There is a niche market in India for good quality household goods. The steady increase in consumer purchasing power and low penetration levels in urban and especially rural areas have attracted multinational companies in this sector. In addition to that, liberal policies for foreign equity participation and foreign direct investments have given a further boost to the sector. The multinational companies in this sector are now competing with the domestic manufacturers to win market shares.
Tough competition in this market has put pressure on profit margins. Profitability is being achieved by focusing on increasing volumes which in turn requires deeper penetration of the market through well developed distribution channels.
The purchase of household goods is influenced by price and affordability of the product, and the value perception, associated with the product.
Characteristics of the Market :-
Furniture and Furnishings:
The Indian furniture market is estimated to be worth Rs 350,000 million. Within this the wooden furniture accounts for Rs 60,000 million. More than 75% of this wooden furniture are made by individual carpenters. Branded furniture is still in its infancy and volumes are negligible. Of this the imported furniture market is currently worth Rs 6000 million and is currently growing at a rate between 3 and 5 per cent, according to industry analysts.
Till the early 1990s home furniture and furnishing was limited to furniture of solid teak, rose wood and other less expensive wood made by the neighbourhood carpenter. Designs were traditional and oriental in nature. The carpenters usually copied functional designs that were simple and straight, from magazines published abroad. The choice of designs, however, was extremely limited. Emphasis was on long-lasting products that could easily service an entire generation of users.
However, in the post-liberalisation period from 1991, the furniture market is observing immense changes with the advent of branded products. New entrepreneurs have brought in strikingly contemporary concepts in particle board, medium and high-density fibre board and even steel. This has ushered in a total change in the taste of the consumers, especially in the urban areas, for modular board furniture and accessories. Modular Kitchen systems in particular, have a good market in India. Another area, which offers good potential is children’s furniture. Parents are seeking specific furniture range that caters to the requirement of children. This demand is however limited to major metros.
Post liberalisation, import duties for furniture have come down from 150% to 62%. Various overseas brands are now tying-up with Indian companies to service this demand. Major players in the imported furniture segment inlcude Durian, Interiors Espania of Spain and Renaissance Homes which imports furniture from the US, Italy, Denmark, Germany and Spain.
According to market experts the demand for modular furniture is likely to expand exponentially in the coming period and it is the right moment for any overseas company to bring in good quality, competitively priced furniture to cater to this demand.
The market for furnishings is very price sensitive and spending on furnishings is a low priority on most people’s budget. The price for Indian furnishing (fabric) products ranges from Rs 150 – 1500 per metre (with blended cotton furnishings costing between Rs 150 – Rs 500 and pure cotton furnishings costing upto Rs 1500 per metre). The leather furnishings cost upto Rs 5000 per metre.
Fabrics are usually imported from USA, Belgium and Italy and constitute a niche segment. (Milligan of USA is a popular name). Popular materials are jacquard, velvet and chenille as these are not available in many prints and colours locally. Most of the upholstery distributors stock and sell imported goods as the whole cycle takes about 3 months. The distributor margin generally vary from 10-30%
