F ur

niture
MARKET & OPPORTUNITIES

Furniture
MARKET & OPPORTUNITIES

CONTENTS
Introduction Indian Furniture Industry Appendix 2 3

A report by KPMG for IBEF

FURNITURE

Introduction

T!e "#o$a# %urniture &ar'et can $e $road#y cate"orised into %our cate"ories ( do&estic %urniture) o%%ice*corporate %urniture) !ote# %urniture and %urniture parts+ ,#o$a##y) do&estic %urniture accounts %or -. per cent o% t!e production /a#ue) 0!i#st corporate*o%%ice %urniture represents . per cent) !ote# %urniture . per cent and %urniture parts . per cent+ Accordin" to a 1or#d 2an' study) t!e or"anised %urniture industry is expected to "ro0 $y 23 per cent e/ery year+ A #ar"e part o% t!is "ro0t! is expected to co&e %ro& t!e rapid#y "ro0in" consu&er &ar'ets o% Asia) i&p#yin" si"ni%icant potentia# %or "ro0t! in t!e Indian %urniture secto r+

Global Furniture Market . 4 . 4 .4 -.4

n 5o&estic n O%%ice 6ote# n Parts Source: KPMG Analysis or I!EF

Indian Furniture Industry

As o% 233-) t!e Indian %urniture &ar'et is esti&ated to $e 0ort! US7 8)922 &i##ion+ O% t!is) 0ooden %urniture accounts %or US7 )3.: &i##ion+ A$out per cent ;US7 .2 &i##ion< o% t!is ;0ooden %urniture< is i&ported and i&ports are "ro0in" at .3 to -3 per cent e/ery year+ India 0as t!e #ar"est %urniture i&porter in t!e 0or#d in 233=(3.) 0it! a 8 per cent s!are in t!e %urniture i&ports 0or#d0ide+ A tota# o% 3) =8- i&porters s!ipped %urniture to India durin" t!is period) &ain#y %ro& Ita#y) ,er&any) Spain) >!ina) Korea) Ma#aysia) Indonesia) P!i#ippines and ?apan+ S"are o Or#anise$ an$ Unor#anise$ Sectors %US& !illion' Percenta#e S"are(

Furniture >oncepts) Furniture0a#a) @uari) TruAo) N R ?asani & >o&pany) B3 En"ineers) PSC Modu#ar Furniture) etc+ T!e ran"e o% indi"enous %urniture a/ai#a$#e in India) inc#udes $ot! residentia# and contract syste& %urniture+ Manu%acturers in India usua##y use a t!ree(tier se##in" and distri$ution structure) co&prisin" o% t!e distri$utor) 0!o#esa#er and retai#er+ T!e &ar'et is &ain#y concentrated in A) 2 and > cate"ory cities ;t!e top .:9 cities<+ A and 2 type cities to"et!er constitute 33 per cent o% t!e tota# &ar'et+ 1it! a !ea#t!y econo&y and increased !ouse!o#d and institutiona# spendin") t!e &ar'et is "ro0in" steadi#y+

FURNITURE COMPOSITION

IN$USTRy

+2) .4

As 0it! t!e "#o$a# &ar'et) !o&e %urniture is t!e #ar"est se"&ent in t!e Indian %urniture &ar'et) accountin" %or a$out -. per cent o% %urniture sa#es+ T!is is %o##o0ed $y) t!e o%%ice %urniture se"&ent 0it! a 23 per cent s!are and t!e contract se"&ent) accountin" %or t!e re&ainin" . per cent+ Consu)er Se#)ents -+:) :.4 Or"anised

n Unor"anised

Source: KPMG Analysis T!e %urniture sector in India &a'es a &ar"ina# contri$ution to t!e ,ross 5o&estic Product ;,5P<) representin" a$out 3+. per cent o% t!e tota# ,5P+ T!e &aDor part o% t!is industry) approxi&ate#y :. per cent is in t!e unor"anised sector+ T!e re&ainin" . per cent co&prises o% #ar"e &anu%acturers) suc! as) ,odreD & 2oyce Manu%acturin" >o+ Ctd+) 2P Er"o) Feat!er#ite) 6a0ort!) Sty#e Spa) Eantra) Renaissance) Mi##enniu& Ci%esty#es) 5urian) Kian) Tan"ent) 23 4

.4

-.4

n 6ouse!o#d >ontract

n O%%ice

*o)e urniture 6o&e %urniture in India is a/ai#a$#e in a 0ide ran"e) to cater to di%%erent custo&er needs+ A typica# &idd#e c#ass ur$an Indian !o&e !as %i/e roo&s ;inc#udin" 'itc!en and $at!roo&<+ A$out 2. per cent o% t!e ur$an popu#ation #i/e in !o&es 0it! %i/e roo&s or &ore) 0!i#e =. per cent #i/e in !ouses 0it! t!ree roo&s or #ess+ A$out - per cent is esti&ated to #i/e in sin"#e(roo& !o&es+ T!e type o% %urniture used depends on t!e custo&erFs a%%#uence and taste+ T!e ric! and upper &idd#e c#ass is typica##y /ery attenti/e to desi"n and Gua#ity) so price is rare#y a deter&inin" %actor+ In "enera#) European sty#e %urniture is on#y %ound in !o&es o% t!e ur$an upper c#ass+ 5e&and %or %urniture o% internationa# standards is #i&ited to t!e #ar"er cities+ It is a#so esti&ated t!at t!e 0ea#t!ier c#asses do not c!an"e %urniture /ery %reGuent#yH t!e a/era"e #i%e o% a piece o% %urniture is a$out 23 years and so&e cra%ts&enFs pieces are used %or as #on" as .3(83 years+ >o#onia# %urniture is sti## /ery co&&on in India) $ut t!e trend see&s to $e dec#inin" s#o0#y+

O ice Furniture T!e o%%ice %urniture se"&ent caters to t!e co&&ercia# and o%%ice space+ T!is se"&ent !as 0itnessed rapid "ro0t! in recent years) in #ine 0it! t!e "ro0t! in t!e Indian econo&y and su$seGuent de&and %or o%%ice space+ T!e t!rust on rea# estate and o%%ice construction is expected to sustain in t!e near %uture) indicatin" continued "ro0t! %or t!e %urniture industry+ Contract se#)ent T!e contract se"&ent caters pri&ari#y to !ote#s and its "ro0t! is conseGuent#y #in'ed to "ro0t! in touris& and de/e#op&ent o% ne0 !ote#s+ T!ere are around )233 !ote#s in India in t!e or"anised sector+ More t!an 3 per cent o% t!ese are in t!e .(star and a$o/e cate"ories ;p#ease re%er to ta$#e $e#o0 %or detai#s<+

Cate#ory + ,ise A-ailablity o *otel Roo)s

Star Cate#ory . ( Star 5e#uxe . ( Star = ( Star 3 ( Star 2 ( Star ( Star 6erita"e 3 ( Star Apart&ent 6ote# = ( Star Apart&ent 6ote# . ( Star Apart&ent 6ote# Si#/er Incredi$#e India 2ed & 2rea'%ast Esta$#is!&ent 2 No. o *otels 9 8 : 2 = 2 : . 2 : . 2 No. o Roo)s 2 )3 = 9). 3. 8)39) -= .) =: 2):2 3)= =. = = 3 -

,o#d Incredi$#e India 2ed & 2rea'%ast Esta$#is!&ent To $e c#assi%ied Total

Source: Annual Re5ort 6770+72' 8e5art)ent o Touris)

3 2 /'/ 01

8).8 23'2 42

FURNITURE MARKET 9 OPPORTUNITIES

3 3

Touris& in India is "ro0in" at a ro$ust pace+ T!e nu&$er o% %orei"n tourists !as increased o/er t!e #ast t!ree years) as indicated in t!e %i"ure $e#o0+
Forei#n Tourist Arri-als
=)==8

Ma#aysia and Myan&ar+ It a#so i&ports M5F ;Mediu& 5ensity Fi$re$oard< $oards %ro& Europe+
Ra, Material Usa#e

34

233-

233. 233= 3 )333 2)333 ;I333s< 3)333 =)333

>A,R 3+=4 2.4 .)333 -.4

T!ese trends indicate si"ni%icant potentia# %or "ro0t! in t!e contract %urniture se"&ent+ To su& it up) t!e %urniture &ar'et in India is "ro0in" on stron" %unda&enta#s) 0it! de&and dri/ers #i'e#y to sustain o/er t!e &ediu& ter&+ At t!e sa&e ti&e) t!e supp#y side is a#so encoura"in") as India !as su%%icient a/ai#a$i#ity o% 'ey ra0 &ateria#s t!at are used as inputs %or %urniture &a'in"+

n 1ood P#astic
:oo$

n Meta#

FURNITURE IN$USTRy ; <AlUE C*AIN T!e Indian %urniture industry co/ers t!e entire "a&ut o% acti/ities) %ro& sourcin") &anu%acturin" and distri$ution) to sa#es and a%ter sa#es+ In t!e Indian context) p#ayers are acti/e#y en"a"ed in eac! o% t!ese acti/ities+ Barious types o% ra0 &ateria#s are used %or %urniture &a'in" in India+ T!e 'ey ra0 &ateria#s inc#ude 0ood) &eta# and p#astic) 0it! $a&$oo and cane a#so $ein" used in so&e cases+ 1ood accounts %or near#y -. per cent o% a## %urniture &ade in India+ T!is inc#udes se/era# types o% indi"enous 0ood) as 0e## as

i&ported 0ood+ India i&ports 0ood %ro& /arious Sout! East Asian countries suc! as Indonesia)

FURNITURE

India a$ounds in se/era# tree species 0!ose 0ood is used %or %urniture &a'in"+ Apart %ro& indi"enous &ateria# a/ai#a$#e in India) so&e types o% 0ood are a#so i&ported) in case t!e do&estic supp#y is inadeGuate+ Popu#ar 0ood types used in India inc#ude 1a#nut) Sanda#0ood) Tea') S!ees!a&) 5eodar) E$ony) Red0ood) Rose0ood) Red >edar and Sa#+ Tea' accounts %or a#&ost .3 per cent o% t!e tota# 0ooden %urniture produced) Sa# and 5eodar account %or a$out

23 per cent and t!e $a#ance inc#udes Ma!o"any) >edar and ot!er tree types+ 2a&$oo Materia# 2oards ;2M2< are increasin"#y $ein" used in p#ace o% p#y0ood+ India a#so !as a$undant ru$$er 0ood supp#y+ Natura# ru$$er p#antations co/er .23)333 !ectares 0it! an additiona# -)333 !ectares $ein" rep#anted a#&ost e/ery year since 99=+ T!e sout!ern state o% Kera#a produces 9. per cent o% t!e tota# supp#y o% ru$$er 0ood in India+ A#t!ou"! %urniture &a'in" as an

Or#anise$ Sector <alue C"ain

Supp#iers Manu%acturers

1!o#esa#ers I&port ers

Retai#ers

acti/ity is spread across t!e #en"t! and $readt! o% India) a %e0 centres !a/e $eco&e %a&ous %or t!eir exGuisite car/in") in#ayin") turnin" and #acGuerin"+ Indian states 0e## 'no0n %or 0ood0or' inc#ude ,uDarat) ?a&&u & Kas!&ir) PunDa$) Uttar Prades! and Kera#a+ India is one o% t!e #ar"est consu&ers o% 0ood in Sout! East Asia+ T!e country !as su%%icient a/ai#a$i#ity o% tropica# 0ood) !o0e/er) in recent years) "ro0in" concerns a$out t!e en/iron&ent and t!e need %or conser/ation o% %orests !a/e #ed to reduction in t!e supp#y o% 0ood+ India i&ports 0ood %ro& /arious countries #i'e Ma#aysia) Indonesia) Myan&ar) and I/ory >oast) etc+ M5F $oards are i&ported %ro& Europe) so%t and !ard 0ood are i&ported %ro& Russia and ot!er Sout! East Asian countries+ Beneered pane#s are $eco&in" increasin"#y popu#ar in India and are i&ported %ro& t!e European Union and USA+ $o)estic Manu acturin# Furniture &anu%acturin" is dri/en $y t!e desi"ns c!osen) t!e inputs 0!ic! co&e %ro& in(!ouse desi"ners and &ar'et %eed$ac'+ Manu%acturers consider se/era# aspects re#ated to t!e custo&er ;de&o"rap!y) #i%esty#e) &oti/ation and aspiration) needs and pre%erences<) ra0 &ateria# ;type) Guantity and a/ai#a$i#ity< and interna# capa$i#ity ;expertise) Guantity and a/ai#a$i#ity o% #a$our) production process co&p#exity and de#i/ery ti&e< %or de/e#opin" di%%erent desi"ns) 0!ic! in turn) deter&ine t!e %urnitureFs %unctiona#ity) #oo' and %ee# and /a#ue+ Furniture produced in India %a##s into t0o $road cate"ories) dependin" on t!e end userH do&estic %urniture &eant %or !o&e use and co&&ercia# %urniture &eant %or t!e o%%ice and

to0ards i&ported %urniture+ European %urniture &anu%acturin" co&panies !a/e $een t!e %irst entrants) 0it! t!eir pre&iu& products ;&ain#y /eneered< in India+ T!ey 0ere #ed $y t!e K K 2ir#a Doint /enture) ,autier) 0it! ,roupe Seri$o o% France+ Furniture i&ports %ro& ot!er Asian countries !a/e co&e in &uc! #ater+ 2arrin" a %e0) suc! as) Renaissance 6o&e) Interior Espania) Pinnac#e Saporiti and ,autier) &ost o% t!e i&ported %urniture dea#ers se## t!eir products eit!er under t!eir o0n $rand na&e or 0it!out any $randin"+ In recent ti&es) i&port o% c!eaper %urniture %ro& Sout! East Asian countries !as $een increasin"+ Furniture I)5orts into In$ia 233.(3.2+=3 233=(3. 2333(3=
.:+33

92+89 >A,R -=4

2332(33 32+93 233 (32 23+93

3 .3 33 .3 233

US7 &i##ion $istribution

!ospita#ity sectors+ 5o&estic %urniture represents a#&ost t0o(t!irds o% t!e tota# output+ T!e 'ey success %actors %or eac! cate"ory /ary+ Manu%acturers in t!e do&estic sector typica##y try to di%%erentiate on t!e $asis o% desi"n /ariety and price) 0!i#e in t!e co&&ercia# space) !a/in" a stron" and re#ia$#e $rand is i&portant+

I)5ort s Furniture i&ports in India !a/e $een "ro0in" at near#y -= per cent >A,R) o/er t!e .(year period %ro& 233 to 233-+ A 'ey dri/er is t!e increasin" de&and %or %urniture) %ue##ed $y t!e $oo& in !ousin" and co&&ercia# construction+ Increasin" inco&e #e/e#s and in%#uence o% "#o$a# #i%esty#e trends !a/e a#so #ed to &any ur$an) a%%#uent Indians) &o/in"

Indian %urniture co&panies operate $ot!) t!rou"! direct se##in" in t!e &ar'et and distri$utors+ >o&panies 0it! a #ar"e #oca# custo&er $ase nor&a##y se## direct#y) 0it!out in/o#/in" distri$utors+ T!e #ar"er co&panies typica##y !a/e t!eir o0n co&&ercia# o%%ices and s!o0roo&s in a## t!e #ar"er cities in India+ Many or"anisations pre%er) !o0e/er) to operate /ia or"anised out#ets+ For proDects o% #ar"e /o#u&e) co&panies typica##y se## direct#y to t!e custo&er ( t!e pri&ary custo&er is o%ten t!e Ispeci%ierF ;arc!itects) $ui#ders or proDect &ana"ers< or $ui#din" o0ners*#essees 0!o are responsi$#e %or %ittin" out $ui#din"s and o%%ices+ Ar&ed 0it! t!e c!oice o% #oca# and i&ported products) t!ese purc!asers exert si"ni%icant in%#uence on t!e sector+ Retaile rs T!ere are a #ar"e nu&$er o% %urniture retai#ers and %ranc!ises spread across t!e country+ 1!i#e t!e &aDority o% retai#ers are s&a## in siAe and sca#e) #ar"e retai#ers usua##y operate in ur$an &ar'ets+ One(stop s!oppin" c!ains %or

!o&e $ui#din" so#utions !a/e co&e up in #ar"e cities) suc! as Arcus in ,ur"aon and KSS 6o&e Pro in 2an"a#ore+ Anot!er de/e#op&ent !as $een t!e e&er"ence o% specia#ty %urniture c!ains) suc! as) Us!a S!rira& Furniture Industries) O>C) Pace Furniture) Indoors and Renaissance 6o&e+ 1it! t!e rapid#y "ro0in" and trans%or&in" retai# sector) it is expected t!at t!e #ar"e retai#ers 0i## continue to expand t!eir presence) #eadin" to conso#idation in %urniture retai#in" in ur$an &ar'ets+ Consumers Influencers and Key

C"an#in# $e)o#ra5"ics

consu)er

T!e decision &a'in" process in $uyin" !o&e %urniture is #ar"e#y in%#uenced $y t!e o0ner and t!e %a&i#y at #ar"e+ arc!itects are %reGuent#y consu#ted) %or se#ectin" a## aspects re#ated to interiors) inc#udin" %urniture+ Up0ard#y &o$i#e %urniture and %reGuent#y e&p#oy interior desi"ners) to su""est*c!oose t!e ri"!t %urniture+

Inco&e #e/e#s in India !a/e $een "ro0in" rapid#y o/er t!e past decade and t!is trend is expected to continue+ T!is !as #ed to an increase in t!e nu&$er o% &idd#e c#ass and a%%#uent !ouse!o#ds( t!e nu&$er o% !ouse!o#ds o% t!e ric! and consu&in" se"&ent !as &ore t!an dou$#ed $et0een 99. and 233.+ A/era"e !ouse!o#d inco&e in ur$an areas !as "ro0n at a >A,R o% . per cent o/er t!e past decade+ 2y 23 3) t!e !i"!er inco&e earnin" "roup ;JUS7 2)333< is expected to constitute =: per cent o% t!e tota# earnin" popu#ation in India+ Nu)ber o *ouse"ol$s o Ric" an$ Consu)in# Class 233.(3:3+8 233 ( 32 99.( 93 23 -3 33+ 8 =3 =9+3

:3

33

A &aDor %actor t!at !as prope##ed t!e "ro0t! in t!e i&ported %urniture &ar'et is t!e increasin" exposure o% Indians to "#o$a# trends and #i%esty#es+ Suc! exposure) coup#ed 0it! increased disposa$#e inco&es) !as caused &ore and &ore ur$an &idd#e c#ass consu&ers to !ire t!e ser/ices o% interior decorators) %or doin" up t!eir !ouses+ To su& it up) K 1!i#e decoratin" a ne0 !ouseL T!e $uyin" decision is #e%t to a $ui#der*arc!itect*interior decorator or t!e o0ner K 1!i#e reno/atin" a !ouseL T!e $uyin" decision is &ade $y an interior desi"ner or $y t!e

o0ner K 1!i#e %urnis!in" a co&&ercia# co&p#exL T!e $uyin" decision is &ade $y t!e $ui#der*arc!itect*interior desi"ner

KEy $EMAN$ $RI<ERS Steady "ro0t! in t!e Indian econo&y and t!e conseGuent rise in #i/in" standards) !a/e $een 'ey in%#uencers on de&and "eneration in t!e Indian %urniture industry+ T!e t!ree 'ey dri/ers t!at !a/e !ad a si"ni%icant i&pact on t!e sector areL + >!an"in" consu&er de&o"rap!ics

2+ Rea# estate*!ousin" $oo& 3+ Touris& and !ospita#ity industry "ro0t!

US7 &i##ion >oup#ed 0it! t!is is t!e increased propensity to spend on #i%esty#e and consu&er products) dri/en $y trends #i'e increasin" nu&$er o% dou$#e inco&e %a&i#ies) increased ease o% %inancin" %or consu&er dura$#es and increased exposure to "#o$a# products+ A## t!ese %actors !a/e !ad a positi/e i&pact on t!e %urniture sector and are expected to dri/e de&and %or %urniture in t!e %uture+ Real estate="ousin# boo) T!e "ro0t! in t!e Indian econo&y !as a#so !ad a positi/e i&pact on t!e "ro0t! o% rea# estate and co&&ercia# properties in India+ T!ere !as $een a##(round "ro0t! in $ot!) t!e &anu%acturin" and ser/ices sectors+ In particu#ar) t!e "ro0t! in t!e ser/ices sector) 0!ic! no0 constitutes &ore t!an t!e .3 per cent o% t!e ,5P) !as #ed to rapid de/e#op&ent in t!e rea#ty sector in India) as t!e "ro0in" KPO*2PO sector creates Real Estate $e-elo5)ent

233.(32+3

2333 (3. 93

9.

33 US7 $i##ion .

3 3

de&and %or construction o% ne0 o%%ice space+ T!e rea# estate sector !as "ro0n %ro& a US7 9: $i##ion industry in 2333(3= to US7 2 $i##ion in 233.(3-+ 1!i#e !ousin" constitutes a &aDor part o% rea# estate in India) co&&ercia# construction !as a#so $een "ro0in") in order to cater to t!e increasin" de&and %or o%%ice space+ T!e cu&u#ati/e de&and %or o%%ice space in 233.(233: is esti&ated to $e in excess o% :. &i##ion sGuare %eet) up %ro& - &i##ion sGuare %eet in 233=+ ,ro0t! in $ot!) !ousin" and co&&ercia# de/e#op&ent 0i## !a/e a positi/e e%%ect on %urniture de&and) dri/en $y t!e need to constructions+ %urnis! ne0

roo&s 0ou#d $e reGuired to cater to t!e needs o% tra/e# and touris&+ T!e %urniture industry 0ou#d $ene%it t!rou"! t!e su$seGuent de&and %or !ote# %urniture+ Tourist <isits to In$ian States 233 233 3 99 3 US7 &i##ion CRITICAl SUCCESS FACTORS FOR FURNITURE MANUFACTURERS IN IN$IA T!e Indian %urniture industry is "radua##y trans%or&in" into a &ore or"anised and co&petiti/e sector+ T!e entry o% "#o$a# $rands in t!e sector) e&er"ence o% #ar"e retai# p#ayers and t!e resu#tant conso#idation) are trends t!at !i"!#i"!t t!is trans%or&ation+ T!e %i"ure $e#o0 captures t!e current status o% t!e Indian %urniture sector 3 =.+ . 23 3 2= + 9 >A ,R 2+. 4 =33 =82+. -

33 3

.33

Touris) an$ "os5itality in$ustry #ro,t" Touris& in India !as $een increasin" rapid#y and steadi#y o/er t!e past decade+ T!e nu&$er o% tourists ;do&estic and %orei"n co&$ined< to /isit a## states in India "re0) %ro& =.+ &i##ion in 99- to near#y =82+. &i##ion in 233-) at a >A,R o% 2+. per cent+ It is expected t!at de&and %or touris& 0i## "ro0 at :+- per cent $et0een 233and 23 .+ T!is 0ou#d create si"ni%icant de&and %or !ote# roo&s+ It is esti&ated t!at $y 23 3) an additiona# 2.)333 !ote#

T"reat o Ne, Entrants Fra"&ente d industry ,ro0in" do&estic &ar'et Industry is not in/est&ent intensi/e

Su55lier Po,er A$undant supp#y o% ra0 &ateria#s and #a$our Supp#ier $ase not or"anised I&ports "ettin" easier

Co)5etiti-e Ri-alry Moderate#y co&petiti/e industry Transitionin" %ro& !i"!#y unor"anised to or"anised sector 'ey

Custo)er Po,er Increasin" de&and %ro& user se"&ents 5e&and %or #i%esty#e products MaDority o% t!e &ar'et sti## price sensiti/e

T"reat o Substitutes No si"ni%icant t!reat Source: KPMG Analysis n 6i"! n Co0 n Mediu&

T!ese trends indicate certain 'ey capa$i#ities t!at co&panies in t!e %urniture sector need to de/e#op %or success+ T!ey are $rie%#y discussed $e#o0L Goo$ su55ly )ana#e)ent c"ain

expect t!e %urniture to co&p#e&ent or en!ance t!eir o0n $rand+ 6o0e/er) e/en indi/idua# $uyers in t!e !o&e %urniture se"&ent are increasin"#y #oo'in" at $randed products) as a &eans to ensure Gua#ity and /a#ue+ Custo)isation Furniture &anu%acturers need to $e a$#e to custo&ise t!eir products to &eet di%%erent custo&er needs) 0!i#e &aintainin" t!eir cost co&petiti/eness+ T!is cou#d $e a c!a##en"e) especia##y in t!e !o&e %urniture se"&ent) 0!ere t!e /o#u&es %or speci%ic desi"ns are #i'e#y to $e #o0+ Practices #i'e &ass custo&isation) 0!ere t!ere are products 0it! standard s!apes and siAes 0it! custo&ised exteriors and co#our s!ades) 0i## need to $e i&p#e&ented+ Accurate

Supp#y c!ain &ana"e&ent is critica# %or %urniture &anu%acturers %or caterin" to $ot!) t!e !o&e and co&&ercia# se"&ents+ For t!e !o&e se"&ent) t!e c!a##en"e 0ou#d $e to cater to IndiaFs di/erse custo&er needs and a spread(out &ar'et) 0it!out addin" to in/entory or costs+ In case o% t!e co&&ercia# ;o%%ice and !ote#< se"&ent) t!e 'ey reGuire&ent 0ou#d $e to ensure ti&e#y de#i/eries) as per reGuired speci%ications to t!e $ui#der or arc!itect+ Cost Mini)isation Furniture &anu%acturers in India 0i## need to cater to di/erse tastes and pre%erences across custo&er se"&ents and "eo"rap!ies+ At t!e sa&e ti&e) 0it! t!e industry "ettin" increasin"#y or"anised and co&petiti/e) &ar"ins are #i'e#y to $e pro"ressi/e#y under pressure+ In t!is scenario) t!e a$i#ity to &ana"e costs t!rou"! i&pro/ed &anu%acturin" processes and &ini&isin" 0aste is a 'ey capa$i#ity reGuire&ent %or p#ayers in t!is sector+ !ran$ Mana#e)ent 2randin" !as $eco&e a si"ni%icant %actor in %urniture $uyin" in India in recent years+ 6a/in" a 0e##('no0n $rand is i&portant %or caterin" to t!e o%%ice and !ote# se"&ent) as t!ese typica##y $uy in #ar"e /o#u&es and

de&and %orecastin" is a re#ated capa$i#ity) reGuired to p#an %or ra0 &ateria#s and parts+

OPTIONS FOR ENTERING T*E IN$IAN FURNITURE MARKET Attracti-e se#)ents T!e Indian %urniture &ar'et o%%ers attracti/e "ro0t! options %or &u#tinationa# p#ayers #oo'in" at enterin" t!e Indian &ar'et+ As &entioned ear#ier) i&port o% %urniture into India !as $een "ro0in" at near#y a -= per cent >A,R) indicatin" stron" de&and %or "#o$a# products in t!e Indian &ar'et+ T!e o%%ice %urniture se"&ent appears t!e &ost attracti/e) as it is "ro0in" rapid#y and a#so o%%ers #ar"e /o#u&es+ It is esti&ated t!at t!e de&and %or o%%ice space in India 0i## "ro0 at a >A,R o% 23 per cent o/er t!e next 3(. years+ Apart %ro& t!e de&and %or creation o% ne0 o%%ice space) t!e de&and %or o%%ice %urniture is a#so dri/en $y reno/ation o% existin" o%%ices+ T!is se"&ent is a#so re#ati/e#y price sensiti/e and #i'e#y to "o in %or 0e##('no0n $rands+ Anot!er potentia# se"&ent is !i"!(end !o&e %urniture) caterin" to t!e upper &idd#e

c#ass and a%%#uent ur$an !ouse!o#ds+ 6o&e %urniture is t!e $i""est se"&ent in ter&s o% /o#u&e and 0it! t!e nu&$er o% suc! !ouse!o#ds increasin" at a$out a 3 per cent >A,R) it o%%ers "ood potentia# %or in/est&ent+ ,#o$a# p#ayers can enter India) eit!er on t!eir o0n or t!rou"! Doint /entures+ ,i/en t!e &ar'et siAe and co&p#exity) success%u# "#o$a# co&panies spend si"ni%icant ti&e in studyin" and understandin" t!e Indian &ar'et t!orou"!#y) $e%ore &a'in" si"ni%icant in/est&ents+ So&e co&panies !a/e esta$#is!ed #iaison*representati/e o%%ices as an inter&ediate step $e%ore enterin" on t!eir o0n or t!rou"! a Doint /enture+ Typica##y) t!e #iaison o%%ice is not a##o0ed to underta'e any $usiness acti/ity in India+ T!e ro#e o% suc! an o%%ice is to "at!er in%or&ation a$out t!e possi$#e &ar'et opportunities and pro/ide in%or&ation a$out t!e co&pany and its products to prospecti/e Indian custo&ers+ A #iaison o%%ice in India is per&itted to carry out on#y speci%ied acti/ities and t!e per&ission %or t!e sa&e is "i/en %or a period o% t!ree years+ T!is &ay $e extended %ro& ti&e to ti&e+ An exa&p#e o% suc! an approac! is Te'nion+ Te'nionFs tar"et &ar'et inc#udes Fortune .33 co&panies and &aDor Indian corporate !ouses+

MNC urniture co)5any in In$ia + Teknion Te'nion initia##y esta$#is!ed a #iaison o%%ice in India and t!e co&panyFs operations 0ere %ocused in >!andi"ar!) 6ydera$ad) Ne0 5e#!i) Mu&$ai and 2an"a#ore+ Present#y) Te'nion e&p#oys t0o per&anent e&p#oyees %or its operations in India+ It !as an a%ter(sa#es ser/ice %unction t!at inc#udes recon%i"uration and ne0 orders+ T!e %ir& a#so e&p#oys su$ contractors %or insta##ation o% its %urniture so#utions+ Te'nion i&ports %urniture %ro& its Ma#aysian operations+ Present#y) Te'nionFs ai& in India is to esta$#is! itse#% as a #eadin" desi"ner and pro&oter o% !i"! Gua#ity &ode# %urniture so#utions+ For t!is) t!e co&pany intends to tar"et 3 per cent o% t!e tota# %urniture &ar'et $y esta$#is!in" re#ations!ips in India and net0or'in" 0it! t!ese re#ations!ips to reac! t!e tar"eted co&panies+ Te'nion a#so p#ans to esta$#is! a ne0 s!o0roo& and a Doint /enture 0it! Indian distri$utor+ In t!e #on"er ter&) Te'nion p#ans to &aintain an asse&$#y unit 0it! standard %urniture and standard product ran"es+

!uil$ bran$

t"e

India $ein" a price and /a#ue(conscious &ar'et) consu&ers typica##y #oo' %or cues t!at indicate assurance o% /a#ue+ A stron" $rand is i&portant %or %urniture &anu%acturers in t!is respect) to increase custo&er a0areness and trust+ Participation in %urniture trade s!o0s) or"anisin" se&inars) etc+) cou#d t!ere%ore pro/e to $e use%u# &eans to $ui#d a $rand+ Un$erstan$ )arket t"e

Potentia# in/estors) 0ou#d a#so need to concentrate on speci%ic re"ions*custo&er se"&ents initia##y) to esta$#is! t!e&se#/es and test t!e &ar'et $e%ore in/estin" in a nationa# distri$ution net0or'+ Esta$#is!in" a #iaison o%%ice to study t!e &ar'et extensi/e#y and identi%yin" in/est&ent opportunities 0i## a#so pro/e to $e steps t!at 0i## ena$#e in/estors to %ir& up t!eir India operations+ Focus $esi#n on

KEy TAKE+A:AyS FOR POTENTIAl IN<ESTORS 1!i#e t!e Indian %urniture &ar'et is "ro0in" rapid#y and can yie#d sustained ad/anta"es) an assess&ent o% t!e sector and t!e 'ey trends dri/in" it t!ro0 up a %e0 'ey ta'e(a0ays %or potentia# in/estors+ T!ese areL

5esi"ns t!at cater to #oca# custo&er reGuire&ents are an i&portant reGuire&ent %or success across &ar'ets+ In t!is respect) co&panies cou#d #oo' at #e/era"in" IndiaFs traditiona# cra%ts&ans!ip and tec!no#o"y $ase) t!rou"! de/e#opin" desi"n sc!oo#s or co##a$oratin" 0it! t!e a#ready existin" sc!oo#s+ P#aces in India) t!at are 'no0n %or t!eir traditiona# 0ood0or' are #isted in t!e appendix+

Appendix

lOCATIONS KNO:N FOR E>CEllENCE IN :OO$:ORK A#t!ou"!) %urniture is &anu%actured in &any di%%erent parts o% t!e country) a %e0 centres !a/e $eco&e 0e## 'no0n %or t!eir exGuisite car/in") in#ayin") turnin" and #acGuerin"+ T!ese areL Gu?ar at 2esides car/ed c!ests and a#&ira!s) ,uDarat is synony&ous 0it! t!e 0ooden s0in"+ T!e di%%erent /arieties o% s0in"s are &ade usin" a ran"e o% 0ood %ro& un/arnis!ed !e0n 0ood to ric! #acGuer+ San'!eda /i##a"e) in ,uDarat) !as a uniGue tradition o% en"ra/in" indi"enous#y de/e#oped si#/er) "o#d and $ronAe co#ours on 0ood+ Surat) !as a tradition o% parGuetry(0or') 0!ic! is #oca##y ca##ed Sadeli+ Kas") ir In Kas!&ir) extensi/e 0ood(0or' !as $een used %or structures since ancient ti&es+ 6ouses are #ined 0it! 0ood cei#in"s 0or'ed in "eo&etrica# patterns and 0indo0s in #attice 0or'+ T!e Kas!&iri !ouse$oat) &ade entire#y o% a specia##y seasoned 0ood t!at does not 0arp in 0ater) is a /isua# de#i"!t+ *os"iar5ur

%Pun?ab( 1ood 0or'ers !ere specia#ise in in#ayin" i/ory) no0 &ore or #ess rep#aced $y p#astic due to its #o0 cost+ Intricate desi"ns !a/e recei/ed roya# patrona"e so&e "enerations a"o+ 1ooden %urniture) trays and &irror %ra&es repeat certain $asic &oti%s and orna&entation deri/ed %ro& nature+

Sa"aran5ur %Uttar Pra$es"( T!is is t!e &ost %#ouris!in" co&&ercia# centre %or 0oodcar/in"+ S!ees!a& and Tea' are used %or t!e s&a##( sca#e &anu%acturin" o% traditiona#) as 0e## as &odern products) suc! as) screens) ci"arette $oxes) ta$#es) tri/ets) $oo'ends) etc+ Sa!aranpur no0 a#so concentrates on 0ood seasonin" or t!e preparation o% 0ood $e%ore it is cra%ted) $y &e##o0in" it and &a'in" it proo% resistant a"ainst crac'in" and sp#ittin"+ K e r a l a

1oodcra%ts in t!e state o% Kera#a) I,odFs O0n >ountry)F /ary %ro& !ouse!o#d %urniture to ani&a# %i"ures) 0!ic! is a &aDor econo&ic and cu#tura# acti/ity+ >ar/in"s %ro& Kera#a represent its tradition and $orro0 stron"#y %ro& spiritua# /a#ues and t!ou"!ts+ Ot"er areas 1est 2en"a# !as its o0n tradition o% stron" %o#' car/in"+ >ar/ed %i"ures) %urniture) ca$inets) De0e##ery $oxes) c!ests and #a&p stands produced in 2i!ar) are noted %or t!eir e#e"ant desi"ns+ Orissa exce#s in &a'in" $eauti%u# do0ry c!ests o% painted 0ood) in addition to car/ed %i"ures o% Cord ?a"annat! and t!e te&p#e at Puri+ And!ra Prades! is 'no0n %or its co#our%u# Kondapa##i toys+

KEy PlAyERS Go$re? 9 !oyce Manu acturin# Co. lt$. K It is a part o% t!e ,odreD ,roup and 0as incorporated in 932+ T!e ,odreD ,roup recorded re/enues o% around US7 . 3 &i##ion in FEF3K It &ain#y &anu%actures consu&er products) o%%ice eGuip&ent) consu&er app#iances) c!e&ica#s) a"ro products) security eGuip&ent) industria# products and o%%er o%%ice auto&ation and stora"e so#utions K T!e co&panyFs &anu%acturin" %aci#ity is #ocated in Mu&$ai) Ma!arastra K T!e co&pany !as exc#usi/e s!o0roo&s and dea#er out#ets across India Feat"erlite K Feat!er#ite is one o% IndiaFs #ar"est %urniture &anu%acturin" co&panies and 0as started in 9-. K Feat!er#ite !as $een retai#in" %urniture %or t!e past 23 years and t!e %irst out#et 0as opened in 2an"a#ore in 9:8 K T!e co&pany !as a state(o%(t!e(art &anu%acturin" p#ant and is en"a"ed in continuous R&5 K T!e co&panyFs &anu%acturin" p#ants are #ocated in 2an"a#ore and 6osur+ It !as a presence in 22 #ocations across India K It !as around 2. exc#usi/e s!o0roo&s in Mu&$ai) >!ennai) 2an"a#ore) 5e#!i) Ko#'ata and 6ydera$ad+ It &anu%actures around 23) 333 c!airs and 3) =33 0or'stations per &ont!+ 3. per cent o% t!e tota# production is so#d t!rou"! retai# out#ets

K T!e co&pany !as an e&p#oyee stren"t! o% .33) 0!ic! inc#udes arc!itects) interior desi"ners and ot!ers Style S5a K Sty#e Spa Furniture Ci&ited is pro&oted $y t!e @uari(>!a&$a# ,roup+ Esta$#is!ed in India in 998) to &anu%acture and retai# %urniture) t!e co&pany is !eadGuartered in >!ennai K T!e US7 . &i##ion &anu%acturin" %aci#ity at Ka''a#ur) near >!ennai) in t!e state o% Ta&i# Nadu) is a sop!isticated and %u##y auto&ated p#ant) 0!ic! is one o% AsiaFs &ost &odern and #ar"est &anu%acturin" %aci#ities+ T!e ISO( certi%ied p#ant produces around 3+2 &i##ion %urniture pieces annua##y

K T!e co&pany &anu%actures !o&e and o%%ice %urniture t!at is retai#ed t!rou"! a$out 92 exc#usi/e retai# out#ets) spread across t!e country K T!e co&pany a#so pro/ides a%ter sa#es ser/ices t!rou"! its s!o0roo&s

$urian K 5urian is a &aDor p#ayer in i&ported %urniture) o%%erin" #i/in") $edroo&) dinin" roo& and o%%ice %urniture K T!e co&pany !as $een set up $y t!e 5o'ania ,roup) 0!ic! !as $een in/o#/ed in p#y0ood &anu%acturin" %or a$out 2. years K 5urian !as o/er =3 i&ported %urniture s!o0roo&s in t!e country K T!e co&pany a#so o%%ers %ree interior desi"n consu#tancy and %ree de#i/ery and %urniture insta##ation Nilka)al K Ni#'a&a# ,roup o% >o&panies !as a turno/er o% o/er US7 2. &i##ion+ It is t!e #eader in p#astic &ou#ded %urniture K T!e co&pany !as di/ersi%ied into t!e #i%esty#e %urniture $usiness $y #aunc!in" M!o&e) 0!ic! is a co&p#ete !o&e so#ution store o%%erin" conte&porary ready&ade 0ooden %urniture+ T!e co&pany !as ei"!t &anu%acturin" #ocations in India+ It a#so !as Doint /entures in 2an"#ades! and Sri Can'a

Millenniu) li estyle K Mi##enniu& Ci%esty#e is a %a&i#y o0ned enterprise incorporated in 999+ T!e %a&i#y !ad near#y 8. years o% experience in retai#in" Indian art and antiGues K Mi##enniu& Ci%esty#e o%%ers a one(stop so#ution to cater to t!e custo&ersF co&p#ete %urniture reGuire&ents) as it o%%ers a 0ide ran"e o% %urniture %ro& around t!e 0or#d under one roo% K A nu&$er o% $rands across /arious product cate"ories are so#d %ro& t!e co&panyFs retai# stores ( ArteM) 5i/ani) Codden'e&per) RioArt) Sauder) S!er0ood and So%tp#us+ Mi##enniu& Ci%esty#e !as its s!o0roo&s spread across t!e t0o sout!ern Indian cities o% 2an"a#ore and 6ydera$ad K T!e co&pany a#so pro/ides t!e Idesi"nin" your o0n interior sittin" at !o&eF ser/ice 0it! t!e !e#p o% an on#ine interacti/e roo& desi"ner

K It pro/ides ser/ices #i'e desi"n so#utions) pro%essiona# "uidance and interest %ree #oans) $esides %urniture and accessories K T!e &ain stren"t!s o% t!e ,roup are a 3.3( &e&$er 0ide direct sa#es net0or') a 3.3(p#us stron" dea#er net0or') 33 re"iona# o%%ices in a## &aDor Indian industria# cities and 2= 0are!ouses a## o/er India and a 0are!ousin" %aci#ity a#on" 0it! a &ar'etin" o%%ice in t!e UAE

E>c"an#e Rate Use$

year 2333(3 233 (32 2332(33 2333(3= 233=(3. 233.(3233-(38 E>c"an#e Rate %INR=US =.+ 8. =8+ 83 =:+ =2 =.+ 9. ==+ :8 ==+ 39 =.+

8ISClAIMER
T!is pu$#ication !as $een prepared %or t!e India 2rand EGuity Foundation ;NI2EFO<+ A## ri"!ts reser/ed+ A## copyri"!t in t!is pu$#ication and re#ated 0or's is o0ned $y I2EF+ T!e sa&e &ay not $e reproduced) 0!o##y or in part in any &ateria# %or& ;inc#udin" p!otocopyin" or storin" it in any &ediu& $y e#ectronic &eans and 0!et!er or not transient#y or incidenta##y to so&e ot!er use o% t!is pu$#ication<) &odi%ied or in any &anner co&&unicated to any t!ird party except 0it! t!e 0ritten appro/a# o% I2EF+ T!is pu$#ication is %or in%or&ation purposes on#y+ 1!i#e due care !as $een ta'en durin" t!e co&pi#ation o% t!is pu$#ication to ensure t!at t!e in%or&ation is accurate to t!e $est o% I2EFFs 'no0#ed"e and $e#ie%) t!e content is not to $e construed in any &anner 0!atsoe/er as a su$stitute %or pro%essiona# ad/ice+ I2EF neit!er reco&&ends nor endorses any speci%ied products or ser/ices t!at &ay !a/e $een &entioned in t!is pu$#ication and nor does it assu&e any #ia$i#ity or responsi$i#ity %or t!e outco&e o% decisions ta'en as a resu#t o% any re#iance p#aced on t!is pu$#ication+ I2EF s!a##) in no 0ay) $e #ia$#e %or any direct or indirect da&a"es t!at &ay arise due to any act or o&ission on t!e part o% t!e user due to any re#iance p#aced or "uidance ta'en %ro& any portion o% t!is pu$#ication+

India 2rand EGuity Foundation ;I2EF< is a pu$#ic(pri/ate partners!ip $et0een t!e Ministry o% >o&&erce & Industry) ,o/ern&ent o% India and t!e >on%ederation o% Indian Industry+ It ai&s to e%%ecti/e#y present t!e India $usiness perspecti/e and #e/era"e $usiness partners!ips in a "#o$a#isin" &ar'et(p#ace+ In$ia !ran$ E@uity Foun$ation c*o >on%ederation o% Indian Industry 2=9(F Sector :) Udyo" Bi!ar P!ase IB ,ur"aon 223 .) 6aryana) IN5IA Te#L P9 2= =3 =3:8) =3-3 ( -8 FaxL P9 2= =3 3:83) =3 =3.8 E&ai#L D+$!uyanMciion#ine+or" 1e$L 000+i$e%+or" 1e$site in t!e Russian #an"ua"eL 000+i$e%+or"*russia