Industry is expected to grow at 20% YOY in next few years and the total market size could reach Rs 2,50,000 Crore by 2022
If you thought that all the action in the Indian furniture market was concentrated around the unorganized segment which constitutes about 85% of the market, you could not be right anymore.
The world’s one of the biggest furniture and consumer markets has been seeing some of the most frenetic activities over the past few years.
Multinational and Indian corporate giants have jumped into the market. New start-ups have cropped up. Fund raising is taking place at a frenzied pace, both from the equity markets and via private equity funding. New products and innovations are being launched fast and furious.
Consumers are moving towards ready to assemble furniture and prefer readymade furniture, innovative designs and buying online.
Industry estimates show that furniture market has an overall market size of Rs.120,000 crores and home decor and utilities is at Rs.130,000 crores. According to a Redseer Consulting report, by 2020, India’s furniture industry is expected to grow to $35 billion, with the online section being worth about $700 million.
The Indian furniture market has grown at a CAGR of 17.2% for the period FY’2008-FY’2013 and is projected to grow at a CAGR of around 26% during 2014-19 according to “India Furniture Market Forecast & Opportunities, 2019. According to another study by the World Bank, India’s organised furniture industry is expected to grow 20% per annum over the next few years and is projected to cross US$ 32 billion by 2019.
The major part of this industry, approximately 85 percent is in the unorganized sector. The remaining 15 percent of organized sector is dominated by established manufacturers such as Parin Furniture, Godrej & Boyce Manufacturing Co. Ltd., BP Ergo, Featherlite, Haworth, Style Spa, Yantra, Renaissance, Millennium Lifestyles, Durian, Kian, Tangent, Zuari, PSL Modular Furniture, Avon Moldplast, Furniturewala and Truzo.
The emerging E-commerce segment is also gaining momentum and contribution from online retailers such as Pepperfry, Urban Ladder, HomeLane and others. The E-com Furniture giant Pepperfry have done sale of more than Rs. 800 Crore. in 2017 and the Company is aiming to clock GMV of Rs. 5000 Crore by 2020.
Pepperfry has 28 stores currently and plans to expand to more than 50 stores by the end of the year. Hussaine Kesury, Chief Activation Officer, Pepperfry says “The online market today is less than $1.0bn in GMV terms. At 40-50% YoY this segment is growing in multiples of the overall e-commerce market and should grow into a $5bn market in the mid-near term.
There are very good reasons for the Online Market to continue to grow at these rates with a potential to become 40% organised in 5-7 years”
The entire Home Furniture and Furnishing is $30-35bn category. Home Furniture within this is a $15-20bn category by itself and is growing fast at 10-15%. It is 90% unorganised with under 5% online, which indicates that there is a large headroom for growth. With a high margin category like furniture, we see a big opportunity for this segment to win in the E-commerce space” he said
Indian E-com leader Flipkart is also eying Rs 750cr GMV in furniture e-sales by 2018 and expects its furniture division to be the next big driver of growth and sees it growing four-five times this year.
The market in recent times is witnessing an increase in the contribution from organized sector across demand segments. The entry of global players such as Swedish giant IKEA in India will further this trend for organized retail sector consolidation and backward integration with manufacturers and raw material suppliers, driving the entire value chain towards organized retail. IKEA has opened its first store in India at Hyderabad on 10th August 2018 and is going to procure 30% furniture from local manufacturers which will give boost to local players.
Many small and medium size companies have also planned big expansions and are hoping to increase their market share by expanding market reach and widening product portfolio. Many companies are planning to raise capital through capital markets, one such company is Gujarat based Parin Furniture who is hitting primary market in
September 2018 to fund its growth plans.
Company’s Chairman & Managing Director, Umesh Nandani, says “As the standard of living continues to improve in India, people are becoming increasingly willing to invest in home furniture and decoration. In recent years organized Indian Furniture market has been showing a huge growth potential driven by burgeoning middle class, increasing pace of urbanization and change in life styles.”
There has been a gradual rise in disposable income of people which has really helped the industry to see a significant growth. Moreover, people are moving towards ready to assemble furniture and prefer readymade furniture, innovative designs and buying online. Post the GST implementation; organized players have been seeing benefits in terms of better pricing across the markets.
“The industry has a great potential for exponential growth and in the next 4-5 years it can double its contribution to GDP, economy and job creation. As of now the furniture segment in India makes a marginal contribution to the
Gross Domestic Product (GDP), representing about half a percent of the total GDP. We expect the Indian Furniture Industry market size to reach 2,50,000 Crore by 2022 at a 20% YOY growth rate”
Parin Furniture Ltd is a fast growing managed frniture company and has pan-India presence across 371 cities in 18 States. Company is having three verticals Retail, E – Commerce and Projects. The company with a fully integrated
business model is engaged in the business of manufacturing of home, office, hospital and educational furniture.
The domestic home furniture comprises of 65% of the Indian furniture demand, followed by office furniture comprising of 20% and contract furniture comprising of 15% demand. The contract furniture is primarily for hotels and this sector has seen strong growth in the last two years.
“There are around 1200 hotels in India with more than 10% in the five star category. Wood accounts for 65% of all furniture made in India, followed by metal and plastic at 25% and 10%.In the recent years, molded plastic, wrought iron, board and bamboo furniture too have been widely purchased by the households in India,” Nandan added.
