Home Dcor and Furnishings

Sector Analysis

Group No.

What am I good at ?

What are you passionate about ?

Vision:

What drives your economic Engine ?

Evolution
Furniture, Home Dcor and Furnishing
Branded furniture retailers such as Gautier, Durian and Godrej were among the first few to start organised stores in the furniture vertical in India
Traditionally, furniture made by carpenters in a customized fashion catered to the requirements of the households.

Lately, popularity of readymade furniture has been increasingly gaining ground in India.

Snapshot of the Industry in 2011-2012 Home Dcor and Furnishings

Total Retail (2011-12) Market Size (In Share in Billion) Total 1014 4%

Organised Retail (2011-12) Market Size (In Share in Billion) Total 60 4%

Major Players
Furniture, Home Dcor and Furnishing

After the government relaxed the rules for foreign retailers to set up shop IKEA, a Swedish company that designs and sells ready-to-assemble furniture (such as beds, chairs, and desks), appliances, and home accessories, has announced its entry into India.

Current Outlook & Issues

Almost 85% of Home improvement industry is unorganized sector

Owing to current economic situation, the growth of this industry has reduced to 14 to 16% from 20% in the past years Organized retail expected to grow faster

Mainly unorganized

Economic slowdown

Increasing cost
This industry has very high inventory carrying costs Also, growing real estate prices is huge threat

Hesitant foreign players

Though the FDI in retail is open, global players still waiting for the policies to be relaxed

Recent Changes in FDI Policy

Mandatory investment in Backend Infra
Minimum 50 per cent of the first tranche of $100 million would be required to be invested in the back-end infrastructure. This gives clarity and favourable for large players

Definition of MSMEs
Amended to include companies which have invested upto $2 mn in plant, machinery without depreciation The definition holds good, if the MSME grows, beyond threshold of $2mn, due to the business relationship with the retailer

Foreign retailers can now operate in cities with population of less than 1 million
But still, it is allowed only in 11 states and 2 union territories. This is a huge constraint for the foreign players

Few Important Players

About the company Established by Wadia group selling home furnishing items Soft Furnishings

Bombay Dyeing

Facts Avg. store area - 1500 sq ft. No of stores - 350

Major players
Style spa
Welspun Welhome

About the company Established by SK Poddar group Into the hard furnishing segment

Facts Avg. store area 2000sq ft. No of stores - 100 First player to enter the organized market

About the company Established by Welspun group Main products include bed, bath linen and living accessories

Facts Avg. store area - 800sq ft. No of stores - 200

Few Important Players Hard Furnishings

Major players

Godrej & Boyce Manufacturing Co. ltd.

About the company part of the Godrej Group and was incorporated in 1932. The companys manufacturing facility is located in Mumbai, Maharastra The company has exclusive showrooms and dealer outlets across India Low Facts It mainly manufactures consumer products, office equipment, consumer appliances, chemicals, agro products, security equipment, industrial products and offer office automation and storage solutions

Nilkamal

About the company Nilkamal Group of Companies has a turnover of over US$ 125 million. It is the leader in plastic moulded furniture The company has eight manufacturing locations in India. It also has joint ventures in Bangladesh and Sri Lanka

Facts The company has eight manufacturing locations in India. It also has joint ventures in Bangladesh and Sri Lanka The company has diversified into the lifestyle furniture business by launching @home, which is a complete home solution store offering contemporary readymade wooden furniture.

Porters Five Forces Analysis

Threat of New Entrants Fragmented industry Growing domestic market Industry is not investment intensive Customer Power Increasing demand from key user segments Demand for lifestyle products Majority of the market still price sensitive

Supplier Power Abundant supply of raw materials and labour Supplier base not organised Imports getting easier

Competitive Rivalry Moderately Moderately competitive industry Transitioning from highly unorganised to organised sector

Low Moderate High

Threat of Substitutes No significant threat