KIRLOSKAR INSTITUTE OF ADVANCED MANAGEMENT STUDIES,

HARIHAR

RETAILING MARKETING PROJECT REPORT

ON
FURNITURE SECTOR IN INDIA

SUBMITTED TO
PROF. BHALENDER SINGH NAYYAR

SUBMITTED BY:

AMULYA SHARMA (12), DHEERAJ AGARWAL (26), DIVYA PRABHU (27),

KARAN BAKSHI (33), PAVNEET KAUR (47), RAMAPRABHU R P (52)

DATE OF SUBMISSION: OCT 18, 2010

 Global Furniture Industry

According to the CSIL‘s (Centre for Industrial Studies) ―World Furniture Outlook 2008
report, world production of furniture is worth about US$ 307 billion.
The seven major industrial economies (which are, in order of furniture production, the
United States, Italy, Germany, Japan, the United Kingdom, Canada and France) together
produce 50% in value of the world total. The furniture production of all developed
countries combined covers 65% of the world total. Furniture production in emerging
countries currently amounts to 35% of the world total in value. There are two countries,
China and Poland, where production is increasing rapidly.

Source: World Furniture Outlook 2008 report

The opening of furniture markets over the past Ten Years

Source: IMRB report

The most important structural phenomenon of the past decade is the increased degree of
openness of the furniture markets, measured as the ratio between imports and
consumption. This increase is particularly important in the United States, where the trade
deficit for furniture was almost US$ 22 billion in 2006, providing the most important
stimulus to world furniture trade. Growth of the imports/consumption ratio has been
rapid, reaching 25% in 2001 and almost 30% in 2006. It is now leveling off and it is
estimated that in the next few years it will remain at a level of about 30%.
International trade of furniture has grown faster than furniture production because of the
opening of the main furniture markets in the last ten years.

World trade of furniture grew by 7% in 2007 and was equal to US$ 97 billion. It is
expected that this figure will grow by 5% in 2008, in which case, it would be equal to
US$ 102 billion.
 Source: IMRB report

A sizeable percentage of international furniture trade is carried out within the economic
regions into which the world economy can be divided:
• In the European Union (15) and Norway and Switzerland about 57% of foreign
furniture trade takes place within the same countries

• In the NAFTA area (US, Canada and Mexico) about 33% of foreign furniture
trade is within the three countries

• In the Asia and Pacific countries, more than 40% of total foreign furniture trade is
within the region.

On balance, trade within regions amounts to about 47% of total world furniture trade.
Therefore, only one-half of world furniture trade can be considered "global" in the sense
that it takes place between countries in geographically distant regions. The most
important of these flows are:
• From the emerging countries of Asia to the United States (67% of outgoing flows
from this area) and to Europe

• From Europe to the United States, mostly from Italy

• From the new EU members to Western Europe, especially to Germany

 Furniture Industry in India

The Indian furniture industry is fragmented in nature with many small players. In terms
of value, this industry is worth INR 350 billion (2007-08) maintaining a growth rate of 10
percent. The organized sector, which accounts to 10 percent of the total market, has
contributed significantly to the overall industry growth by witnessing significantly higher
growth rate between 17 and 20 percent. However, the unorganized sector, as experts
opine, is growing only at a rate of 5 to 6 percent.

Organized Furniture market in India (Rs. Crore)

In years 2005, 2006 and 2007 the growth was 18%, 42% and 35% respectively, while it
slowed down in further 3 years( 2008-2010) to 20% due to global slow down and is
again expected to grow at 30% p.a from 2011 to 2013.

Industry Segmentation – The furniture industry can be segmented into the following
three categories:- Industry Segments Office, 20%Contract, 15% Household, 65%

Household segment – The size of the overall real estate industry in India is estimated to
be around US$ 12 billion (Source: FICCI). This figure is growing at 30% for the last few
years. Almost 80% of real estate developed in India is residential space and the rest
comprise of office, shopping malls, hotels and hospitals. Within the household segment,
major share is the middle class population of India. About 25 per cent of the urban
middle class populations live in homes with five rooms or more, while 45 per cent live in
houses with three rooms or less.
Office segment – In line with the growth in the Indian economy and subsequent demand
for office space, this segment has witnessed good growth at a compounded annual growth
rate of 20%. The thrust on real estate and office construction is expected to sustain in the
near future, indicating continued growth for the furniture industry.
Contract segment – It primarily caters to hotels and its growth is consequently linked to
growth in tourism and development of new hotels. As per the World Travel Market‘s
Global Report 2008, scope for new tourism development could be seen notably in
emerging economic giants India and China, which are likely to remain a strategic priority
as growth is predicted to be robust, albeit slow down in global economy. The growth of
hotel industry in India can be attributed to the recent growth in the service industry and
economy as a whole.
The consistent growth in the Indian economy and rising living standards are the key
factors driving the demand of the Indian furniture industry. Other than these factors,
growth in the organized retail industry, real estate growth, increasing affluence of Indian
consumers and growth in hospitality and tourism industry of India have significant
influence on the industry demand.

Source: IMRB report

As with the global market, home furniture is the largest segment in the Indian furniture
market, accounting for about 65 per cent of furniture sales. This is followed by, the office
furniture segment with a 20 per cent share and the contract segment, accounting for the
remaining 15 percent.

Comparative distribution of Branded Furniture in India

In India the furniture market is worth about US$ 8 billion (2009). International consulting
firm Technopak Advisors estimates that the organized furniture market in India is
growing at a compound annual growth rate (CAGR) of about 30% over the next three
year. There are about 5000 firms in the domestic organized sector, in India and nearly
10500 importers of furniture. The furniture industry Employs 3,00,000 people in India.
The imports in the sector in India is worth about $150 million last year, growing at 60%
CAGR.
 Major Players of Branded Furniture in India

Source: IMRB report

Godrej Interio
Interio is a brand the Godrej group uses for its home furniture business and hence the
group has decided to extend this to the retail chain as well because it will be sharply re-
focused on the furniture retail business of the group. The focused on the furniture
business of the group, which has been identified as a key thrust area and a ‘hero’
business. The decision will allow the company to display a wider selection of its furniture
particularly its new range of designer home furniture at the Godrej Interio stores because
the entire space in the store will be available exclusively for displaying the growing
furniture collection.
Unlike other home solutions focused retail formats run by the Future Group and Shoppers
Stop, which have recently seen a double-digit decline in same-store sales Godrej’s
furniture retail business, has in fact seen a 25-30 per cent rise in same-store sales.
Building on the success, the group expects to expand its retail chain network to 200 stores
over the next three years using a mix of company-owned and operated outlets to
franchisees. At present, all of the chains’ stores are company owned and operated. Godrej
says “that in difficult times, customers tend to patronize brands, which are known for
their reliability and durability”.
The group’s wide sales network in B and C class towns too it said, has helped it side step
the effect of the slowdown because furniture sales in these towns were impacted less than
those in the metros. In addition to its own retail chain, Godrej also sells its furniture range
through its wide network of dealers and franchisees. Along with expanding its own retail
chain, Godrej & Boyce continues to appoint new franchisees to further grow its sales
network pan-India. In keeping with its focus on ‘Brighter Living’, the group is now trying
to connect more closely with its consumers and is engaging in more one-to-one research
and customer emotion studies to help uncover what its target consumers want. The input
is fed this back into its marketing and new product development initiatives.

Godrej Interio currently has 59 exclusive showrooms spanning in all 4 regions of the
country. It has stores in metros, tier 1 and tier 2 cities. The concept of the store is
mostly Stand alone.
 Ye
2009-
Num2008-
ber o
City Company owned and co
2007-
No. of Outlets
Ahmedabad 2
Bhopal 1
Bhubaneshwar 1
Chandigarh 1
Chattisgarh 1
Coimbatore 2
Guwahti 1
Indore 1
Jabalpur 1
Kochin 1
Durian
Durian is a yarn of how two generation of a close knit business family built a
conglomerate that is a household name in the country today. The journey has been
eventful marked by numerous pioneering achievements in the building material industry.
Durian is the pioneer of natural veneer in the building material industry in India. Their
products have met the most stringent of international quality standards, resulting in
constant supply not only in the domestic market but the international market also. It has
most prominent ISO 9001 and 14001 certifications for our quality standards and
contribution in the industry.

Durian has also introduced readymade doors in this industry to make life trouble-free for
all the users with a range of designs and colors to suit every eye. Durian has imported
home and office furniture range which is sourced from all over the world which is the
talk of the nation in terms of world class designs be it classic or contemporary. The
furniture pieces which are sourced from across the world to meet the new changing taste
of the Indian market. For the first time in India, with the help of overseas research and
technical team Durian introduces Laminates which are guarded to resist borer, fungus and
termite. It’s the proprietary know-how which Durian has developed in collaboration with
highly techno-savvy foreign research laboratory.
The ideas and products have resulted in intensive transformation of technology for chairs
and workstations to give corporate look to offices meeting international standards. To
fulfill the demand of the ever changing market in office furniture they have built state-of-
the-art factories with the most advanced technology, with BIFMA standard guidelines.
They have also started offering services for turnkey projects to provide a complete
package to our clients. In concise Durian offers lifestyle products related to interior
design of office, home under one roof.
Durian has 38 exclusive showrooms spanning in all 4 regions of the country. It has
stores in metros, tier 1 and tier 2 cities. The concept of the store is mostly Stand
alone.
Tangent
Tangent is a chain of sprawling showrooms that put together everything an office or a
home needs. The furniture is gathered from all over the world. Spain, Italy, Malaysia,
France, Hong Kong with a firm grip on the international furniture pulse, when we feel
that you might like some furnishing, we bring it down for you. Furniture designs at
Tangent are renowned for their elegance, international appeal, durability and
affordability.
Bedrooms and living rooms, cozy nooks and comfortable dens- our furniture will fit right
into your lifestyle. Sets for bedrooms and living rooms. Recliners, couches, sofas and
settees,loveseats, beds, dressers, dining tables… the list is endless. For your office needs,
Tangent offers ergonomically designed contemporary seating, spacious desks, open plan
office systems, and much more. All of these are designed to utilize space in an optimum
manner and promote productivity. Comfort and durability are the trademarks of our
business furniture line.
At Tangent your every space requirement will be met. We invite you to help us make
your dreams come true.
Style Spa
Headquartered in Chennai, India - Style Spa Furniture Limited (SSFL), a company
owned by Mr. S. K. Poddar Group and Zuari Industries Limited of the K. K. Birla
Conglomerate was established in 1997 to manufacture and retail furniture. The
manufacturing facility located near Chennai is a fully automated sophisticated plant
equipped to manufacture exquisite pieces of furniture of impeccable quality. The plant is
also one of Asia’s most modern and largest manufacturing facility.

The products - elegant and contemporary furniture for homes and offices, mattresses and
pillows – are retailed in exclusive Style Spa showrooms spread across the country. Style
Spa is the largest retailer of furniture in India with over 100 exclusive showrooms
spanning the length and breadth of the country. Style Spa has stores in metros, tier
1 and tier 2 cities. The concept of the store is mostly Stand alone and at few places in
secondary markets (Furniture and hardware).

Style Spa’s competitive edge lies in its elegant range of products which are difficult to
replicate, its State of the Art manufacturing facility that ensures consistent quality, a large
retail network, experienced, and qualified personnel that make up the Style Spa team and
not to mention the tens and thousands of homes that revel in the Style Spa brand of Good
Living.
Nilkamal ( @home )
The Company has 7 large manufacturing plants in India:
• North – Samba (Jammu & Kashmir) and Greater Noida (Uttar Pradesh)
• South – Pondicherry (Union Territory)
• East - Barjora (West Bengal)
• West - Sinnar, Nashik (Maharashtra) and Silvassa (Union Territory of Dadra &
Nagar Haveli) (2 plants).
All the manufacturing plants are ISO 9001/2000 Certified and practice 6 Sigma
manufacturing process. This extensive manufacturing infrastructure is ably supported by
our wide and strong sales network, operating through 45 Regional Offices and 33
Warehouses spread across India.
Nilkamal's quality is widely accepted internationally and we have an office in Ajman,
UAE to cater to the Middle Eastern Markets. We also export to most major markets in
Europe and Americas which are known for being sticklers for quality.

The Company's New Venture @home, the Mega Home Retail Chain is recognized as a
pioneer and leader in this category in India. Each of the @home Store has an area
between 10000 to 28000 sft. located in prime 9 cities of India (March 2009).

@home retails complete bedroom sets, living room units, upholstered sofas, dining sets
apart from a large variety of home décor products like artificial flowers, vases, show
pieces, picture frames, paintings etc. and daily used items such as mattresses, bed sheets,
towels, curtains, etc. @home is targeted to the middle and middle high mass market
of the new youth of India.
@home has products from around the world that cover an entire gamut of home
essentials. The extensive range includes furniture, soft furnishings, lighting, kitchenware,
home accessories and more.

With over 90% of renowned International merchandise from among the trendiest
designer brands, every @home product exudes a touch of class and exclusivity to create
that perfect ambience.

Year Turnover (Rs. Cr

2009-2010 1161.63
Year Number of company ow
2008-2009 1030.24
2009-2010
HomeStop 16
2007-2008 891.26
2008-2009 15
HomeStop is a complete home solution chain offering design, style, quality, convenience
and value to the consumer. HomeStop provides high quality products required for homes

2007-2008 13
with a deeper product assortment. HomeStop, the first of its kind of premium home
concept store from Shoppers Stop Ltd is the destination to transform your dream house
into a reality. Presently in Bangalore, Delhi, Mumbai & Navi Mumbai. HomeStop offers
a choicest range of home products.
From the kitchen to the dining room, the bathroom to the drawing room, HomeStop has
everything that will add a special touch and exclusivity to your space. It is one-stop-shop
for all your home needs ranging from home decor to furniture & recliners, bath
accessories to bedroom furnishings, mattress to draperies, carpets, kitchen accessories
and appliances to modular kitchen, health equipment and anything else one can think of.

HomeStop houses some of the most reputed national and international brands under one
roof. High end crockery from Corelle, premium steel utensils from Magpie and Art
d’nox, exclusive down feather pillows and fine bedding, bed linen and furnishing from
Stop, Ivy, Fern, Portico, Maspar, Bombay Dyeing and home appliances from Phillips and
Morphy Richards, bathroom linen from Welspun.
HomeStop currently has only 3 stores; Delhi(Saket) , Bangalore(Raheja point) and
Mumbai(Malad). But it can expand further given the 33 existing Shoppers Stop
stores.
SWOT Analysis:
Strengths:
• Large, diversified and potential market

• It has strong, diversified and supportive retail infrastructure

• Diversified product range that service different market

• Low barriers of new entry

• Abundant and cheap labor hence can compete on price

• Low capital investment and high ratio of value addition

• Aesthetic and functional qualities

• Variety of products categories

• Exporters willing to handle small orders

• Increasing emphasis on product development and design up gradation

Weaknesses:
• Lack of infrastructure and communication facilities

• Unawareness about international requirements and market

• Lack of co-ordination between government bodies and private players

• Inadequate information of new technology

• Inadequate information of current market trends

• Less interest of young people in industry

 • Lack of skilled labor

• Still confined to rural areas, small cities, and untapped market

• Lack of promotion of products

• Inadequate market study and marketing strategy

• Capacity to handle limited orders

Opportunities:
• Development of sectors like Retail, Real Estate that offers great requirements

• Development of domestic and international tourism sector

• E-Commerce and Internet are emerged as promissory distribution channels to

market and sell the products

• Large discretionary income at disposal of consumer

• Growth in search made by retail chains in major importing countries for suitable
products and reliable suppliers

• Developing fashion industry’s requirements

Threats:
• Quality products produced by competing countries like China, South Africa.

• Increased and better technological support and R & D facility in competing

countries

• In spite of having diversified products, some part of Indian market is still

untapped and market is price sensitive.

• Products are high priced in big and metro cities, which are beyond the reach of
people belonging middle and lower middle class.
 • Producers have to compete on price, quality and delivery for different segments.

• Inadequate supply chain management and distribution reduces the sector‘s

commercial viability and economic sustainability.

• Inappropriate energy supplies to rural and sub-urban areas.

Target Customers

Based on the analysis of the Indian Tableware & Plastic storage container market, it can
be seen that women especially newly wed in upper middle class & middle class should be
target segment for a new entrant as the middle class currently numbers some 50 million
people, but by 2025 will have expanded dramatically to 583 million people—some 41
percent of the population. Also, there is a considerable increase in the disposable income
and people are purchasing more number of lifestyle goods because of the rising income
levels. Also, number of working women is increasing who need plastic storage containers
for themselves & their kids which are air-tight, leakage proof and safe. They can also
target companies & hotels due to the increase in the gifting levels of companies & rising
hotel & catering industry due to the next commonwealth games which are going to take
place in India. For beverage and barware, the target customers should be Corporate &
Hotel/ Catering segment for gifting or as freebies for promoting their product and for
personal usage. In case of dinnerware & plastic storage containers, the target customers
are domestic users who use these products for their personal usage or for gifting.
Market Segments Key Take Out from the Target Critical Success
Market Study Segment Factors
Household Furniture Expanding Middle class and Upper Upper Middle Class Product Innovation,
– High End Segment middle class India is a complex Exclusive designs,
country with cultural variation Well – Established
important to gather information Brand Name, Better
first Middle - middle and Upper packaging,
middle class ready to pay extra to Customization
ensure durability However,
considered as a price competitive
country, . Perceived as a shopping
destination of moderately affluent
class of the society

Household Furniture Imports Middle – Middle Competitive Prices,

– Low End Segment Classes Availability,
Warehouses in Tier 1
cities, Strong Logistics
Network, High
Quality, After Sales
Support,

Office Furniture Office Space in India is growing Service Industry (IT Timely Delivery,
rapidly, will grow at 20% CAGR in and BFSI Sector) - Warehouses and
coming four to five years Mid Size Offices connectivity through
Institutional Customers look for strong Logistics
brand names that can compliment Network, Brand Name
with their own brand name and After Sales
Support
Handicrafts & Décor Indian customers are now spending Middle Class Large Product
Products more on Home Furnishing Among Assortment, Large
Indian customers, Thailand is Volumes, Better
perceived to be price competitive Packaging, Product
Thailand Positioned as a Exclusivity, Ethnic /
country with delicate, attractive Culture based
and ethnic products in the Positioning
handicrafts and décor industry
Bibliography:
www.at-home.co.in
www.stylespafurniture.com
www.durian.in
www.ushafurniture.com