% from
FY’2010 to FY’2015
- Convenience, Large variety at
one go, Product reviews
2
Advent of foreign brands
- India emerging as fast growing furniture
market
- Huge gap in untapped org. Market
- High purchasing capacity
- Absence of large retail formats
- Outlook & trust on foreign brands
- Significant increase in customer
knowledge about quality of wood &
materials
- One of the major factor for inclination
towards carpenter made furniture

14. India Online Furniture Market Overview
Snapshot of Major players in the market
1
2
3
4
5
6
Online furniture retail market has grown at 91.15%
from FY’2012 to FY’2015
ATV was observed to range between 15k-20k
despite small furniture items comprising 50% of
GMV in FY’2015
Tier 1 (85%), Tier 2 (10%), Tier 3 (5%) [market share
in terms of GMV]
- low penetration of internet
- less confidence in online transactions
- low usage of smartphones
Online payments (75%), COD (25%) in terms of GMV
respectively
Pepperfry stood as the major player in FY’2015 with
27.9% share in GMV
Others include players like Amazon, flipkart, Godrej
interio etc

15. India Children’s Furniture Market
Introduction & Market size FY’2010 - FY’2015 and Future Outlook
1
2
3
4
5
6
7
Overall children’s furniture market has grown at a
CAGR of 23% in FY’2010 - FY’2015 (5% of furniture
market)
Of which, Organized children’s furniture market has
expanded at a CAGR of 48%
Urban middle class & higher income class have been
observed as the main target group. Avg budget of ₹2
L-₹2.5 L
Theme based children furniture that includes cost of
designers is highly priced than non-theme based
furniture
Beds (40%) and Wardrobes (35%) constituted the
major share of children’s furniture market in FY’2015
The share of children's furniture market is expected to
grow at a CAGR of 22% with organized market growing
at a CAGR of 31%
Preferences towards non-theme & minimalist designs
with flexibility in terms of usage + with more storage
options

16. India Mattress Market
Market segmentation, Regional demand & Future Outlook
1
2
3
1
2
Urban working class is the major driver of mattress
market
Spring mattresses are increasingly being preferred
over coir & foam mattresses
- health benefits that it adds
- change in lifestyle
Decline in coir mattresses is due to rise in prices of
raw materials (latex)
Regional Demand
South India:
- major production hub of coir mattresses
- 45% of total organized mattress market
- south & west india are quickly adapting durable &
good quality spring mattresses
North India:
- dominated by large unorganized players
- 26% of total organized mattress market

17. India Mattress Market
Market segmentation, Regional demand & Future Outlook
1
1
2
3
Revenues in INR billion by
market structure
Organized vs Unorganized
Unorganized %share has declined from 70% in
FY’2010 to 62% FY’2015
Share of major organized players
Highly competitive with many organized players (60+).
Leading brands: Kurlon, Springwel, Sleepwel, Peps
Market leader: Kurlon
- innovative products catering to wider audience
- better methods of production
- focused on luxury customer segment in FY’2015
Other organized players accounted for market share
of 19%

18. India Mattress Market
Market segmentation, Regional demand & Future Outlook
Foreign brands like Sealy, King koil entry lead to
further expansion in 2011-2013
Real estate sector + rising incomes made significant
contribution to the demand increase
Major blocker: less awareness of importance of
having a good mattress
1
2
3
1
Short term FY’2016-FY’2018
Gradual rise in awareness among consumers about
health benefits of a good quality mattress
Increase in demand with the increase in purchasing
power
long term FY’2018-FY’2020
Change in preference of customers from coir & foam
to high quality spring & luxury mattresses
New players & several brands are expected to be
successful in tapping the target segment & focus on
superior mattresses
2
1
2
To Focus:
- Leveraging rising scope of hospitality sector such as hotels,
institutions & service apartments
- Bringing in diversification to produce hybrid mattress in
combination of coir, foam & spring

19. India Home Furniture Market
Future projections & Outlook
1
2
3
4
Things to consider
More investment in R&D to provide high quality
furniture products with thorough understanding of
trends in western side
Usage of strong & nature friendly materials such as
HDF with PU coating is likely to be adopted
Destination stores to act as “one-stop-shop”
attraction for a significant number of people
Demand for rental & used furniture to pick up in next
5 years with growth in young working population
- change their work locations frequently & hence
look for low cost temporary furniture

20. India Home Furniture Market
Analyst Recommendations
Having an Integrated business model
1
2 Source of raw materials
- creation of strong timber base in India + complementary additions
from abroad
Automated manufacturing
- reduces labour cost + TAT
- Technology to play huge role in reducing production costs +
streamlining operations
Addition of furnishing products
- customer look forward to buy furnishings
along with furniture
- generates higher revenue per sq.ft; INR
4k-7k rev/sq.ft in FY’2015
4
Efficient training for sales
representatives
- play a major role in impacting the
purchase decision of a customer
- skills to pitch differently for different types
of customers
5
3
Combination of retail & project
sales
- must cater to both B2B and B2C
- strategic alliances with real-estate
developers & architects will assist growth
Eg: Godrej interio
6

21. India Home Furniture Market
Analyst Recommendations
7 Assisting customers in decision making
process
- leveraging technology in assistance
- stitchwood has virtual reality model on website
which is used by ~30% of its customers
Excellent after sales services
- separate service with inventory of spare parts
that are more likely to get damaged
- long TAT could result in decline in repeat
customers
8
Ideal Retail
Furniture Store
Layout
Single Colour
Scheme on Store
Walls
Wider Areas
with
Proper Pathways
Product Display -
Major Attention
Store Layout
- Ideal store size is estimated to be 20,000 sq.ft
- should represent the scenario / ambience of a
home
- must also display products at the end of an aisle
or lead to some other department
- allow customers to focus on products by giving
suffice breaks
- furnishing items to be displayed along with
furniture + racks of similar products allowing
customers to compare
9

22. India Home Furniture Market
Analyst Recommendations
Entry Barriers
1. Domination of unorganized furniture manufacturers
- Organized players should continue to focus on
product innovation
2. Less repeat business
- Indian customers’ furniture life cycle may last
for even 20 years
- Manufacturers should focus on reducing cost
of manufacturing
Observed failures in the Market
1. Establishment of large format retails stores
- Rev per sq.ft of small retails stores > large
format stores
2. High inventory
- Increases cost per sq.ft as stock gets locked
up in retail stores
- Eg: Reliance living stores, Home Town tie up
with e-Zone stores
Prospective
product
category
➢ Beds - most sold furniture item with bedroom
furniture contributing to highest sales
➢ Leather & printed fabric have been major
preferences in seating
➢ Young indian working group increased the
purchase of home working stations
➢ Rise in demand of Handicrafts - adds a cultural
touch to home
Recommended avg retail pricing of
home furniture products