INVESTMENT POTENTIAL STUDY INDIAN HOME UTILITY & FURNISHING INDUSTRY

Prepared By:

,
February 2009

IMRB International

January 1, 2008

Prepared For:

Preface
Thai-Indian business relations have improved considerably over the past decade. Thailand and India are close to concluding a Free Trade Agreement (FTA) covering trade in goods by 2010. The Free Trade Agreement between Thailand and India is expected to improve trade relations between the two countries further. The FTA covering trade in goods would lead to long term mutual benefits in trade and investment and the partnership would be expanded further to cover technology knowledge and expertise India's primary imports from Thailand are machinery, electronic appliances, textiles, plastic material, transport equipment, vegetable oil and latex. The major items of imports under FTA are polycarbonate, cathode-ray tubes, color-TVs, air conditioners and Aluminum products. Thailand‘s main imports from India are jewelry, gemstones, steel, pharmaceuticals and ferrous metal ores. India's trade with Thailand could touch USD 7 billion by 2010-11 propelled by a doubling in transaction under Free Trade Agreement (FTA). The EHS was implemented on September 1, 2004, under which tariffs on 82 items were to be phased out by September 1, 2006 by both the sides. The trade between Thailand and India is estimated to be US $ 7 billion by 2010-11 from US $ 2.2 billion in 2005-06. The total trade of 82 items under Early Harvest Scheme (EHS) of the FTA was increased by over 140 percent to about US $ 358.63 million in 2005-06 from US $ 149 million in 2003-04. The share of these 82 items in India-Thailand trade increased from 10.34 percent in 2003-04 to 15.68 percent in 2005-06. Thailand‘s export to India of the identified 82 EHS items was increased from US $ 84.64 million to US $ 275 million during the period from 2003 – 04 to 2005 – 06. During the same time, India‘s export to Thailand of these items increased from US $ 64.28 million to US $ 83.03 million during the same period.

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In 2007, Thailand‘s export for these 82 items was US $ 406.31 million. Due the FTA between two countries, Thailand is able to manage the trade surplus of US $ 598 in 2007 in bilateral trade between Thailand and India. With significant potential for growth of business between the two countries, the Ministry of Commerce, Thailand and Royal Thai Embassy would like to understand the investment potential across the following identified product categories:1. Home Utility and Furnishing: This would broadly include three product categories:a. Furniture – Largely focusing on house hold furniture e.g. Sofa-set, Dining table, Corner / corner table etc. Also covering office furniture e.g. office chairs, cubicles, tables etc and open-air furniture i.e. the furniture used in the garden, near pools etc b. Interior Decoration items – This would include Showpieces, Wooden handicraft, photo frames, and artificial flowers. c. Utensils – Household (kitchen), HoReCa (Hotel Restaurant Catering) Segment, Institutional / Office d. Plastic Products - Food containers, plastic storage boxes etc e.g. Cello, Tupperware, Milton, Nyasa etc 2. Construction Material: This would include Bathroom Fittings, Tiles/Floorings (including wooden), Roof Tiles (used in the costal areas), Metal (Al, Tin etc) / Gypsum boards used for partition 3. Hospitality Services: This would be understood with the objective of tie-up with existing hotels – spas, specialty restaurant (e.g. Thai cuisine restaurant), health wellness services etc. The client would be interested in management control and running the property. The stand-alone spas e.g. Kaya clinic is also covered in the purview of the study. 4. Auto parts and accessories: It would cover both types of auto parts:-

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These parts would be for 2-wheelers (e. alloy wheels etc In order to understand the trade potential across the above categories.a. b. Accessories / decorative items e. Given the similarity and overlap in couple of these product categories. the Ministry of Commerce.g. this report is divided and presented in two parts as follows: 1. clutch plates etc and high volume low value items like break pads etc). Utensils and Plastic Products. music systems. Module 1 – Home Furnishing (Furniture & Interior Decoration) 2. This report is for Home utility and furnishing segment that includes Furniture. Report for each of the above-mentioned product categories shall be submitted separately in four different modules. moulding etc) and 4-wheelers – both cars and commercial vehicles. gear box. Interior Decoration items. Module 2 – Home Utility (Utensils and Plastic Products) INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -3- . Essential auto parts (low volume high value items e.g.g. Thailand and Royal Thai Embassy has commissioned Business and Industrial Research Division (BIRD) of IMRB International to avail its research based consultancy services.

........................................1...................5. Furniture Industry Value Chain ....... Furniture Industry Analysis...........................................................1.....................2...................... Segmentation – Exporting Nations ................................................................. India – a preferred destination for International Business .... 27 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -4- ..........2...................... 21 1................................. Décor and Handicrafts Industry Value Chain .......................................2......................2..............................................1.... 21 1....................................... 14 E......1... Industry Analysis ... Consumer Insights ..4............. Furniture Industry .......1..1............................................................. Furniture and Handicrafts & Décor Industry in India............3......24 3...........................................................................6....................................................... 18 1..................................... 14 E..........TABLE OF CONTENTS MODULE 1 – Furniture & Decorative Items Industry of India Executive Summary ............................................................................................................ 11 E............. Understanding the Value Chain of Furnishing Industry......1........... Overview: ...... Global Furniture and Handicrafts & Décor Industry ............................ 13 E....................................................................... 21 1............................... Recommendations for Thai Investors ............. 11 E....................................... Global Furniture Industry ......................................... 14 E....... 12 E....................................................................... 22 1....... Major Importing Nations ........18 1......................................................... Global Crafts and Decorative Industry .........................5.......................... SWOT Analysis of Décor and Handicrafts Industry.4................................................. Overview: .2.................4.. INDIA – Important Trends in Indian Economy ............... 23 2..........1..................................... Major Exporting Nations ................................4.................... 27 3............... 20 1.... Overview .......... Indian Décor and Handicrafts Industry ................................................2............................................5..2.......................2..................................... 13 E............................................. 13 E........3.....27 3........................................................................1........................................11 E..............................7.............. Furniture Industry in India................................................2........................ 18 1..1.................1...................................... 15 E................................................2........... 16 1................................... The main furniture exporting countries .................

...................................... 46 5............ 46 5........................................45 5....... 43 5......................................2...........................4......1............................ 33 3......................... 31 3........ 50 6..............1.2...... 45 5.......... Challenges in the Indian Handicrafts and Décor Industry ...................1...............................1..............2............. Distribution Structure ..........................................................................2... Information Search ...... 32 3........3......................2............. 34 4................. Consumer Insights .................................... Purchase Decision Process – An Introduction ......... 38 4......................................... Indian Handicrafts & Décor Industry – SWOT Analysis ................ Industry Growth Trends and Forecasts ........52 6...................................................................... 53 6.. Imports ................................ Industry Analysis ........................................ Classification / Segmentation of the Industry: ..............35 4......................................................... 57 6.......... 27 3............................................................................................................ Handicrafts & Décor Products Value Chain ...........................................................................................................................................1............................. 47 5............ 35 4. Industry Segmentation ......... 37 4....................... Indian Handicrafts and Decorative Industry ........3..1............... 60 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -5- ........4.........2..... Key Demand Drivers of the Furniture Industry......2..........................3..................1..................2............. Furniture Industry Value Chain ....................3...3..................4................ Overview .....................................................1.2..2... 41 4............1.................... Handicrafts Clusters in India ...............4.............................................................................................................1................................................ Problem Recognition / Need Awareness Stage ............. Understanding the Value Chain .......... Purchase Decision.................................................................... 29 3........ 30 3.................... Indian Furniture Industry Analysis – Five Forces Model ...............................................4....2............... 52 6....................................................... Evaluation of Alternatives .........................................................................2.......................1...............1.................... 48 5............................ Respondents Profile .........................................................................................1...... Threat of New Entrants..........................................................2.........................2.. 31 3.................5...................3..........1....................1......... 55 6................................ Competitive Rivalry .... 47 5......2...............2........ Threat of Substitutes .......................................2.......1........................ Domestically Manufactured Furniture................ 35 4.......................... Bargaining power of Customers .... 54 6......1.1............... Bargaining power of Suppliers ..................... Furniture Industry and Organized Retailing ....................................................................................................1...............

..3.............................2........................2........... Recommendations for Thai Investors ............................1.........................................................................4................ 80 E............................................ 81 E..........................................1.....1................................. Consumer Insights ....................1.............1..................................................... Wooden Handicrafts Industry – Overview .............2............3................ 68 7..................................................................... 80 E... Value Chain – Tableware & Plastic Container Industry ........ 75 8.................... Tableware Industry in India.........1.....7..........6..................................3...........................5 Post-Purchase Evaluation . Customers‘ Perceptions about Thailand ........... Style Spa .... 70 8........................1.. Durian .... 72 8....... Entry Options ..........4...................................................... 82 E.... 81 E.............................................................3.....................................4......... Value Chain for Manufacturers – ..........................2............................................................................... 71 8.................................................................................................................. 76 Executive Summary ............. Recommendations .........1.............1..................................................................................... 79 E.................................... 62 6...................................... Tableware Industry............................ 73 8......... Godrej Interio ........ 65 7........................................................................................................................ 69 7.................................................................. 84 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -6- ................................................... Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 71 8....... Market Attractiveness ..........................................3......................................78 E.................. Annexure ....................... Plastic Container Industry ............................... 66 7............................2......... Factors That Affect Growth ...................................2.......1............5.......................................6........................................................... Distribution .....2.................................... 82 E.............1.... 83 E....................................2.......... 81 E............................................... Value Chain for Importers – .... 75 8............................................... How to Enter the Four Market Segments ....... Plastic Container Industry in India ................................2............... Brand Building & Promotion ............1....65 7........ Industry Analysis .. Market Attractiveness of Tableware & Plastic Container Industry..........................................................1........ Role of Wooden Handicrafts Industry in Indian Economy ......................................................................................................................................................71 8.... 78 E....................3...2.......... 64 7...................................2.......1........................................................................

9. Global Scenario ..................................................................................................86
9.1 Global Tableware Industry: .................................................................................................... 86 9.1.1 Overview: ..................................................................................................................... 86 9.1.2 The Changing Consumers ............................................................................................ 86 9.2. Global Plastic Products Industry............................................................................................ 88 9.2.1. Plastic Industry ............................................................................................................ 88 9.2.2 Plastic containers .......................................................................................................... 88

10. Tableware & Plastic storage containers Industry in India ..........................89
10.1. Tableware Industry .............................................................................................................. 89 10.1.2. Industry Segmentation ............................................................................................... 89 10.1.3. Customer classification.............................................................................................. 92 10.1.4. Major manufacturers in India .................................................................................... 93 10.1.5. Growth Drivers for Tableware Industry .................................................................... 93 10.1.6. Analysis of Tableware Industry in India ................................................................... 96 10.1.7. Critical Success Factors for Tableware Industry ....................................................... 98 10.2. Plastic Containers Industry in India ..................................................................................... 99 10.2.1 Overview .................................................................................................................... 99 10.2.2 Industry Segmentation .............................................................................................. 101 10.2.3. Customer classification............................................................................................ 102 10.2.4. Major manufacturers in India .................................................................................. 102 10.2.5. Growth Drivers for Plastic storage containers Industry .......................................... 103 10.2.6. Analysis of Plastic storage containers market in India ............................................ 103 10.2.6. Analysis of Plastic storage containers market in India ............................................ 104 10.2.7. Strengths and the weaknesses of the industry ......................................................... 106 10.2.8. Critical Success Factors for Plastic storage containers ........................................... 107

11. Imports structure in Indian Tableware & Plastic containers market ......108
11.1. Overview ............................................................................................................................ 108 11.2 Current Import Duty Structure ............................................................................................ 108 11.3. Major brands being imported in Indian tableware market ................................................. 108 11.4. Major brands being imported in Indian Plastic containers market .................................... 109

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11.5. Channel Structure for Importers ........................................................................................ 109

12. Understanding the Value Chain ...................................................................111
12.1. Value Chain of Tableware Industry ................................................................................... 111 12.1.1.Case study for Tableware: Value chain of La Opala RG Ltd. .................................. 111 12.2. Value Chain of Plastic Containers Industry ....................................................................... 112 12.2.1. Case study for Plastic containers: Value chain of Cello Thermoware Ltd. ............. 113

13. Consumer Insights .........................................................................................115
13.1. Overview ............................................................................................................................ 115 13.2. Customer Purchase process................................................................................................ 115

14. Conclusion ......................................................................................................121
14.1. Market Attractiveness ........................................................................................................ 121

15. Recommendations ..........................................................................................122
15.1. Entry Strategy .................................................................................................................... 122 15.2. Positioning of Tableware & Plastic storage containers ..................................................... 123 15.3. Target Product Categories.................................................................................................. 123 15.4. Target Customers ............................................................................................................... 124 15.5. Distribution ........................................................................................................................ 124 15.6. Brand building & Promotion ............................................................................................. 125 15.7. Value Chain ....................................................................................................................... 125

16. Annexure .........................................................................................................126
16.1. Profile of major players in tableware category .................................................................. 126 16.1.1 La Opala ................................................................................................................... 126 16.1.2 Yera .......................................................................................................................... 127 16.1.3. Bharat Pottery Ltd. .................................................................................................. 128 16.1.4. Art d‘ inox ............................................................................................................... 129 16.1.5. Magppie ................................................................................................................... 130

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16.2. Profile of major players in Plastic storage container category .......................................... 130 16.2.1 Cello.......................................................................................................................... 130 16.2.2. Tupperware .............................................................................................................. 131 16.2.3. Hamilton .................................................................................................................. 132 16.3. Import Legislation in India ................................................................................................ 134 16.3.1. Principal Law & Import Export Policy.................................................................... 134 16.3.2. Mode of Pricing and INCO TERMS ....................................................................... 134 16.3.3. Customs Duty .......................................................................................................... 135

17. References .......................................................................................................137

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10 - .MODULE 1 .INVESTMENT POTENTIAL STUDY FURNITURE AND DECORATIVE ITEMS INDUSTRY OF INDIA INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY .

India – a preferred destination for International Business India has undergone tremendous economic Rising consumption development in last few decades. Industry Segmentation – The furniture industry can be segmented into the following three categories:1. 65% INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 11 . the unorganized sector. Some of the major changes and recent trends that have given strength to Indian economy include India joining the trillion-dollar GDP club. In terms of value. However. as experts opine. This figure is growing at 30% for the last few years. is growing only at a rate of 5 to 6 percent. India has now become one of the most Rising income Multiplier effect GDP growth Rising production favored destinations for international businesses to expand. has contributed significantly to the overall industry growth by witnessing significantly higher growth rate between 17 and 20 percent. which accounts to 10 percent of the total market. Furniture Industry in India The Indian furniture industry is fragmented in nature with many small players.2. 15% Industry Segments Household. Household segment – The size of the overall real estate industry in India is estimated to be around US$ 12 billion (Source: FICCI). fast growing middle class with rising income levels and majority of Indian population falling in below 34 years of age. E. Almost 80% of real estate developed in India is residential space and the rest comprise of Office.1. Considering the fast growing and barely tapped middle class market.Executive Summary E. this industry is worth INR 350 billion (2007-08) maintaining a growth rate of 10 percent. The organized sector. 20% Contract. These trends along with the growth in sectors like real estate have a significant positive impact on the Furnishing Industry in India.

2. which has a status of cottage industry. out of which a significant proportion (close to INR 90 billion) is exported. Within the household segment. Contract segment – It primarily caters to hotels and its growth is consequently linked to growth in tourism and development of new hotels. high potential for export and foreign exchange earnings and flexible production. However. albeit slow down in global economy. real estate growth. lack INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 12 . high ratio of value addition. The industry production is estimated to be worth INR 210 billion (2007-08). indicating continued growth for the furniture industry. shopping malls. About 25 per cent of the urban middle class populations live in homes with five rooms or more. major share is the middle class population of India. The growth of hotel industry in India can be attributed to the recent growth in the service industry and economy as a whole.office.3. As per the World Travel Market‘s Global Report 2008. The few important features of Indian handicraft and decorative industry are low capital investment. The Indian handicrafts industry. Office segment – In line with the growth in the Indian economy and subsequent demand for office space. growth in the organized retail industry. The consistent growth in the Indian economy and rising living standards are the key factors driving the demand of the Indian furniture industry. this segment has witnessed good growth at a compounded annual growth rate of 20%. while 45 per cent live in houses with three rooms or less. Indian Décor and Handicrafts Industry The handicraft industry employs seventy million people in India. increasing affluence of Indian consumers and growth in hospitality and tourism industry of India have significant influence on the industry demand. diversified product portfolio. E. cheap and skilled labor. The thrust on real estate and office construction is expected to sustain in the near future. which are likely to remain a strategic priority as growth is predicted to be robust. Other than these factors. has grown at a promising rate of 15 to 20 percent in the last few years. 3. hotels and hospitals. scope for new tourism development could be seen notably in emerging economic giants India and China.

4.1.4. Understanding the Value Chain of Furnishing Industry E. E. internet has emerged as a major distribution channel for décor items handicrafts items INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 13 . ethnic products of the decorative type is the large  Most common channel  Carry variety of product categories under one shop E – Retailers  In recent times.2. Décor and Handicrafts Industry Value Chain The handicraft industry supply chain of India (shown in the adjoining figure) largely consists Importers / Wholesalers Producers of importers and wholesalers who supply goods to retailers and small chains. Franchisee Manufacturers Imports Own Stores Distributor s Importers Distributor s Franchisee Retailers Imported Furniture Value Chain Domestically Manufactured Furniture Value Chain Raw Material Suppliers Manufacturers Own Stores Distributor Raw Material Imports s E. The channel flow across these two categories is summarized in respective charts below.of infrastructure & technological support. lack of awareness of international and new trends and poor promotional campaigns are a few drawbacks that need to be addressed. The most popular channel for distribution of the more Small Retailers Large Retail Chains  Stock in bulk  Sell to final consumers or small retailers Final Point of Sale traditional.4. Furniture Industry Value Chain The value chain of the Indian furniture industry can be divided under two broad categories – imported furniture and domestically manufactured furniture.

However.5. factors like lack of infrastructure and communication facilities. comprising of many small and unorganized players.low costs. low competitive rivalry. Although 90% share of the industry remains with the unorganized sector. available opportunities and potential threats and respective impacts of each of these. inadequate information of current market trends. The suppliers are also not in a position to bargain much with the manufacturers due to the domestic availability and easier imports of raw material. less interest of young people in craft industry are some of the industry weaknesses. The summary of the analysis is as follows: The furniture industry is fragmented in nature. E. ignorance / lack of information availability. the internal competitive rivalry is not significant. low capital investment.2. customers are not able to experience a wide variety and new range of products.number of small and independent retail stores.1. abundant and cheap labor to compete on price.5. E. inadequate information of new technology. weaknesses. To sum up. growing demand. Furniture Industry Analysis The Porters Five Forces model has been used to analyze the industry. it can be said that any investor who wants to enter India as an industry player can take great advantage from following factors . comparatively low capital investments and easier imports. there is an increasing demand but limited number of dominant players. The industry is vulnerable to new players with factors like increasing demand. Industry Analysis E. SWOT Analysis of Décor and Handicrafts Industry The strength factors like low barriers of new entry. In view of this market scenario. This provides an attractive opportunity for Thai companies to enter the organized sector of Indian furniture industry. variety of products categories provide an advantage to the décor and handicrafts industry. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 14 . due to growing demand and initial stage of organized sector growth. However.5. industry has witnesses a rapid growth in the organized segment. Comparing the strengths. lack of co-ordination between government bodies and private players.

6. In case of interior decoration items. visiting exhibitions become the source of information and point of purchase as well. Consumer Insights Key consumer insights.  The most preferred information sources for furniture purchases are internet. On a comparative scale. The other factors that are considered are aesthetics. There is association of fragility with Thai products in the consumer mindsets. in case of furniture it is a joint decision between husband and wife (also influenced by the children in some cases). In terms of price range. print media and exhibitions.  Perception about Thai companies – In terms of product design and quality. attractive and varied designs. . Word of Mouth. Thai price range will fall somewhere close to China and India. it was observed that home furnishing purchase decisions are mainly taken by women in the household. Other than these occasions. quality.E. renovation and new home purchases.  As expected. because of high money outlay involved in it. purpose and price. which can have a positive impact for decoration related product categories but can have a negative impact in case of furniture and utensils. important from the point of view of foreign entrants are as follows:  The major reasons identified for home furnishing purchases are related to home remodeling. It is recommended that a new player who wants to enter in the Indian market is should have multiple point of presence and established brand name in addition to meeting consumers‘ expectations for basic looks and quality.  After sales services / warranty period is an important consideration in the purchase process of furniture goods. furniture and decorative products are also purchased during celebrations around Diwali or marriage seasons. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 15 . with exclusive product designs and position itself as a brand that will be always there to provide after sales support. Sometimes. there is no such information search phase. consumers perceive Thailand as a country that will offer most of the products at affordable prices. The company can set up its own showrooms across the country. Indian customers see Thailand as a country with more innovative. However.

attractive and ethnic products in the handicrafts and décor industry Joint Venture / Medium Scale Firms Direct Selling and Marketing Tie ups with Builders and Architects Service Industry (IT and BFSI Sector) . Large Volumes. Thailand is seen as a country with a status quotient attached with its products. High Quality.7. Better Packaging. will grow at 20% CAGR in coming four to five years Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation. Customization Household Furniture – Low End Segment Imports Tying up with existing Retail Chains – Hypermarket Format Middle – Middle Classes Competitive Prices. Perceived as a shopping destination of moderately affluent class of the society Office Space in India is growing rapidly. Warehouses and connectivity through strong Logistics Network.Mid Size Offices Handicrafts & Décor Products Imports Buying and Selling Agents. Product Exclusivity. Warehouses in Tier 1 cities. Strong Logistics Network. Timely Delivery. considered as a price competitive country. Availability.middle and Upper middle class ready to pay extra to ensure durability However. Brand Name and After Sales Support Office Furniture Institutional Customers look for brand names that can compliment with their own brand name Indian customers are now spending more on Home Furnishing Among Indian customers.E. through wholesalers Middle Class Large Product Assortment. After Sales Support. Ethnic / Culture based Positioning INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 16 . Recommendations for Thai Investors The recommendations for the identified four potential market entry segments can be summarized as follows:-. Thailand is perceived to be price competitive Thailand  Positioned as a country with delicate. Better packaging. Well – Established Brand Name. Exclusive designs. Market Segments Key Take Out from the Market Study Expanding Middle class and Upper middle class Entry Strategy Either through Joint Venture or step by step entry by establishing only a liaison office first Distribution Route Target Segment Critical Success Factors Household Furniture – High End Segment India is a complex country with cultural variation  important to gather information first Middle .

Office Furniture  growing at a fast pace (20% CAGR). customers are ready to pay an extra buck for better quality and designs. Handicrafts & Décor Products There is no need for macro-investment.The market attractiveness analysis of the above-mentioned four segments has been done based on factors like Industry Growth Stage. Potential Entry Barriers Scale of Investments required etc. Competitive Scenario. Household Furniture – High End Segment  Given higher disposable income. Growth of Customer Segments. Products are  present throughout the low value to high value added band. providing an opportunity to make good margins Increasing Affluence of Indian upper middle class. advantage in terms of Household Furniture – Low End Segment volume. Minimum efforts and investments required for  market development (entry through JV and distribution through existing hypermarkets) and promotion. No strong industry player in this segment INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 17 . The findings from this analysis can be summarized in the table below: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base. Limited number of sector strong players in the industry. Growth in Allied Sectors. Huge demand but limited supply from organized sector Office Segment of India is in a booming stage.

7% 30.2% 20% 15% 10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21. Global Furniture Industry 1. in order of furniture production. Italy. 4% U. The seven major industrial economies (which are. 3% Italy. 3% Developed Countries of the world total.8% 28. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 18 . The furniture production of all developed countries combined covers 65% Other Developed Countries. providing the most important stimulus to world furniture trade. Canada and France) together produce 50% in value of the world total. reaching 25% in 2001 and almost 30% in 2006. the United States. Germany. Growth of the imports/consumption ratio has been rapid.5% 26.3% 24.K. particularly important in the United States. 18% Germany.0% 29.S. 3% Canada. 7% Japan. Japan. Overview: According to the CSIL‘s (Centre for Industrial Studies) ―World Furniture Outlook 2008‖ report. 3% Emerging Countries World Furniture Production Other Emerging Countries. China and Poland.. Global Furniture and Handicrafts & Décor Industry 1.6% 22. 8% China. 21% India.3% 29.1.. 15% France. the United Kingdom.5% 24.1. There are two countries. 12% U. It is now leveling off and it is estimated that in the next few years it will remain at a level of about 30%. Furniture production in emerging countries currently amounts to 35% of the world total in value. measured as the ratio between This imports increase and is consumption. where production is increasing rapidly. world production of furniture is worth about US$ 307 billion.1. The opening of furniture markets over the past Ten Years The most important structural Imports/Consumption Ratio 35% 30% 25% 20.9% phenomenon of the past decade is the increased degree of openness of the furniture markets. where the trade deficit for furniture was almost US$ 22 billion in 2006.1. 3% Poland.

only one-half of world furniture trade can be considered "global" in the sense that it takes place between countries in geographically distant regions. It is expected that this figure will grow by 5% in 2008. 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. Therefore. World Trade of Furniture (In US$ Billion) 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 45 48 52 51 55 65 77 84 91 97 102 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. trade within regions amounts to about 47% of total world furniture trade. mostly from Italy From the new EU members to Western Europe. it would be equal to US$ 102 billion. On balance. in which case.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. more than 40% of total foreign furniture trade is within the region. especially to Germany INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 19 .

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 20 . Italy. Canada and Mexico.3 billion in 2007 (preliminary) in current dollars. Italy moves from first to second and Poland from eighth to fourth. Other major furniture exporting emerging countries are Poland.S.2. are number one furniture importing country on a world scale. Several interesting changes that emerged from this study are as follows:    The European Union lost about 15 percentage points The new EU members gained about 6 percentage points The Asia and Pacific area gained 13 percentage points The surge of imports into the United States was accompanied by an increase in exports from China. The main furniture exporting countries The main furniture exporting countries are China. The U. the share of developed countries decreased by 23% to the advantage of some emerging countries: From 1997 to 2006 China's share increased from 4% to 19%. Germany. with imports growing from US$ 8. Vietnam and Malaysia. About 52% of exports come from developed countries.6 billion in 1997 to US$ 25. China moves to the first position becoming the leading exporter. Percentage breakdown by geographic area in 1997 and in 2006 was also studied.1. The evolution of exports by the main exporting countries between 1997 and 2007 was as follows: The relative positions of the main exporting countries have changed considerably between 1997 and 2007. Poland and Canada. however.1.

prone to impulse purchases. manufacturing processes. product requirements and standards. which result in shorter product cycles. This has enabled a country like China to leverage its inherent strengths like availability of abundant and quality labor. Canada. Overview Driven by positive changes in major markets like USA and Europe. 1. Hong Kong.8% of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 21 .5% of the total world imports of crafts and decorative products. it continues to remain the most attractive market because of the sheer purchasing power and stability of the market. Hong Kong and Taiwan. account for 77. The rising levels of consumer disposable incomes together with the tendency to accessorize and re-style homes with unique articles are the major driving factors for the surge in demand for crafts and decorative products. Another significant change is the surge in contract manufacturing arrangements between EU and Asian countries like China. As a result. Exporters are at their best in delivering products low price products that match consumer preferences.2. Currently. France. which have been doing well on basic factors of production like labor and raw material. Japan. these countries. Germany.2.1. Major Importing Nations The top 10 markets.2. Belgium and Spain. the market is more oriented toward fashionable products and hence. United Kingdom. Increases in population and multi-ethnic composition are other factors that make this market attractive. which include countries such as USA. and consumer preferences. Global Crafts and Decorative Industry 1. Germany is the second largest importer and accounts for 8. the market is becoming highly price competitive in the low and medium value market segments. Despite the fact that it is a highly competitive market. USA is the largest importer accounting for 32.1.3% of the world imports. are now exposed to sophisticated designing. However. the demand is more for low price products. technology. the world crafts and decorative market has been witnessing a good growth from 2001 onwards. which are usually machine made.2. and raw material. As a result. to become the single largest exporter with a market share of about 30% in the total world exports.4% of the total imports followed by UK which accounts for 7.

1. France. USA.the world imports. Hong Kong is also a large importer of crafts and decorative especially from China. China‘s ability to supply large volume and wide range of low-cost products has pushed in the forefront of competition. China is the largest exporter of craft and decorative products. Italy. Turkey. Germany. Spain and Mexico are the top ten exporters of crafts and decorative products in 2003. However. 85% of these imports are for the purpose of re-exports. Major Exporting Nations China.3. India. Hong Kong. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 22 .2.

They also re-export product imported from other neighboring Asian countries. a large proportion of produce from Hong Kong and Taiwan are machine made.4.2. Spain and UK dominate the high-end market Italy Germany France Turkey USA Spain UK Poland Taiwan Hong Kong Belgium Korea India China China India Thailand Vietnam Malaysia Indonesia segments. whereas Indian products are mostly handcrafted and exemplify a high degree of craftsmanship. USA. Segmentation – Exporting Nations The exporting nations can be classified in different leagues based on the value of products they export and the markets they address: 1. 3. toys and dolls. Hungary and Romania and Asian countries like Hong Kong. Taiwan.Countries like Italy. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 23 . High-End Market Segment . ceramics. and supply high value crafts and decorative products. furniture. 2. glassware. These are mostly machine made. products categories such as basketwork.Eastern European countries like Poland. Indonesia. These countries occupy leadership positions in categories like ceramics. About 90% of products of Chinese origin are completely or partly machine-made. France. woodwork and some varieties of textile from other Asian countries are mostly handcrafted. Middle Market Segment . Low – End Market Segment . V O L U M E Middle Market Segment High – End Market Segment furniture and lighting articles. Hong Kong. Turkey. China and India are the two leading competitors Low –End Market Segment VALUE among Asian countries. Apparently. leather goods.In the low and medium value products.1. Malaysia and Philippines are the other leading Asian suppliers of low to medium value products. Korea are major players in the medium value products. Belgium. Barring Hong Kong and Taiwan. Thailand. Vietnam. Germany. Taiwan. The main factor that distinguishes product from these countries is the level of mechanization. Czech Republic.

2. India will create a sizeable and largely urban middle class.Given the substantial scope for continued productivity increases in Indian businesses. with a CAGR of 5. Tripling Indian Incomes . This is much faster than income growth in other major markets. Considering the fast growing and barely tapped middle class market. India has undergone tremendous economic development in last few decades. The emerging middle class will surge tenfold. the shape of the country‘s pyramid will also change dramatically. Rising India . 3. To be precise. UK. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 24 .744 INR to 318. exceeding 500 80% 60% 40% 20% 0% 8% 1980 Growing Middle Class 500 368 220 65 22% 2000 %age Population 32% 2010 2025 Million People 60% 200 0 600 400 million by 2025.896 INR. Important Demographic and Economic Trends 1. with an exception of China. competitiveness of Indian economy and favorable demographic trends a compounded annual growth rate of 7. Exploding Middle Class – As Indian incomes rise. after US. If the same is achieved. 2. It will command 60% of the country‘s spending power. India today is seventh most attractive destination for foreign direct investments. Following part of this chapter outlines the major trends and changes that India has gone through during past decades. Average real household income will grow from 113.3% can be assumed from 2005 to 2025.20% 8% 6% 3. Indian income levels will almost triple in next twenty years.50% 1% 2% 4% 6% 8% 10% between 2012 and 2014 to become the third largest.3%.Recently joined the trillion-dollar GDP club India economy is now fourth largest in the world and is estimated to cross Japan 2007 2002-2006 1980-2002 1950-1980 1900-1950 0% %age Average Annual GDP Growth 9. Mexico & Germany. Brazil. INDIA – Important Trends in Indian Economy Moving its population out of poverty and generating huge demand. India has now become one of the most favored destinations for international businesses to expand. China.

7 3. Above-mentioned four factors combined result in a multiplier effect leading to an accelerated economic growth. India will be defined as a country with self-confident.2 Total Population: 1.8 1. Young and Home Maker India . a generation that is either ready to step or has recently stepped into next stage of their INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 25 .5 8.Target Segment for Home Furnishing market 6.0 2.With 49% of its population below 24 years of age. India to be the world’s fifth largest consumer market by 2025 – Given the rapidly increasing household incomes and a robustly growing population will lead to a striking increase in overall consumer spending.6 4.5 9. 80+ 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 0.5 9. Rising consumption Rising income Multiplier effect GDP growth Rising production 5.8 7. 16% of its population belongs to an age group of 25 to 34.5 5.1 1.4.9 49% below 24 years 9.9 10.2 9.11 Billion % Population 2011 16% between 25 – 34 years . The aggregate consumption in India will grow from 17 trillion INR today to 34 trillion by 2015 and INR 70 trillion by 2025. assertive and risk takers generation.6 2.5 6.6 8 10 12 0 2 4 6 As can we also see from the above chart.

Almost 80 % of real estate developed in India. decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction. is residential space and the rest comprise office.7% of the total household expenditures of India) INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 26 . Changing Indian Families – Some of the recent trends in the Indian households which will have a significant impact on the furnishing industry are: a) Sudden and accelerating growth in number of nuclear families  Requirement for setting up new Homes b) More working women  Increasing number of double income families  Higher disposable income  Higher spends across all categories of purchases c) Consumers becoming status / class conscious  Higher expenditure on Home Furnishing and Decor products (Wallet share of home furniture and furnishing has already touched 2. This figure is growing at a pace of 30% for the last few years. shopping malls.lifecycle – Married Life. to be around US$ 12 billion. following variables also have significant impact on Furnishing industry in India: 1. rising incomes. Rapid population growth. this segment will be maximally responsible for the Home Furnishing product purchases. Other than the above-mentioned general economic and demographic trends. By 2030 India will need up to 10 million new housing units per year. 2. Housing Market set for strong growth – a) The size of the overall real estate industry in India is estimated by FICCI. hotels and hospitals b) India possesses the elements of very strong demand growth on the housing market in the coming decades. Considering the needs of this age group that is to make new homes.

1. the office furniture segment with a 20 per cent share and the contract Office. Godrej and Boyce – 23% 2.1. Durian – 3% Remaining 70% share of the organized furniture industry can be attributed to some of the region wise or product segment wise strong players. Tangent. 15% Industry Segments Household. Kian. Style Spa – 5% 3.1. accounting for the remaining 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 27 . Industry Segmentation Application / Customer Segment Wise – As with the global market. 65% segment. Dominant players in the organized sector with their respective market shares within the organized sector are listed below (also shown in adjoining chart): 1. 3. Millennium lifestyles. This is divided into two broad categories – Unorganized Sector and Organized Sector. As low as 10% (INR 35 billion) of the Indian furniture industry is the share of organized sector. home furniture is the largest segment in the Indian furniture market. This is followed by. accounting for about 65 per cent of furniture sales.1. Overview: Size of Indian furniture industry as estimated by the industry experts is approximately worth INR 350 billion. According to industry experts. 20% Contract. Renaissance.2. to name a few – Featherlite. @Home.3. Furniture and Handicrafts & Décor Industry in India 3. V3. Furniture Industry 3. unorganized sector commands the market with a share of around 90% (INR 315 billion).

in line with the growth in the Indian economy and subsequent demand for office space. In general. to cater to different customer needs. so price is rarely a determining factor. Brief description of each of these three segments is provided below. A typical middle class urban Indian home has five rooms (including kitchen and bathroom). scope for new tourism development could be seen notably in emerging economic giants India and China. the average life of a piece of furniture is about 20 years and some artisans‘ pieces are used for as long as 50-70 years. About 25 per cent of the urban populations live in homes with five rooms or more. About 16 per cent is estimated to live in single-room homes. Contract segment (Fifteen Percent Share) The contract segment caters primarily to hotels and its growth is consequently linked to growth in tourism and development of new hotels. but the trend seems to be declining slowly. which are likely to remain a strategic priority as growth is predicted to be robust. The type of furniture used depends on the customer‘s affluence and taste. Colonial furniture is still very common in India. The rich and upper middle class is typically very attentive to design and quality. Office Furniture (Twenty Percent Share) The office furniture segment caters to the commercial and office space. indicating continued growth for the furniture industry. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 28 . Demand for furniture of international standards is limited to the larger cities. albeit slow down in global economy.percent. This segment has witnessed rapid growth in recent years. Home furniture (Sixty Five Percent Share) Home furniture in India is available in a wide range. European style furniture is only found in homes of the urban upper class. The growth of hotel industry in India can be attributed to the recent growth in the service industry and economy as a whole. It is also estimated that the wealthier classes do not change furniture very frequently. The thrust on real estate and office construction is expected to sustain in the near future. while 45 per cent live in houses with three rooms or less. According to the World Travel Market‘s Global Report 2008.

3. select something that they like. like earlier days. recession might decline the demand. Considering the recent developments in organized retail industry and rapidly changing consumer markets as constant factors. However.Furniture is never seen as an urgent customer need .Customers no more want to take the pain for deciding designs or raw material for their furniture. furniture market. However. This faster growth of organized sector can be attributed to certain factors like:  Growth of overall organized retail industry is the most important reason for faster growth of organized players in furniture industry.  Lack of Time . the overall furniture industry is expected to grow at 15% CAGR for next five years. as recession cannot have significant impact on household demands. the overall furniture industry has grown at 10% since last two three years. they just want to go to a retail store. which suits his wallet and buy immediately.  Convenience .Now days nobody has the time to employ a carpenter to get his or her furniture made in home.20%.1. Especially with the growth in the number of double income families – where both husband and wife are working.it is bought only when one wants to renovate or wants to do away with old furniture while shifting to a new place. Now. Industry Growth Trends and Forecasts Maintaining a decent rate.3. This can be further attributed to higher disposable incomes. some level of uncertainty has definitely cropped up after the economic recession has hit the globe. An interesting trend underlying this growth rate is that the organized sector of the industry has shown a better growth falling between 17% . more importantly. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 29 . which goes along with latest trends. changing lifestyles and India‘s overall economic growth. In this regard. no one has the time to get the furniture made by the carpenter. will not be affected much. industry experts have two different viewpoints . As such needs can wait. which is dominated by household furniture.

Rising income levels.3. leading to easier product availability Key Growth Drivers Tourism and Hospitality Industry growth – Rising number of foreign tourists in India.1. rapid increase in number of hotels in India New Affluent Indian Consumer . entry of modern retail formats. home loans at lower interest rates. Other than these two. significant spends on home décor due to peer pressure INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 30 . Higher Disposable Incomes.Buying latest style/designs to keep up with the fashion / trend. Increasing number of double income families Retail Industry Growth – Increase in number of organized retail stores.4. Key Demand Drivers of the Furniture Industry Consistent growth in the Indian economy and rising living standards are the key factors driving the demand of the Indian furniture industry. growth in office space – IT/BPO/ BFSI Changing Consumer Demographics . factors and sub-factors having significant influence on the industry demand are as follows: Real estate growth – Increasing demand for residential space.

culturally attached. artistic. some part of Indian market are still untapped and market is price sensitive. This gives rise to an opportunity for new entrants to tap some price sensitive customers who cannot afford the highly expensive products made available in the metros and tier 1 cities of the country. Overview As it represents rich culture and tradition of the country. Indian Handicraft Industry has the status of cottage industry in India. The Indian handicrafts industry is highly labor-intensive cottage based industry and decentralized. Lack of Infrastructure & Technological support. High potential for export and foreign exchange earnings and Flexible Production are few important features of Indian Handicraft and Decorative Industry. about 70 million people are engaged in handicrafts sector all over the country and their annual production is around INR 210 billion out of which products worth of about INR 90. which needs to be overcome.3. Numerous artisans are engaged in crafts work on part-time basis. Low capital investment. However. Handicrafts are made from raw materials and can be produced in unlimited numbers. decorative. Defining Handicrafts: Handicrafts can be defined as products.2. aesthetic. creative. In spite of having diversified products.3 billion is being exported. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 31 . which are produced either completely by hand or with the help of tools. diversified product portfolio. Mechanical tools may be used as long as the direct manual contribution of the artisan remains the most substantial component of the finished product. Indian Handicrafts and Decorative Industry 3. high ratio of value addition. Cheap and skilled labor. religiously and socially symbolic and significant. traditional.1. It has shown continuous growth at the rate of 15-20% over the years and contributes major role for export and foreign earnings. According to one of the study. Such products can be utilitarian. Indian handicrafts and decorative industry has a unique place among all the industries. being spread all over the country in rural and urban areas.2. but it has shown promising growth and evolved as one of the major revenue generator over the years. Lack of awareness of international and new trends and Poor Promotional campaigns are a few drawbacks of industry. functional. India is one of the important suppliers of handicrafts to the world market.

3. The Economic Importance: Handicrafts are hugely important in terms of economic development.2. They provide many opportunities for employment even with low capital investments and become a prominent medium for foreign earnings. Products served by this industry can be distinguished as follows:                 Metal ware Wood ware Hand printed textiles Embroidered and crocheted goods Shawls Carpets Bamboo products Zari goods Imitation jewellery Paintings Earthenware Jute products Marble Sculpture Bronze Sculpture Leather Products Other miscellaneous handicrafts INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 32 .2. Handicrafts are a substantial medium to preserve of rich traditional art. traditional skills and talents that are associated with people‘s lifestyle and history. heritage and culture.The Cultural and Economic Importance of Handicrafts: The Cultural Importance: Handicrafts play very important role in representing the culture and traditions of any country or region. Classification / Segmentation of the Industry: Handicrafts and Decorative industry comprises of diversified products portfolio and there is large variety available in market.

Baster. Farrukhabad. Kerala & Jagadhari. Kohima (Tribal) lndore. Mysore. The following table lists the major clusters for the production of different handicrafts items in India. Bangalore. These regions are the major source of exports and have better infrastructure. Jaselmer Saharanpur.3.2. Thanjavur. Lucknow. Baster Delhi. Jaipur. Mandap. Rewari. Jaisaimer. Jagdalpur. Kerala & Behrampur (WB) Amroha. Chennapatna. Madras. Sambhal. Sambhal. Baroda. Jodhpur. market development and innovative activity in comparison to the eastern states of the country. Indian handicraft traditions are influenced by the local topography. Jaipur Agra. only a few states and regional clusters contribute maximum to the exports. Nagina. Jaipur. Delhi. Hoshiarpor. and socio-religious factors.3. Jodhpur Rajasthan. These are Gujarat. Kullu. each one specializing in one or other type of handicraft activity. Jodhpur. Jaipur is a classic example of effective synergies between tourism. Madras. Rajasthan and Uttar Pradesh. Beedar. Kolhapur. Amritsar. Madras. climate. Baster. Although artisans and artisans are found in most parts of the country. Product Category Artmetalware Regional Clusters Moradabad. Jaipur. Amritsar. Handicrafts Clusters in India Handicrafts industry is widely dispersed across different states of India. private enterprise and strong NGO movement. Moradabad. Jaipur. craft traditions. Sagru & Sanganer Kutch (Gujarat). The rich craft heritage of India is unique and as diverse as its customs and traditions. Agra. Jodhpur. Aligarh. Jodhpur Kashmir. Madras. Madras. Srinagar. Dharmshala / Chamba & Srinagar Agra. Shanti Niketan (WB) Wooden Artwares Hand printed Textiles & Scarves Embroidered goods Marble & Soft Stone Crafts Papier Mache Crafts Terracotta Zari & Zari Goods Imitation Jewellery Artistic Leather Goods INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 33 . Jodhpur.

identities of true craftsmen are guarded by the middlemen. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 34 . Challenges in the Indian Handicrafts and Décor Industry Lack of economies of scale Owing to inherent problems of finance. Lack of information on sellers The importers often find it difficult to access the local artisans directly. Lack of information on buyers Local artisans are mostly illiterate and do not have information about their prospective buyers. Often. who do not wish to lose their commissions by enabling direct contacts between the craftsmen and importers. the artisans are not in a position to furnish any large-scale orders. This asymmetry of information is often exploited by the intermediaries. The raw materials with acute shortages include cane. scrap and virgin metal.2.3.4. thereby pocketing the huge margins. Scarcity of Raw Material Challenges Décor and Handicrafts Industry There has been a decline in the availability and quality of some of the raw materials used in the production of handicraft goods. silk. dependence on simpler tools and social issues. who purchase artifacts at low prices and sell them to the buyers at exorbitant rates.

79 CAGR = 64% 80. The current furniture imports are mainly from China.43 2005-06 2004-05 2003-04 2002-03 2001-02 0. which is of the same quality and better designs.4. still it is preferred more than the local products because of better finish and use of modern technology and machinery in case of imported products. Furniture Industry Value Chain Given the significant contribution of imports. Philippines and Japan. fuelled by the boom in housing and commercial construction. This increase can be attributed to factors like increasing demand for furniture.00 92. There is a segment of locally manufactured products.00 Imported vis-à-vis domestic . the entire value chain of the Indian furniture industry can be understood under two broad categories:   Imported furniture Domestically manufactured furniture 4. Imports Trend .1.93 20.1. furniture imports in India have grown at a CAGR of 64%. Furniture Imports in India (in Million USD) 152. However.00 32. Germany.1. but it INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 35 .93 40.00 120. Malaysia. Spain. Indonesia. Korea. Italy. It can be available at both cheaper and higher prices in comparison to domestic furniture.00 160. China and Malaysia tops this country list by contributing the most to the industry. Understanding the Value Chain 4.Over the 5-year period from 2001 to 2006.00 58.Imported furniture is India is present in all segments – Low Price to Premium priced furniture. Increasing income levels and influence of global lifestyle trends have also influenced many Indians to move towards imported furniture.

Style Spa and Godrej are good examples. for rest of the categories. At the same time. Actually. Because. Style Spa‘s focus is on bedroom furniture) therefore. imports are preferred.g. there are two categories of suppliers who are responsible for furniture imports in India. In case of organized sector. Whereas in terms of availability. most of the manufacturers in the current scenario have some strength areas or competency in some specific product segments. Current Import Duty Structure . The figure below summarizes the entire value chain of imported furniture industry in India. Manufacturers – Some players are importing furniture along with their own manufacturing set-ups. Government does not allow FDI in single brand retailing for imported products in India whereas for the local products there are no such restrictions. there has been decline in import duties on wood and wood products. there are market players who are solely into importing and selling furniture in India. the local product is good in comparison to the imported products.is available at significantly higher prices. For furniture.Wood product imports were liberated in India in 1995. Example . Value Chain for Imported furniture – In the current scenario.the product life is quite short. lack of reliability and responsibility in terms of after sales services. could be used instantly. these are 1. the Indian government continues to reduce tariff rates from a peak rate of 300 percent in 1991 down to current rate of 31. This category can also be termed as Traders. Importers – In addition to the above category. furniture is being imported by both sectors of the industry – Unorganized and Organized. There is a good demand for mass produced imported furniture as they could be purchased ―off the shelf‖ and. (for e. 2. this rate ranges between 31 and 36 percent based on the type of furniture imported. Within the sector. Since then. Franchisee Manufacturers Own Stores Distributors Retailers Importers Distributors Imports INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 36 .70 percent on standard value of goods. there are also some drawbacks associated with imported goods.

these are raw material suppliers. It also imports MDF (Medium Density Fiberboard) boards from Europe. 25% Wood. Raw Material Share Plastic. there is an additional level of stakeholders before manufacturers. capacity to build (production capacity and utilization) and capability to design (availability of professional designers) drive furniture manufacturing industry. with bamboo and cane also being used in some cases. Wood accounts for nearly 65 per cent of all furniture made in India. raw material (type.4. 10% Metal. The above stated difference is depicted in the figure below: Franchisee Raw Material Suppliers Manufacturers Own Stores Distributors Raw Material Imports There is a wide variety of raw material used for furniture making in India. These factors combined together are responsible for deciding the actual value of the furniture. metal and plastic.2. 65% India imports wood from various South East Asian countries such as Indonesia. availability & sourcing). Malaysia and Myanmar.1. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 37 . The key raw materials include wood. In this case. as well as imported wood. The difference between value chain of domestically manufactured furniture from that of imported furniture lies at the first stage. This includes several types of indigenous wood. Domestically Manufactured Furniture Various aspects related to customers (changing lifestyle and preferences).

the leading player in organized furniture industry of India. navy etc. is present in both office and home furniture.One of the largest engineering and consumer products‘ company in the country having varied interests from engineering to personal care products. For example.3. Through distributors or franchisees Distribution channel structures of three major players are described below for better understanding. 4.Godrej Interio is a unit of Godrej . different players have different preferences. There are more than 500 franchisees. Distribution Channel Structure – Godrej Interio has adopted two types of distribution models: 1. 2. located in tier 1. Distribution Structure Distribution channel adopted by leading furniture-manufacturing companies in India can be classified into two broad categories: 1. these can be multi brand stores. Along with this. Catering to office as well as home furniture needs. Direct selling through own retail stores 2. Own retail Stores – named Lifespaces. Interio owns around 58 stores spread across 25 cities in India. Godrej Interio also specializes in providing customized solutions to some specific institutional segments like labs.Depending upon the type of raw material to be imported. thus positioned as Home and Interiors Store. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 38 . In contrast to the above category. This model sells both office as well as home furniture. no other intermediaries are involved. Case 1: Distribution Model of Godrej Interio – Brief Profile .1. be it individuals or institutions. with more focus on office segment. Particleboard is preferably imported from Thailand and rubber wood from Malaysia. Franchisees – named Interio. 2 and 3 cities of India. Godrej Interio. this model of distribution largely sells the latter. Both the above-mentioned models sell directly to end customers.

furniture is sold under the brand name of Zuari. Style Spa has positioned itself as specialist in Bedroom Furniture. furniture manufactured in this company is sold under the brand name of Zuari. Through Dealers – Second model is of selling the furniture through dealers. K. in home furniture category. Birla conglomerate promotes Style Spa Furniture Limited as a company. office furniture Godrej Interio does direct selling. Style Spa Exclusive Stores These are exclusive stores owned by the company where only style spa products can be sold. Bedroom furniture accounts for 65% of the total sales. Further. Then distributors give away the product to the dealers. distributors take away the products on cash and carry basis. 74 stores are company‘s own stores and remaining 16 are stores owned by exclusive dealers – which cannot sell other products or brands. Style Spa is only into home furniture. Remaining 35% is from living room and miscellaneous categories. The same is done through either cold calling (whenever there is news of any company or office expanding. There are 90 showrooms of style spa all over India – making Style Spa the largest chain of furniture showrooms in India.e. 2. but these are not exclusive stores. Although. these are multi brand multi product outlets. in this case.In case of institutional customers. except for less than one percent of their customized services to some special institutional segments. Distribution Channel Structure – Furniture is sold through two routes – 1. presentations are made pro actively to sell) or else by attending to the requests received from the customers directly. Indian Furniture Products Limited / Zuari  Distributors  Dealers In this case. Case 2: Distribution Model Style Spa Limited Brief profile: Zuari Chambal Group of K. i. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 39 . There are no other intermediaries. Out of these 90. Indian Furniture Products Limited is the manufacturing company. The company is pioneer and one of the largest manufacturer in panel based furniture made from particleboard.

Hyderabad and Bangalore. Depending upon the gap of demand and supply (furniture already available in warehouse) import / manufacturing decisions is taken. Durian has limited presence in case of office furniture – Office table. Then as per the orders. Durian is present in both categories . 30 are owned by Durian. part is imported (depending upon demand of the project). these dealers are authorized exclusive dealers. and Italy. and decorative veneer. Office chair. China. Thailand. However. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 40 . Spain. Orders from different showrooms come to the central warehouse through their ERP system. 98 percent of Durian‘s Sales is from imported furniture and only 2 % is from domestically manufactured.Durian is mainly into manufacturing of plywood. but only for some categories of furniture . Distribution Channel Structure – Two types of channel 1. In case of Home furniture. Material that is imported is stored in warehouses and then distributed to showrooms all across India. Some of the material is manufactured. Durian has a main/central warehouse (2.Case 3: Distribution model of Durian Industries Limited Brief Profile . Durian has project offices in all the major cities like Delhi. It is also into manufacturing. Durian mainly caters to the needs of the individual customers. By this route. 1998 onwards Durian entered in furniture trading. Out of 43.chairs. There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi. PVC doors. Dealers own remaining 12-13. Through retail showrooms – 43 retail showrooms of Durian are present across India.2 lakhs sqft area) in palgaon (100 Km from Mumbai). Orders are generated in these project offices and their demand is communicated to Mumbai head office. and they cannot sell other brands. Conference table and Book Shelves. 2. which is importing and distributing in India. modular workstations. Durian currently imports furniture from Malaysia.Home as well as Office furniture. arrangements are made for the logistics and material is finally sent to the destination showrooms. it is present in almost all types of products. Project sales – This model is mainly to cater to institutional customers.

large and small appliances. a unit of PRIL (Pantaloon Retail India Limited) is one such example. such hypermarkets in India are present in the range of 50. the customer segment that is targeted is the middle class of the country. which is largely dominated by unorganized sector in terms of supply. The latter. mostly follows modern formats as far as retailing to end customers is concerned. India has grown from the traditional Mom and Pop stores present here and there in the neighborhood catering to the convenience of the consumers.000 sq ft. Furniture Industry and Organized Retailing India has seen a resurgence of Retail sector.000 square feet to 200000 square feet depending on various parameters like store location.Big Bazaar. Through this format.1. These hypermarkets are typically multi storied. Furniture Bazaar along with being present as a furniture-dedicated section under Big Bazaar is also present in two other INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 41 .Value. In this category of retail. Emergence of shopping centers mainly in urban centers with facilities like car parking and finally growth of modern retail formats like hyper and super markets trying to provide customer with ‗3 V‘s . demand etc. Furniture Bazaar is the section of Big Bazaar that focuses on furniture. In terms of space. The result is a very large retail facility.4. The retail formats present in the furniture industry of India can be categorized into following two categories: a) Hypermarkets b) Specialty Stores or Home Improvement Stores Hypermarkets A hypermarket is a superstore that combines a supermarket and a department store. space that is allotted to furniture as a category may vary between 15. clothing and many items. The basic approach is bulk display and minimum handling by stores personnel. which carries an enormous range of products under one roof. Emergence of organized retail industry has its impact on the Furniture Industry as well.4. Variety and Volume‘ is the latest trend. with discounts offered to customers who are willing to carry heavy appliances and furniture out of the stores. Example . however one product category is restricted to one floor only. Its product assortment goes beyond routinely purchased goods and includes furniture.000 sq ft to 25.

This category of stores is explained in the next section. kids' room market. these can be termed as home improvement stores as well. dining market. bedroom. markets and services. Tilewala. Electrician. Carpenter. door delivery and installation. Considering the fact that these stores not only specialize in furniture as a product category but also focus on other home furnishing and home décor related categories. In case of latter. Home Stop (Shoppers Stop). bathroom market. Mr. Home Town is an amalgamation of the value and lifestyle propositions. Home Centre (Lifestyle) etc. dining room. best wishes. so appears eminently approachable to the budget-buyer. The services section offers service options such as .Mr. example of Home Town is explained below: Home Town. Examples of such formats in Indian furniture industry can be Home Town (Pantaloon Retail India Limited). grihapravesh. Home furnishings.formats – online store and stand-alone stores (in few places). music. e Zone (consumer durables and electronics) and Depot (books. is divided into three sections – exhibitions. The markets section features products for living market. a unit of PRIL. Plumber. bedroom market. Since this format has less diverse product range. etc). keeping traditions alive in a contemporary world. mattresses. the appropriate term would be specialty stores. Design Centre. The displays echo the aspirations of the consumer. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 42 . kitchen market. thus it is comparatively easy to manage the supply chains. the aspirational customer as well as the lifestyle-driven customer. Specialty Stores / Home Improvement Stores A specialty store can be defined as a retail format that concentrates on a limited number of categories along with some complimentary categories. The store also has a customer service desk to help customers with any service related challenges. Mr. kitchen & bathroom in the exhibitions section. Painter. The objective with which these stores operate is to provide one stop shop for those who are setting up new homes or those who are renovating their homes. These kinds of stores provide a high level of service in their focus categories. Mr. For a detailed understanding of this category. kids' room. Home Town has live displays of various rooms such as living room.

2. Secondly. Handicrafts & Décor Products Value Chain The Handicraft supply chain of India consists of importers and wholesalers who supply goods to retailers and small chains. internet has emerged as a major distribution channel for décor & handicrafts items There is a definite trend in the Indian market towards flattening of the distribution channels for crafts and decorative products. there has been a rapid growth in the increase of crafts and decorative products sales through large retailers like national and chain stores and mail order catalogue. thus eliminating the need for an independent exporter and as they are working less with sales representatives. Even the smaller independent shops that deal with the traditional. an essential for staying competitive in the market. The distribution channel for crafts and decorative products in India follows the following model - Producers Importers / Wholesalers Final Point of Sale Small Retailers  Most common channel  Carry variety of product categories under one shop Large Retail Chains  Stock in bulk  Sell to final consumers or small retailers E – Retailers  In recent times.4. The importers/retailers prefer to deal directly with the producers /exporter. The reason being. which has further INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 43 . importers/ wholesalers and large retailers want a closer relationship with production in order to implement customized product development. As such the importers/wholesalers are increasingly buying from producers with export marketing capacity. ethnic products do most of their own importing and dealing with manufacturers.

ethnic products of the decorative type is the large number of small and independent retail stores. Direct import retailers that work with more than one supplier in a given country often opt to work with an independent agent or an overseas export consolidator who is responsible for coordinating orders and shipments. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 44 .accelerated the flattening of the distribution channels. The small importers/wholesalers are also no longer working with sales representatives so as to keep price margins competitive & because sales representatives are geared to work with large wholesale companies that have greater volumes and higher price margins than small to mediumsized companies. The most popular channel for distribution of the more traditional. This is mainly because the large retail chains prefer to import directly from the producers and thus eliminate the role of the importers/wholesaler. that are functional and not purely decorative. However. Since the large department stores cannot compete on the terms of price. department stores and hypermarkets are becoming the more prominent distribution mode. they cater to the higher-end market with special up-market ranges. with respect to products.

(E. Such concepts might take years to come.g. Industry Analysis 5. with imports getting easier day by day Till date. 3. as raw material is not only available from local abundant supplies but can be imported as well. Bargaining power of the customers – how strong is the position of buyers. Is there a monopoly in supply side? 2. Bargaining power of the suppliers – how strong is the position of suppliers. in absence of the latter there is a possibility switching to unorganized 3. No other significant barriers Low INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 45 . but can have significant impacts Intensity  High Medium 5. Bargaining power of Customers With fast growing middle class and changing lifestyle. huge demand is there. However. large business conglomerates are planning to enter the industry in organized sector. Only a limited number of dominant players are present in the organized sector. Threat of new entrants – How easy or difficult it is for new players to enter the industry? 1. traditional furniture.5.1. industry entry does not require very huge investments. At the same time. it is important to consider the following five critical factors: 1. Aditya Birla Group). Bargaining power of Suppliers Low. virtual office space. Indian Furniture Industry Analysis – Five Forces Model To determine the competitive intensity and thus the attractiveness and opportunities of the Indian Furniture Industry. Reliance. small homes. Threat of substitute products – How easily can furniture be made cheaper or substituted by other products 5. Threat of Substitute Products No significant threat except for the possibility of new concepts like plastic furniture. Intensity of competitive rivalry – what is the level of competition among the existing players of the industry 4. Supply side is largely dominated by the unorganized sector 2. Competitive Rivalry Industry shifting from highly unorganized towards organized sector Moderate competition among handful of players existing in organized sector 4. Threat of new entrants Because of growing domestic market.

Similarly. Indonesia is preferred for importing synthetic rattan. Therefore. Malaysia is known for its Rubber wood. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 46 . but of a medium intensity only. they cannot always do so because there are only a limited number of players in the organized sector. the raw material supply industry is yet very far away from shifting towards the organized market.1. it can be said that there is more of a positive aspect associated with the bargaining power of the consumers – that is they want to shift to organized sector and have more options from the latter.g. He/She is aware about the latest trends/fashion. one might shift to town side shops from the unorganized sector to avail more options in designs or price. However. For e. options available in the domestic as well as international market. has access to many information sources including worldwide sources like internet. it can be said that the raw material suppliers have low bargaining power. To comment on the overall bargaining power of the consumers. It is no more difficult to import the raw material of your choice. unlike the finished products supplies.A detailed analysis of these five forces determining the competitive intensity and attractiveness of the Indian furniture Industry is provided below: 5. Even though when consumers want to purchase branded furniture to ensure in terms of quality and reliability. Indian consumers have the right to choose from the various options available for him. there are countries that specialize in different categories of raw materials. Today‘s affluent Indian consumer is ready to spend extra to buy as per his/her aspirations. at the same time there are limited options available for the consumers from the organized sector. Overall.1. In fact.1. Bargaining power of Suppliers In terms of raw material. Given these characteristics. There will not be a significant threat of consumers buying from unorganized sector if there will be more players in the organized sector. 5. Bargaining power of Customers As discussed in the earlier sections. In this situation. India as a country has abundant raw material supplies for this industry.2. However. it can be said that they have it. cane and MDF (medium density fibreboards). Not only the domestic availability. but the easier imports of raw material also lower the bargaining power of the suppliers. Indian consumer has undergone a change in terms of lifestyle and purchase behavior. knows the best deal and is more knowledgeable.

Given this. Therefore. the industry might also think of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 47 . 5. there is a possibility of other concepts of furniture usage coming into picture and affecting the current product basket. convenience. Threat of Substitutes There is no significant threat of furniture being replaced by other products as such.5. However. unorganized sector takes away the major proportion of the overall Indian furniture industry.4. rapid and day-by-day increasing growth of the organized sector. Style Spa in bedroom furniture. with 90% share.3. who do not have a permanent residence and keep shifting their locations. Factors like lightweight. Especially those. there has been a recent. can motivate the new and young homemakers of India to buy plastic furniture. For e.1. the internal competitive rivalry can be said to have a force of moderate level on the overall attractiveness of the furniture industry.g. This huge demand and lesser number of players in the organized sector has been the reason behind insignificant competition among the existing players. each of these players still have a scope to expand to serve to the wide spread needs of the country  Growing Demand: Given the higher disposable incomes and other lifestyle related changes mentioned in the earlier sections. there is maximum one player having a significant presence in one product segment. will prefer such options. That too. a handful of players have mushroomed in the latter segment of the industry. Considering this. these new players have not faced a tough competition because of following factors:  Growth Stage: Organized sector of this industry is still in its growth / unsaturated stage and it will still take a significant number of years for organized industry to reach up to a saturation level when all the products segments of the industry would be tapped by one or the other player o In the current scenario. Competitive Rivalry Today also. plastic furniture has grown and taken a share in living rooms of most of the Indian households.1. On the other hand. Nevertheless. to sum up. Godrej in office furniture. Durian in living room furniture. the proportion of Indian population that wants to buy branded furniture is increasing day by day. easy to maintain etc. These changes / new concepts can be:  Plastic Furniture: With time.

especially in the organized sector. This will lead to sharp decline in furniture demand. However. Given the high rentals and huge overhead costs of running an office. Threat of New Entrants As explained above. one kitchen and one bathroom. – Reliance and Aditya Birla Group – details are as follows: INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 48 . This kind of change. bathroom) might catch up. Given this. Given the higher prices and space constraints. most of the middle class families of India reside in a house with five rooms. also make this industry vulnerable to new players. the demand is growing exponentially but there are only a limited number of players on the supply side. In that case. India is also catching up fast with the work from culture. This provides a fine opportunity for new players to enter the industry.  Concept of Virtual Offices: Following the trends of western countries. it might happen in future that most of the knowledge sector companies follow a concept of virtual office. demand for office furniture will go down substantially. some of the known and big business houses of India have already taken steps to foray into this industry. this might not be the case in coming years. all these above-mentioned concepts might take ample number of years to percolate and have an effect on the industry. one common room/living room. For example. which might take years to come. There will be tendency of staying in smaller homes.1.innovative ways to come up with high strength and designer plastic furniture. other factors like comparatively low capital investments. which includes two bedrooms. Concept of studio apartments (apartment with one big living cum bedroom with attached kitchen. However. easier imports etc. might sweep away the traditional household and office wooden furniture.5. 5.  Small Homes: In the current scenario. affording big homes will not an easy option for most Indians. Along with the increasing demand.

"As you walk through the Megastore. this report.The Delhi store has been set up under the label of ‗Reliance Living‘. apparel and what-have-you for the husbands and wives to shop together. which opened its first furniture store — Reliance Living Furniture — in Delhi. mobiles." Birla said. you will find an excellent toys and stationery mart for children." he added. it can be said that there is huge demand but limited number of dominant players. To summarize the above analysis of the industry. This threat of new entrants also can be taken care off by adopting appropriate actions in terms of tying up with right players of the industry. This provides a very attractive opportunity for Thai companies to enter the organized sector of Indian furniture industry. our destination hypermarkets will cater to monthly and event-based shopping requirements. there is no significant threat. It plans to add one more furniture store in Hyderabad by early 2009. including two more in NCR and two in Hyderabad. For interested players. furniture. The More Megastore is a one-stop shop for the entire family. The company is also expanding its newly launched Living Furnishings format. targeting the most apt class of consumers. 250-300 crore to expand its retail business and set up at least a dozen hypermarts across the country under the brand name More Megastore in the coming financial year.Reliance Retail to set up 100 Reliance Trends stores by 2011 . The company plans to have five more stores by end of the fiscal in March 2009. at the end also consists of a set of recommendations with suggestions on all the above-mentioned factors. "While our conveniently located neighborhood super marts all over the country provide all the daily and weekly shopping needs. setting up most suitable distribution channels. Here we offer an extensive range of 60. where two stores from furnishings and furniture segments would be co-located. The retail arm of Aditya Birla Group.Reliance Retail plans to set up 100 Reliance Trends outlets by 2010-11. Aditya Birla Retail Ltd (ABRL) has announced plans of investing Rs. Reliance Retail. every household product for the woman of the house.000 products catering to every need of a household. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 49 . a live bakery and a cozy café for parents to relax. electronics. Except for the threat of other new entrants. marketing with right positioning platforms. is also looking to expand the format while synergizing it with home furnishing format. besides making a foray into furniture segment and adding more stores for home furnishings.

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 Strengths SWOT Analysis Indian Handicrafts & Decorative Industry 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 craft industry Lack of skilled labor Still confined to rural areas. Indian Handicrafts & Décor Industry – SWOT Analysis           Large.5. small cities. and untapped market Lack of promotion of products Inadequate market study and marketing strategy Capacity to handle limited orders INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 50 .2. diversified and potential market It has strong.

      Development of sectors like Retail. quality and delivery for different segments. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 51 .  Products are high priced in big and metro cities. some part of Indian market is still untapped and market is price sensitive. Inadequate supply chain management and distribution reduces the sector‘s commercial viability and economic sustainability.  Craft producers have to compete on price. South Africa.   Inappropriate energy supplies to rural and sub-urban areas. which are beyond the reach of people belonging middle and lower middle class. Increased and better technological support and R & D facility in competing countries  In spite of having diversified products. Real Estate that offers great requirements of handicrafts products Development of domestic and international tourism sector E-Commerce and Internet are emerged as promissory distribution channels to market and sell the craft 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 requires handicrafts products Opportunities SWOT Analysis Indian Handicrafts & Decorative Industry Threats   Quality products produced by competing countries like China.

focus group discussions (FGD) were conducted across India as a part of this study.000 (Twenty Five Thousand Rupees) in last six months. A2 and B1 males. Detailed findings from these FGDs are as follows: 6. and especially in case of furniture and furnishing.Each respondent should have purchased furniture worth at least or greater than INR 25. Consumer Insights The recent trend in the Indian consumer mindset is ―the concept of good living‖. one FGD was also conducted with working males. Respondents Profile Based on exploratory study. considering the role of males as chief wage earners and financer in most of the decisions. these FGDs were conducted in such a manner that there is a considerable representation of both the categories of women – workers as well as homemakers. This concept is not only gaining importance in the upper class of the society. A2 and B1 working females and housewives. Thus. This qualification criterion enabled the respondents to answer and discuss the information areas more appropriately by linking their thoughts with their last purchase. but it is catching up fast with the middle . As per the scope of the study. across two age groups – 25 to 32 and 38 to 45 years SEC A1. Objective of the FGDs being capturing the consumer behavior. there was a special focus on four product categories – INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 52 . playing a role of chief wage earners in their households between 38 and 45 years of age *SEC refers to socio economic classification. they have a significant role. In order to get responses that are more accurate. which is done based on the educational qualification and occupation of the chief wage earner of the household. one more qualification criterion was applied within the above-mentioned profile of respondents .1.middle and upper – middle class as well.6. However. out of nine FGDs. To understand the in-depth consumer behavior associated with home furnishing purchases. this fact was vetted that females play a major role in most of the household purchases. respondents were asked for their inputs on various behavioral and perception based aspects with respect to buying household items. at the same time. A brief profile of the respondents identified for these discussions is given below:   SEC* A1.

Understanding or investigating this process is necessary from the point of view of understanding the mental and social processes that precede and follow the purchase actions. Following part of this section outlines the findings from these group discussions for the furniture and Home Décor products. 6. Utensils and Plastic products.Furniture. Need or Problem Recognition Information Search Evaluation of Alternatives Post Purchase Behavior Purchase Decision Consumer purchase behavior with respect to Furniture and Home Décor products is explained below with the help of above-mentioned process: INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 53 . lies a decision process. depending upon the degree of complexity and level of involvement in the product. These behavioral sciences help answer questions such as why people choose one product or brand over another. not all decision processes lead to a purchase. Purchase Decision Process – An Introduction Behind every visible act of making a purchase.2. All consumer decisions may not always include all stages. The purchase decision process is the stages that every buyer passes through in making choices about which products and services to buy. Home Décor products. how they make these choices. The figure given below represents the five common stages of any buying process. In addition.

SEC B1.” Homemaker. SEC A2. the major reasons identified for home furnishing purchases as identified in a study that was conducted in early 2008 to understand the consumer buying and spending preferences with regard to Home Furnishings are shown in the adjoining figure. Delhi Other than these two occasions. furniture purchases are always need based. As expected. there is limited space in household.6. people end up changing their furniture. Furniture – Given that. Problem Recognition / Need Awareness Stage This is the stage when consumer recognizes a problem or need. we were shifting to our new home and I didn‟t want to carry any old items there” Homemaker. Delhi “Last time when I bought furniture. The need can be triggered by internal stimuli when one of the person‘s normal needs rises to a level high enough to become a drive. two surveys were conducted – General Survey with approximately 3000 respondents General Survey Luxury Survey from the middle class and a Luxury Survey with around 1000 affluent customers from Source: The Home Furnishing & Décor Report 2008 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 54 .2.1. In this study. furniture is purchased in any of the following cases – old furniture goes faulty. In addition. for gifting in daughter child marriage and sometimes due to attractive offers available in the market during festive seasons like Diwali. It was observed that most of the furniture purchases are made  While setting up and decorating a new residence or While renovating a residence “I can also buy furniture whenever there are attractive discount offers in the market.

the major reasons for such purchases are redecorating or renovating existing homes. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 55 .2. Other then such on the spot purchases. a customer buys home décor products in a planned manner at following occasions –  Whenever such products are to be purchased for ‗vaastu‘ or ‗fengshui‘ purpose. As can we see from the figure. Information Search This is a stage in which the consumer searches for information. If I am with my husband.2. example – Laughing Buddha. Interior Decoration Items – Considering the low level of utility/purpose of home décor products. wind chimes etc   When need arises to buy for gifting purpose While decorating a new home or redecorating a home during Diwali or Marriage in a home Although most of the decisions are impulse. and based on consumer responses in the discussions it is understood that these products can be categorized under impulse purchases. SEC A2. Impulse buying refers to buying decision made immediately. never plan. in an unplanned manner based on urge created by liking a product very much. this stage is followed in case of furniture but not that much applicable in home décor products. information sources that are referred the most are as follows:  Internet – Websites of the manufacturers and retailers. This is usually done on higher value purchases. if the product is of high value. Vaastu or good luck plants. he should be ready to spend. I buy on the spot. The consumer may simply have heightened attention or may go into active information search. reliability of brand “For decorating home.the upper class. whenever I like I just pick up. I have no other considerations while buying” Housewife. Therefore. In case of furniture. websites about latest trends and lifestyle  Word of Mouth – for collecting information on aspects like quality. some of the stages of the above mentioned decision process is followed. 6.

offers. identify internet/websites as the source they use to help decide what and where to make their next big-ticket furniture or major appliance purchases (shown in the adjoining chart). INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 56 . shopping malls. and brands by going and seeing the displays at places like clusters of furniture malls. departmental stores etc. it was also observed that of the consumers who say they research furniture and appliances online. Referring to the same study. Print Media – Newspapers and Magazines – mostly referred for knowing the brands. 31 percent indicate that they expect to also purchase online. discount offers or schemes available  Trade fairs and Exhibitions – to know more about products from other countries. As per the findings of Home Furniture and appliances survey conducted in March 2008. 54 percent of respondents said it was the need to see the actual product. quality and trends Sometimes customers also gain information on the new products designs. When respondents were asked to select the main reason. as this is the only platform for gaining knowledge about global designs. price. 25 percent indicated the cost of home delivery as the main reason they would not purchase online. the majority of customers. In other words. they would not make their next home furniture or major appliance purchase online. window-shopping is also an important source of information. 53 percent.

6. I picked quite a lot from there to decorate my home. the three most popular decorating styles based upon how the consumers' homes are currently decorated are casual.In case of interior decoration item purchases. while I was in a trade fair. Sometimes.3. Investigation of this stage leads to the understanding the most important and in-depth aspects related to consumer behavior. there is no such stage of information search phase. Evaluation of Alternatives “Some time back. Parameters identified as important to consumers while buying furniture and interior decoration items are as follows: Furniture – When it comes to Furniture and related home accessories: the first thing the Consumer will look for is the Aesthetics along with Durability. The luxury consumers tended to show less of a preference for casual and rank traditional and General Survey Luxury Survey Source: The Home Furnishing & Décor Report 2008 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 57 . Furniture though has a purpose. how does it appear in the first looks. visiting exhibitions become the source of information and point of purchase as well. I saw very beautiful products from Thailand.” Homemaker. traditional and contemporary in that order. durability of the furniture also takes in the first position along with aesthetics as far as important parameters are concerned. Since furniture is still considered to be a product for long term utility. Delhi In this stage. As identified in the Home Furnishing and Décor Report 2008. the information collected in the above stage is used by the consumer to evaluate alternatives. This stage involves weighing different product attributes and their ability to deliver benefits.2. It‘s only from these international trade fairs that customers become aware of the products or specialties of other countries and if they like it. yet the first factor influencing the buying behaviour will be its looks. Before this I never knew about Thai products. they buy also. SEC A2.

will come up. Customers do not want to limit their transaction up to buying a product. The other styles included in the survey are shown in the chart. whenever furniture needs repairs or services like making the furniture termite resistant.Married. storage etc. For example – Is it a sofa cum bed. It should not happen that if I am buying imported furniture and I face some problem and if I go back. customers have developed resistance for buying imported furniture until and unless it comes with a warranty period and long buyer – seller relationship advantage. This factor will influence the type and size of Furniture Purchase. does it have storage capacity. should come with at least one year of warranty. As most of the players who are selling furniture imported from other countries. These are listed below:    Bed: 14000 – 28000 Rupees Sofas: 20000 – 50000 Rupees Full Bedroom Set (Bed + Wardrobe + Dresser + TV trolley): 28000 – 52000 Rupees Another factor which is considered as important is After Sales Support. Based on the customer inputs. Overall few statistically significant differences are found in terms of home decorating preference. Working. Second most important parameter is the Functionality. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 58 . Price affects the decision but does not impact much as compared to other factors like durability and designs. Indian customers are now ready to pay an extra buck. price bands of main home furniture products have been identified for the middle and upper middle class. the secondary functions like multifunctional. 30. the shop keeper tells me that we are not responsible. What is the seating arrangement required in the house. many times this factor acts “Furniture should be durable. They want the company to take care of the furniture whenever they shift places. do not have a support system to take care of the after sales aspects. Number of Family Members and average guests visitors at a time. Thus. Bangalore as a negative point or limitation for buying imported furniture. Having satisfied the primary functionality that is seating or sleeping.contemporary styles higher in their overall value system. SEC A2. as this is imported from some other country” . Reason behind this is that furniture is a Value Additive and Long Term Use Product. but not ready to compromise on quality.

Home Stop. However. Home Town. Reason for preferring brands is again related to the two factors mentioned above . Interior Decoration items – As mentioned earlier. most of the purchases in this category are impulse purchases. Therefore. Thus. with exclusive product designs and position itself as a brand which will be always there to support it customers. it can be said that brand is an important indirect parameter fulfilling the expectations related to factors like quality and warranty. Factors like quality. Tangent. Branded furniture as defined by the customers is furniture available at malls or shops like – Durian. durability and brand are not relevant in this case. In general. some considerations are there depending upon the type of product category.Significance of Brand as a consideration parameter while buying furniture – recent shifts in customers buying preferences includes shift from unbranded towards branded furniture as a major trend.Quality and After Sales Service. where the products being considered are of high value. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 59 . in some cases. the factors considered while buying home décor products are Price (should not be too expensive) and Aesthetics (look and design). the key take out is that if a new player wants to enter in the market. However. which sometimes become difficult to afford. it should establish itself in India in a full fledge manner with its own showrooms across the country. at the same time. Buying from such established shops or malls gives them a satisfaction in their subconscious that if something goes wrong then somebody would be there to take care of their furniture. so this stage of buying process holds less relevance. Furniture Walla. there is a perception among customers that branded furniture comes with a package of additional costs. and @Home.

The roles can be divided as follows: Decisions related to design. type of wood – Husbands Decisions related to price / budget – Joint decision. husbands are the influencers and their influence matters to such an extent that the decisions can be termed as joint decisions. Based on the various factor considered and evaluation of alternatives. In case of nuclear families.4. Depending upon the family composition. considering that furniture is a high value and long-term investment. Purchase Decision This stage mainly includes following decisions .2. furniture purchase decision is mainly in the hands of the woman in the house. all three of us who went and bought it” – Housewife. 38. while elder women (mother in law) also plays a major role. in either case – be it homemakers or workers. imported vs. In addition. fabric (in case of upholstered). Objectives of these focus group discussions also included identification of the decision makers. it was a joint decision between me and my husband. if imported – which country. it is of critical importance to market it to the right person and from the right place. women of the younger generation take the decisions. It is very important for any company to target the person who takes this decision and one who plays a major role in influencing this decision. equal role of both husband and wife “Last time I bought furniture. purchase decision is made.6. domestic. Ahmedabad INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 60 . sofa cum bed etc. but in case of joint families. we had to change our decision at the end because we were buying study table for our son and he did not like the decision. the role is clear. However. influencers and most preferred points of purchase. this role shifts accordingly. These findings are as follows: Furniture – Given the fact that Indian homes are still a place to be managed under females.Where to buy and What to Buy. color. For marketing any product successfully. Finally. SEC A2. functionality (bed with or without drawers/storage boxes.) – Wives Decisions related to point of purchase.

vaastu experts or interior decoration consultants influence the decisions. General Survey Luxury Survey Source: The Home Furnishing & Décor Report 2008 As far as decision of point of purchase is concerned. Durian. some of the affluent and upper class families have involved themselves in getting their homes decorated by interior designers and architects. customers prefer to buy from wellestablished brands that are there in India since years. “I would prefer to buy from brands like Home Stop. It was identified that the services of a home decorator or designer are a luxury of the affluent. customers will always prefer to buy from companies that put their brand name on imported products and are accountable for the after sales support. As mentioned earlier. Home décor products – Since. interior decorators also play a major role. 41. In the general home survey some 12 percent overall used the services of a decorator. these are impulse decisions. and Durian etc. In such cases only. trustworthiness in terms of after sales support like repair and replacements drives the decision. Godrej. Delhi INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 61 . some of these products are purchased from vaastu / charm / good luck perspective. in some cases. I know if I need their help in future. They will not vanish like any other small one off kind of showroom of imported furniture on gurgaon highway. Thus. Examples of such companies as given by customers include names like Style Spa. SEC A1.Use of Home Decorators or Designers: In addition to the above roles played in traditional Indian families. In case of imported furniture. Home Town. Thus. depending upon who has liked the product buy it. they will be there. and Style Spa. I can‟t trust those shops” – Husband. Some 20 percent of the luxury consumers reported using the services of a home decorator or designer in the past year. other than husbands acting as influencers in all the purchases.

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 62 . real outcome of the transaction come . Shortly after a purchase customers develops Cognitive Dissonance.2.Satisfaction or Dissatisfaction. This is the buyer‘s doubts about whether it was the right decision or not. Based on the experiences of using the product. Such post purchase effects can be reduced by taking appropriate steps like warranties.6. support provided by the seller. etc. after sales communication.5 Post-Purchase Evaluation Any transaction between a buyer and seller does not end when a product is purchased.

price can be a constraint Furniture – Joint decision between husband and wife. if the product is very expensive. Word of Mouth from Family or Friends Interior Decoration – Trade fair / Exhibitions Furniture – Aesthetics. Sometimes.Summarized Furniture – While shifting to a new house. look and feel of the product matters. Furniture – Customers look forward for provisions like warranty. Sometimes bought for gifting purpose or if suggested by Vaastu experts Information Sources Furniture – Newspapers. Trade Fairs / Exhibitions. Quality. buys. Preferred to be bought from well-established brands or chain of showrooms Interior Decoration – Who likes it. Post Purchase Behavior support in disassembly and reassembly while shifting to new home and after sales communication is expected from the seller INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 63 . Husband can influence in terms of spending or budget. Need Trigger Sometimes for occasions like Diwali or Marriage in the family Interior Decoration – Mostly impulse purchases. Kids influence for new trends and designs. After Sales Services / Warranty Period Alternatives Evaluation Interior Decoration – No such considerations. while renovating a house. Price. Wife plays a Purchase Decision major role. Magazines. Purpose.Learning from Consumer Insights .

more traditional in his approach. Customers’ Perceptions about Thailand In terms of Product Quality & Designs “Thailand offers more variety in designs. lifecycle stage. affluence. A summary of responses is given in the box above. newly married. respondents were put under a projective technique of imagining and describing the lifestyles of three different personalities – (A) Person buying furniture from Thailand. it is better than China and India. like decorative items Thailand is costlier than India. would shop from places like malls. who is young. respondents were asked to describe the latter in terms of age. like furniture.” “Comparing with other countries. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 64 . But in some. (B) Person buying furniture from China and (C) Person buying Indian furniture. hobbies etc. working in call centers.6. would like to spend weekends with family members” “A person buying Chinese furniture will be again young. value systems. mostly bachelors or newly married. experimental in approach. Projective techniques are used to understand the in-depth feelings.” “In some product categories. its like China present in low end as well as high end furniture” “I think products from Thailand are very much affordable” Lifestyle Association* “A Person buying Thai products (furniture) would be a person. will spend weekends shopping” * As a part of the Focus Group Discussions. where I could not buy much” “I think Thailand is present in all price ranges like China. but behind other countries like Italy and France” “Thailand has amazing and very beautiful designs of artificial flowers and paper crafts” In terms of Price “While I was on a trip to Thailand. designs are attractive and eye catching. they are innovative. motives and perceptions of the customers. Based on their imagination of the above-mentioned three personalities.3. working with MNCs. I did a lot of shopping because I could afford most of the products there. unlike Dubai. weekend spending pattern. and would like to spend his weekends either shopping or travelling” “A person buying Indian furniture would be middle aged.

Market Segments Key Take Out from the Market Study Middle class and Upper middle class are expanding. Recommendations for Thai Investors 7.1. Thailand is seen as a country with a status quotient attached with its products. Warehouses in Tier 1 cities. Either India is a complex country Household Furniture – High End Segment with cultural variations after every 500 Kms. High Quality. Availability. following are the key recommendations with respect to the four potential market entry segments. considered as a Household Furniture – Low End Segment price competitive country. So. Well – Established Brand Name. Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation. How to Enter the Four Market Segments Based on above analysis of the Indian furniture and Decorative items industry. Perceived as a shopping destination of moderately affluent class of the society INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 65 . Better packaging. Customization Entry Strategy Distribution Route Target Segment Critical Success Factors However.7. After Sales Support. Exclusive designs. Strong Logistics Network. it is important to gather information about the market first through Joint Venture or step by step entry by establishing only a liaison office first Middle .middle and Upper middle class of India is ready to pay extra buck in order to ensure durability Tying up with existing Imports Retail Chains – Hypermarket Format Middle – Middle Classes Competitive Prices.

distribution and brand building strategy is provided below: 7. Warehouses and connectivity through strong Logistics Network. Given that India is a complex country and there are strong cultural variances leading to different taste and preferences. Brand Name and After Sales Support Institutional Customers look for brand names that can compliment with their own brand name Indian customers are now spending more on Home Furnishing Large Product Assortment. not volumes.1. Especially. Better Packaging. it is important for any entrant to understand the market first.1.Office Space in India is growing rapidly. Ethnic / Culture based Positioning Among Indian customers. in this segment Thai investors should build up in terms of branded and high design furniture. it is more appropriate for global players to enter India INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 66 . Buying and Selling Imports Agents. Thus. However. Product Exclusivity. through Middle Class Large Volumes. Entry Options (a) High End Furniture Segment – The focus of this segment will be value. Handicrafts & Décor Products Positioned as a country with delicate. it would be of critical importance for the investors to understand the market deeply in order to build a strong position. attractive and ethnic products in the handicrafts and décor industry Thailand is perceived to be price competitive wholesalers A detailed description of the entry. will grow at 20% CAGR in coming Office Furniture four to five years Joint Venture / Medium Scale Firms Direct Selling and Marketing Tie ups with Builders and Architects Service Industry (IT and BFSI Sector) Mid Size Offices Timely Delivery.

Presently. the liaison office is not allowed to undertake any business activity in India. Hyderabad. the entry process can be divided into two steps for better understanding of the market. Liaison/representative offices can be set up as an intermediate step before entering on the own or through a joint venture. A liaison office in India is permitted to carry out only specified activities and the permission for the same is given for a period of three years. Teknion‘s aim in India is to establish itself as a leading designer and promoter of high quality furniture solutions. Thai manufacturers can just import their furniture here and get good margins. Setting up of operations through a joint venture will lead to the following advantages for a foreign investor:    Already established distribution/marketing set up of the Indian partners. Teknion plans to maintain an assembly unit with standard furniture and standard product ranges. Typically. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 67 . Teknion also plans to establish a new showroom and a joint venture with Indian distributor. benefit should be taken from the already established organized retail sector of India. New Delhi. The role of such an office is to gather information about the possible market opportunities and provide information about the company and its products to prospective Indian customers. (b) Low End Furniture Segment – Motive of Thai investors in this segment should be to serve to the middle class masses and play on volumes. Teknion employs permanent employees for its operations in India.through partnerships like joint ventures. In the longer term. It has an after-sales service function that includes reconfiguration and new orders. Rather than putting high investments in setting up own infrastructure. This company initially established a liaison office in India and the company‘s operations were focused in Chandigarh. Presently. Financial resources availability of the Indian partner Established contacts of the Indian partner that help smoothen the process of setting up of operations Or else. An example of such an approach is explained below: Case Study – Teknion. Teknion imports furniture from its Malaysian operations. Mumbai and Bangalore. The firm also employs sub contractors for installation of its furniture solutions. This may be extended from time to time. As volumes based on price competitiveness would matter more than brand name or other criteria.

In case of the commercial segment. The critical success factor in this case would be to make the product easily available in at least the top 20 cities of India. 7. this route of entry shall be more beneficial. it is very important to make the right thing available at the right time. There are some players. Distribution Distribution or supply chain management is critical for furniture manufacturers for catering to both. Such requirements can be taken care off by having appropriate and required investments in the infrastructure as well. key criteria of the customers in this market segment would be that they would like to buy furniture from a brand name that will compliment the consumers own brand. (d) Décor and Handicrafts Products Segments – Based on its positioning as a country with reasonable priced handicrafts and decorative products. For the home segment. Style Spa‘s one of the strength areas is availability of its furniture stores throughout India. which includes both office and hotels. The challenge would be to do the same without adding to inventory or costs.to cater to India’s diverse customer needs and a spread-out market. Thus. the home and commercial segments. Thus. if any company wants to expand. Therefore. but logistically it is not possible for them to reach in all the parts of the country. Thailand has a better option to play on volumes rather than value.2. where the affluent and high-income middle class of India resides. Last but not the least. company needs to have its own warehouses at least in all the top six cities of India otherwise timely distribution becomes difficult. the aim should be to cut on huge investments of establishing own infrastructure and enter India through imports route. logistics also play a very important role. the most critical factor will be availability . which at the back end is supported by its mother warehouses and twenty other small warehouses across India. Therefore. In case of high value products as well. which have a strong regional presence and have good furniture designs. the key requirement would be to ensure timely deliveries and satisfaction in terms of value for money. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 68 .(c) Office Furniture Segment – As mentioned earlier. Indian furniture industry has now become a part of the fashion industry.1. For example. in this segment it would be critical to tie up with an already existing and well-established brand name that fits fine in the customers‘ mind. it should have a strong logistics network to expand.

Examples of promotion activities by one of the major players Durian – Twice in a year Durian offers its customers flat 60% discount on all the products available in all its stores. This is applicable in case of both institutional as well as individual customers. For any player wanting to focus on home furniture. latter being the most appropriate method for introducing a new brand or product from a new country. In recent times. India. brand as a buying decision parameter has gained significant importance in the consideration sets of the customers. interior decoration products or accessories free with furniture. the next step is to build the brand value. be an office or hotel. it would be helpful to focus itself as a company with good quality furniture and a company which shall be available for after sales services as and when the need arises. Individual Customers – This segment of customers is also price sensitive. but quality and reliability factors play more important role as compared to price. Thus. Durability and Trustworthiness. Once the customers are aware about the presence of a particular product or company. it would prefer to have its infrastructure. Various methods that are prevalent in the market can be adopted. Well-known brand names are looked up to in this category as well to ensure Quality. package options for doing the entire bedroom/living room. any player wanting to focus in this category. These free products are mainly accessories and home décor products like lamp etc.3.7. Other than this. Brand Building & Promotion First step for any new player is to create awareness about its products in the market. Therefore. there is one or the other item that is provided free of cost to the customers. The same can be done through various routes – Print Media. As far as promotion is concerned. this segment of customer is price sensitive. Such as discounts. At the same time. new product introductions. interior and furniture that compliments or enhances its own brand. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 69 . follows many old rituals of buying new things or renovating the house around auspicious occasions like Diwali or a marriage in the home. Interactive Media and Trade fairs or Exhibitions. such activities are helpful mainly in the home furniture segment. should position as a well-known brand available at optimum value for money. Institutional Customers – As institutions.1. still being a traditional country. such kind of promotions would be more helpful in Diwali or Marriages seasons.

Household Furniture – High End Segment  Given higher disposable income. No strong industry player in this segment INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 70 . Office Furniture  growing at a fast pace (20% CAGR).2. customers are ready to pay an extra buck for better quality and designs. This ranking has been done based on the various criteria. Market Attractiveness Along with the above-mentioned entry suggestions in the four product segments. Minimum efforts and investments Household Furniture – Low End Segment  required for market development (entry through JV and distribution through existing hypermarkets) and promotion. an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these. Huge demand but limited supply from organized sector Office Segment of India is in a booming stage.7. Products Handicrafts & Décor Products  are present throughout the low value to high value added band. providing an opportunity to make good margins Increasing Affluence of Indian upper middle class. Limited number of sector strong players in the industry. advantage in terms of volume. such as:       Industry Growth Stage Growth of Customer Segments Growth in Allied Sectors Competitive Scenario Potential Entry Barriers Scale of Investments required etc. There is no need for macro-investment. The findings of the above analysis are as follows: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base.

Style Spa Company Profile        Indian furniture products limited is manufacturing company and Style Spa limited is the marketing company Is one of the largest manufacturer and pioneer in panel based furniture Manufacturing facility is 14 kms from Chennai Company owns 90 exclusive stores which makes it the largest chain of furniture showrooms in India Also sells furniture under the brand name of Zuari through dealers.  Style Spa as a company targets middle . Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 8. which are not their exclusive stores.middle class of customers 71 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY . style spa is importing chairs and dining table made from rubber wood. present in all states of India o Similarly in case of Zuari. Similarly. dining table and centre table with glass and metal we are again importing from China only o From Malaysia. dining tables) are imported – o Imports from Malaysia and China o Rough break up of sales – 65% manufactures. 65% of their business comes from Bedroom furniture Strength of Style Spa – its nation wide presence o With 90 style spa showrooms.1.1. 35% imported o Half leather and full leather sofas we are importing solely from China. living room furniture (sofas. Annexure 8.1.middle and upper . Style Spa positions itself as Bedroom Furniture Company. present in 145 cities across India   Style Spa and Zuari‘s combined last year (07-08) sales – 120 Crores Only manufactures bedroom furniture.8.

which is bedroom furniture.1. new product introductions.  Promotion activities undertaken: Discounts. Such promotions are done in Diwali and marriage season. package options for doing the entire bedroom.beds. bedside tables. while the company expands. 2 and 3 cities. Godrej Interio        Godrej Interio is primarily into furniture – both home and office Also serves some special segments like navy.2.000 units furniture per year. import component will go up. economical Godrej Sales 2007-2008 – 800 Crores (2/3rd office furniture) Exports – 2. wardrobes. value for money. o Reason to grow more on imports is higher margins on imported products o For their strength. Style Spa will continue to depend on its factory only. These can be multi brand stores.5 percent of the above amount Two type of distribution models: o 58 Own retail Stores – by the name of Lifespaces. that is by 2011 o When expanding. 00. 8. Current dependence on the factory is 65%. dressers. by name of Interio franchisees located in tier 1. This includes only bedroom furniture . TV trolleys. this model sells both office and home furniture INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 72 . Godrej largely sells home furniture through this model o Franchisees – More than 500 in number. computer tables and study tables. these are only imported. Production capacity of the factory – 2. entertainment units. We are not into manufacturing of chairs or sofas or dining at our factory. laboratories / provide customized services also depending upon customer needs Godrej – present in all product categories (focused more towards office furniture) Godrej is present in all price ranges – Premium.  Expansion plans o Sales target for 2008-09 = 140 crores o Targeting 400-450 crores in next three years time. this dependence on the manufactured furniture will go down to 45-50%.

However. Durian mainly caters to the needs of the individual customers. Out of 43. modular workstations Last year (2007 – 08) – Approximately 100 Crores In case of office furniture. Durian has limited presence – Office table. mainly Thailand and Malaysia. Office chair. Durian         Durian is mainly into manufacturing of plywood. Orders are generated in these project offices and their demand is communicated to Mumbai head office. strong in leather sofa category Actually in case of sofa sets. Depending upon the gap of demand and supply (furniture already available in warehouse) import / manufacturing decisions is taken. most of the players have a set pattern of selling 3+1+1 sofa sets. Little bit from Taiwan. 30 are owned by Durian. o Project sales – This model is mainly to cater to institutional customers. Spain and Italy Two types of Distribution Channel o Through retail showrooms – 43 retail showrooms of Durian are present across India. By this route. Dealers own remaining 12-13. Hyderabad and Bangalore. China. Italy Also into manufacturing – only for some categories of furniture . For e. Conference table and Book Shelves Household category – Almost all types of household furniture.1. Spain. Durian has project offices in all the major cities like Delhi.g.chairs. Some INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 73 . PVC doors. Thailand. decorative veneer 1998 onwards Durian is in furniture trading Import furniture from Malaysia.8. Material that is imported is stored in warehouses and then distributed to showrooms all across India. and they cannot sell other brands. these dealers are authorized exclusive dealers. Durian offers different customized options depending upon the regional preferences. 2+1+1 for Mumbai or 3+1+1 for Kolkata      Break-up of Durian Showroom sales: 60% Household and 40% Office Furniture 98% of Durian‘s Sales is imported furniture and only 2 % is manufactured Durian is mainly importing from China – 50% Remaining 50% from other countries. 3+2+2 for Delhi.3.

part is imported (depending upon demand of the project). Accessories like table lamps. Orders from different showrooms come to the central warehouse through their ERP system.2 lakhs sqft area) in palgaon (100 Km from Mumbai).of the material is manufactured. arrangements are made for the logistics and material is finally sent to the destination showrooms.  Durian has a main/central warehouse (2. Then as per the orders. There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi.Families with at least Rs 40. table stands. anything related to home décor INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 74 .upper middle class .   Durian‘s target market .000 of monthly income Promotion activities undertaken by Durian o Up to 60% discount twice a year o Free Accessories of 10% amount of bill amount.

and subtle elegance. and handicrafts. Indian wooden handicrafts reflect unmatched workmanship. and has emerged as one of the major sources of foreign exchange earnings for India. It employs about six million artisans. The term 'wooden handicrafts' refers to a wide range of wooden items carrying utilitarian and artistic value that are made by hand. including people belonging to the weaker sections of society.8. This makes India one of the chief exporters of wooden handicrafts in the world market.2. Indian wooden handicrafts are much sought after the world over. Women constitute a large section of the handicrafts industry. Wooden Handicrafts Industry – Overview Wooden handicrafts are specialized skills passed on from one generation to the next. This industry requires low capital investment and other resources.60 lakhs Small-scale industries are classified into two categories:   Modern small industries like power looms etc. and form an important export commodity of India. a small-scale industry is defined as an industry that is:   Not registered under the Factory Act Investment in fixed assets does not exceed Rs. According to the classification of Indian industries. Wooden handicrafts fall in the category of small-scale traditional industries. fine designs. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 75 . or with the use of simple tools. coir. Although India's handicraft exports show a consistent increase of sixteen per cent every year. Traditional industries like handlooms. sericulture. The Indian wooden handicraft sector is the second largest employment provider (after agriculture). 8. Role of Wooden Handicrafts Industry in Indian Economy The wooden handicrafts industry plays an important role in the Indian economy. The wooden handicraft sector provides a high ratio of value addition. khadi.1. its share in the international market is not more than two per cent.2.

the products are not sufficiently remunerative. Factors That Affect Growth Though India is one of the chief suppliers of wooden handicrafts in the world market. Craftsmen are not independent enough to resort to direct marketing of their own products. and are illiterate. they are unable to handle the threat to their industry from machine-made products. Improper pricing mechanisms and the intervention of middlemen deprive the artisans from getting their due.  The wooden handicrafts sector is based in rural India where lack of proper infrastructure and working capital is a major cause for concern. Deforestation comes across as one of the main reasons for the setback in production levels of wooden handicrafts. They are also ignorant of the benefits bestowed on them by the Government. The artisans work on a part-time basis. while taking up other means of alternate options of livelihood.  Most of the craftsmen in the wooden handicraft sector live below the poverty line. Wooden handicrafts are sold at least three to four times the price paid to the craftsmen. its share in world imports is insignificant. As a result. There are a number of factors that affect the growth of the Indian wooden handicraft sector. Mass existence of craftsmen combined with an excellent production base has failed to aid India towards cashing on the existing opportunities.8. Weak infrastructure leads to delay in delivery and affects the quality of finished products.2.  The Indian wooden handicrafts sector is plagued by poor marketing strategies. They are:  The Indian handicrafts industry is a decentralized one. As a result.  Production of wooden handicrafts in India is chiefly dependent on the raw materials available locally. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 76 .2.

INVESTMENT POTENTIAL STUDY INDIAN HOME UTILITY INDUSTRY – UTENSILS AND PLASTIC CONTAINERS INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 77 .MODULE 2 .

Executive Summary E. o Beverage Range o Barware Range)  Material used for manufacturing o Stainless Steel – with & without Matte Finish o Ceramic – Bone China & Porcelain o Glassware – Transparent glassware & Opalware). The major growth drivers for this industry in India are –  Increasing middle class population  Increasing per capita income  Growth in organized retail  Ownership of luxury products  Openness to Trade  Increasing Hotel & Catering Industry The tableware industry in India can be segmented based on –  Application o Dinnerware. RAK Glass. Tableware Industry in India The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. Art d‘Inox as well as multinationals like Corelle.beverage range is the fastest growing product category growing at around 20-25% p.. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 78 .a. Magppie.market is growing at the rate of 15-20% on an average after taking into consideration the effects of slowdown. Out of these segments.1. Based on the application of tableware . Bharat Bone China Ltd. The organized tableware market which is around 8% of the total market comprises of both domestic players like La Opala RG Ltd. at INR 12 billion which is the largest in the total tableware market in 2007-08. and contributes maximum to the sales of tableware manufacturers.The organized tableware .. Luminarc etc. the market size of Glassware.

The major growth drivers for his industry in India are –  Openness to Trade  Increasing disposable income & middle class  Increasing pattern of corporate gifting/ freebies  Increasing storage requirements with increase in working women  Replacing old containers of steel with plastic due to rising modular kitchen concept  Impact of organized retail These factors would enhance the growth of a new entrant in this market if they enter with the optimal set of products after keeping in mind the changing consumer preferences. kitchenware. and molded furniture. which are leakage proof. writing instruments. Pearl Pet.The major sets of customers in tableware are domestic consumers & institutional consumers (hotel/ catering & corporate players). They want quality products. airtight and aesthetically appealing. The changing preference of people for using plastic containers for storage purpose in turn is promoting the growth of this industry. E. Ltd. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of consumer plastic goods. However. molded luggage. purchase of products in these categories is expected to rise in future.. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 79 . The domestic consumers at present occupy the largest consumer base for products in this category.2. The kitchenware. tableware and household products contribute around INR 15 billion to the revenues of the total consumer plastic goods industry (according to Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003). Cello. Eagle Thermoware etc. Plastic Container Industry in India The consumer plastic goods industry includes household ware. with the increase in gifting trend amongst Indian consumers & growing number of hotels / restaurants. Tupperware. The organized plastic container market has few major players who are Hamilton Housewares Pvt.

Also.Plastic Container Industry can be segmented as Storage Boxes  Thermoware  Dine ware The plastic container industry is growing at the rate of 12-15% with the increasing storage requirement of people and preference for more aesthetically appealing containers rather than stainless steel containers due to modular kitchen concept coming in place. Value Chain – Tableware & Plastic Container Industry E. The major set of customers for plastic container industry is domestic consumers & institutional consumers (hotel/ catering & corporate players) with domestic consumers occupying a larger share of the pie. In order to minimize expenditure at each level of the value chain. through multi-brand outlets & retailers with minimum number of intermediaries in between to ensure presence across all geographies.e. thereby enabling the growth of this industry.1. through company‘s own stores. Value Chain for Manufacturers – The tableware & plastic container industry in India follows a similar value chain model.3. they should optimally utilize all the available channels for distributing their product i. reach to maximum number of customers possible and to save on cost. Own Stores Factory Multi brand outlets es / Institutional sales Raw Material Sourcing Distributor Dealer / Retailer Customer INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 80 . the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion. In case of institutional players.3. E. it is very important for the manufacturers to source raw material from a supplier who provided them at low cost and from a near-by source.

through retail outlets or directly sell to customers. However. middle & upper middle class prefer to purchase products from the organized market due to better quality. it is very important for a new entrant to position its products in the Indian market based on the needs of the consumers that are not fulfilled from existing products. The major threat posed to tableware industry is from new entrants due to the attractiveness of this industry.1. who are posing threat to an investor in this industry to varying extents. Customer Imports Importers / Super Distributor Retailer Distributor / Dealer Customer Retailers Customer E. supplier & buyer bargaining power. Existing competition & substitute products pose medium threat to the tableware industry.e. after analyzing the tableware industry in India. it can be inferred that there are small number of players in the organized tableware market. for a new brand to establish its name in the Indian market. variety & changing preference for purchase of lifestyle goods. However. They may sell the products through various channels like through a distributor/ dealer. Industry Analysis E. it is very important that the importer/ subdistributor should be an exclusive distributor of that brand to reduce the bias which arises because of difference in the margins offered if selling multiple brands through a single distributor and they should utilize all the channels optimally to reach maximum number of customers. the major target segment i. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 81 .2.4. Tableware Industry The tableware industry is affected by existing competition. whereas the unorganized market is highly fragmented. new entrants who would be entering this industry and substitute products.3.4. Value Chain for Importers – Importers or Super distributors in Indian tableware & plastic container industry can be exclusive distributors or multi-brand distributors. Thus.E. Thus.

This is because of the rise in number of working women. the products are evaluated based on the following parameters. there are access capacities available in the Indian market. Aesthetics INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 82 . It can also be purchased for gifting purpose. Price. Aesthetic Appeal. which can help to boost the production in the future. most of the purchases are impulse in nature and also depends upon the increasing storage requirement. Hygienic. Also. which will be good for the future prospects of the industry. Variety. Many players in the medium scale industry are also selling branded products. newspapers.2. Also. the products are evaluated based on the following parameters . increasing disposable income of people & preference of people for branded & good quality plastic products which attracts new entrants. Variety. Plastic Container Industry This industry when analyzed through Porter‘s Five Force Model revealed that the major threat is posed by new entrants & competition amongst existing players due to increase in the size of this market. They may also purchase for gifting on occasions like Diwali or Marriage in the family. Consumer Insights Key consumer insights. important from the point of view of foreign entrants are as follows: Need for purchase of Tableware & Plastic Containers o Tableware is purchased whenever the need arise. Quality. magazines.Quality.. Brand. These factors attract foreign investors to venture in this industry.4. Functionality. word of mouth from family or friends are the most common sources of gaining Alternative Evaluation o In tableware. with the increase in number of family members and when they need to replace the old tableware. E. the amount of investment required to start the business in this segment is low. Information Sources o For both these product categories. o In plastic storage containers.5. Maintenance o In plastic storage containers. trade fairs/ exhibitions.E.

Purchase Decision o For both these product categories, wife plays a major role in purchase of the products in these categories. Kids also influence the decision in selecting new trends and designs. o They prefer to buy from well-established brand outlets or chain of showrooms. These products are purchased once in six months with no fixed budget in mind Post Purchase Behavior o For both the product categories, customers look forward for provisions like warranty, replacement of defected products & should be communicated about the same

E.6. Market Attractiveness of Tableware & Plastic Container Industry
Market attractiveness analysis of the above-mentioned four segments has been done based on factors like Industry Growth Stage, Growth of Customer Segments, Growth in Allied Sectors, Competitive Scenario, Potential Entry Barriers Scale of Investments required etc. The findings from this analysis are summarized in the table below: Market Segment Market Attractiveness Main Criteria / Advantages
Demand is huge and it‘s the fastest growing category (more than 20% p.a.); competition is high ;Both domestic & institutional customers purchase products in this category for personal as well as gifting purpose; entry barriers are minimum and customers change products in this category very often; investment required in terms of plant setting & manufacturing cost is less than other categories; margins are low Demand base is increasing with the increase in possession of lifestyle products; few players in the organized market; growing product category (around 20% p.a.) ; both domestic & institutional customers purchase products in this range; Investment required is more than in beverage range category; margins are high Comparatively slow growing category; customer base is limited to institutional customers (Hotel & Catering Industry) & upper middle class segment in domestic customers; investment required is more than other categories; competition is less; margins are high Demand is huge in this segment; competition is high; growth is almost stagnant at 12-15% p.a.; both domestic as well as institutional customers purchase products in this category; investment required is low in this product category; entry barrier is low; margins are low

TablewareBeverage Range



TablewareDinnerware TablewareBarware Range Plastic Storage Container







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Thus, Tableware is the most attractive category and within tableware, a new entrant should focus upon Beverage Range & Dinnerware for entry in the Indian Tableware market.

E.7. Recommendations
India has retained its position as the second-most preferred global location for foreign investment in 2008 and will continue to do so till 2010, lagging only behind China, according to the World Investment Report 2008. Tableware & Plastic Containers imports from other countries are increasing because changing preference of people towards lifestyle goods and desire for more variety. Thus, it is very important for a new entrant to enter this industry with the right entry strategy and targeting most profitable set of customers with positioning of products according to consumer needs Entry Strategy o In order to enter the tableware market in India, the potential investor should enter either through Joint Venture or Merger & Acquisition with the existing player in this industry in India o In order to enter the plastic storage container market in India, the new entrant should enter either through Joint Venture or through strategic alliance with an existing player in that market Positioning o Tableware should be positioned as easy to maintain i.e. unbreakable, scratch free, easy to handle and clean & available in variety of designs & colors across all regions in India o Plastic Storage Container should be positioned as leakage proof, beneficial for storage of all kind of food materials- perishable & imperishable. Target Product Categories o In tableware, beverage range especially tumblers is the most fastest growing category o In plastic storage containers, containers for storage of perishable food items is an important critical success factor for positioning their products

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Target Customers o For both these categories, women in upper middle class & middle class should be the target segment Distribution o For institutional customers, direct distribution system is the best option for both these product categories o For domestic consumers, multi channel or hybrid distribution network ensures coverage of wider market Brand Building & Promotion o Through proper mix of advertisement in print media, T.V., exhibitions etc. o Introducing schemes like scratch card, discounts etc. on occasions like Diwali for customers & schemes for dealers should also be used to motivate them to sell more

Thus, a new entrant should focus upon Tableware category – beverage range & dinnerware in joint venture or merger & acquisition with an existing player and ensure that the products are available across all geographies and address customer needs in terms of scratch free, unbreakable & maintenance is easy and inexpensive.

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It is the large market very competitive with high professional importers/ distributors placing large orders. Ceramic and porcelain table ware are used by household. manufactured domestically). Global Scenario 9. positioning themselves not only in the up-market segment. Technology has to keep pace with these changes. 9. it can be divided into three categories i. Cooperation between the suppliers of machinery and raw materials has become much closer. mid-range. specialty stores. and these table ware mainly comprise of coffee-tea sets. plates. mass merchants. hotels. tea and breakfast sets. cups and source boats. However. sales of tableware have been trending ever lower in the traditional western European markets. and retail category (the INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 86 . drinking glass sets. sugar bowls. barracks.e. the market for ceramic and porcelain tableware is different to that of Europe. End consumers now want a more personalized service in all areas. egg cup etc. but also innovations in design. The market leaders among the tableware manufacturers are pointing to the fact that it‘s not just technological innovations that count. dishes. in particular because optimizing process quality is a challenge that can only be mastered by working together.1 Global Tableware Industry: 9. soup tresses. USA is one of the biggest market for ceramic and porcelain tableware. place of origin (imported vs.1. material (fine china. Targeted outsourcing for manufacturers in high-wage countries is very much a part of this strategy and thereby introduces Asian manufacturers into the process. distribution channel (department stores. tea and coffee pots. traditional or contemporary). restaurants. Dinner sets. the western European tableware manufacturers have to pursue clever brand and price policies. price segment (high-end. According to the use of tableware in USA.). In the last ten years. In addition. glass). etc.1 Overview: Tableware is marketed these days as a lifestyle product.9. stoneware. therefore. And they prefer to spend their precious disposable income on leisure products rather than fine china. salad bowls.1.2 The Changing Consumers Tableware can be classified in six basic ways: style (formal or casual. or low-end).

which is something between casual and formal. the global tableware industry has faced changes in purchasing habits of consumer products. mix-friendly stories in open-stock. with some restaurant chains using "warm" tableware patterns. The growth of casualware has increased the market for specialty glassware (such as sugar containers and creamers). Formal companies have thus explored a more proactive. Even so-called formal crystal stemware is being used in casual ways by the consumer. while the market for stemware and barware remains flat. The interest in embossed and textured looks in glassware also continues to grow. and the introduction of open-stocked casual lines. steady demands for formal ware continues. dinnerware market. Some tabletop manufacturers have responded with comprehensive. two-pronged marketing approach: open-stock availability of their traditional lines. Such colors as Spanish green and Mediterranean blue have emerged as everyday basics in glassware. The house wares mass market dominates the U. less expensive range of tableware over the next few years. manufacturers and retailers are aggressively designing new patterns to keep with this trend. In response."upstairs" china/crystal/silver department vs. Decorated glassware has also become more popular. Since many consumers now consider tableware a replaceable fashion product. Consumers have turned toward a more casual lifestyle around the world. This casual trend has even extended to the foodservice industry. This color trend is expected to continue into the millennium. the "downstairs" house wares department). INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 87 . comprised of several coordinating patterns.These trends are leading to a new style defined as transitional. major companies like Noritake and Lenox have developed more casual lines of crystal or have repositioned their formal stemware at lower prices. In recent years. plus accessories in the same or alternative materials. While casual tableware patterns are popular. especially fruit and flower decorations with gold accents. The casual trend has also resulted in a demand for brightly colored glassware. Wedgwood is trying to address this trend as well by introducing a casual.S. lifestyles and attitudes toward the home.

This gives us an idea of the size plastic industry and the significance that it holds in the global scenario. five HPL supported FIBC units exported 7 KTA worth goods annually.6 percent of the entire chemical output and polyolefin output is US $ 61 billion that is 3. The demand for the major polymers is growing at a rate of 5. more than 35 percent of the capacity is in Asia – pacific region and around 28 percent of the capacity is in the North America.2. the firm predicts.04 MMTA. Based on Frost & Sullivan‘s Report -2003. Plastic Industry The global plastics industry is marked by dynamic growth with both quantity and quality aspects helping boost the upswing. There are tremendous capacity expansions that are happening for polymers all over the world. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 88 . the global capacity for polymer production is around 170 MMTA and is growing at a rate of 10. Global Plastic Products Industry 9.6 percent per year. overall population growth. The global demand for polymers is 139. 9.The estimated demand from the US alone (for plastic food containers) has been estimated to touch as much as $21 billion by 2009. Currently.9. Commodity plastics contribute US $ 90 billion that is 5. Western Europe contributes to around 21 percent of the entire capacity. This becomes even more significant when the global polymer industry is growing by almost twice the rate of the global GDP.2. For many years now.5 percent per annum. a good global economic climate and ongoing substitution processes in favor of plastic have combined to foster steady expansion in the sector. At present.3 MMTA out of which polyolefin form 89.2.1. Out of this. Plastic has occupied a major role in the lifestyle of the 21st century. These three regions form the major polymer production regions of the world.8 percent of the chemical output.2 percent annually and polyolefin alone make up for the 63 percent of the entire polymer industry.2 Plastic containers Plastic bottles accounted for 77 per cent of plastic container weight in 2003 and will continue to remain the dominant type for during this decade. The demand for Polyolefin is growing at an even faster rate of 5.

Graph: Percentage share of the organized and unorganized tableware market in terms of value The organized market is 8% of the total tableware market in India i.1. *The Financial Express – June 2007 10. Tableware Industry 10.1. the organized market is growing at a much faster rate than the unorganized market.. Magppie. Industry Segmentation The tableware market is classified according to their application & raw material being used for their manufacturing.The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. there are both domestic players like La Opala RG Ltd. around INR 2. Tableware & Plastic storage containers Industry in India 10. Bharat Bone China Ltd.e. The organized and unorganized market has a huge difference in terms of value but with the rising disposable income of middle class & upper middle class as well as growth in hospitality industry. Overview . Art d‘Inox as well as multinationals like Corelle.1. RAK Glass. who are a part of this large chunk of market size. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 89 . In the organized market.1.10.2.4 Billion including domestic manufacturers & brands imported from abroad which are sold through organized retail channels.. Luminarc etc.

lemon sets. the tableware is broadly classified as: Tableware Market Dinnerware Beverage Barware Within each product categories. jugs etc. salad bowls. This category is growing after beverage range because of the growth in hospitality industry.10. cups. trays etc. Category wise market share for organized tableware 38% Dining ware Beverage & Bar ware 62% INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 90 . cocktail shakers. pudding set. Rs. Around 62% of the total organized tableware market (INR 2. 1.   Beverage range – This includes glasses. dinner set.2. etc. This is the fastest growing category in tableware especially among glassware. saucer.4 Billion) comprises of Dinner ware i.1. wine sets. Segmentation Based on application Based on their application.1. cutlery. Barware range – This includes ice buckets. the products are:  Dinnerware range – This includes plates (quarter / full).5 Billion. The growth in this category is fast with the changing lifestyle & increasing income of people.e. fruit bowls.

Stainless Steel  Glassware  Ceramic  The total market for stainless steel tableware with matte finish is INR 400 million in the organized tableware market The total market for glassware is INR 12 billion in overall tableware market The total market for ceramic tableware with is INR 2.2.Based on the responses of a senior manager in the organized steel tableware with matte finish . Based on the responses of players in the organized tableware market.2.10. Hence.1. Major kinds of material which are used for the manufacturing of Tableware are: Tableware Market Stainless Steel Without Matte finish With Matte finish Ceramic Bone China Glass Transparent Glassware Opal ware Porcelain The market for tableware is dominated by a large number of unorganized players for stainless steel tableware.15 billion in the overall tableware market  Total market for opal ware is INR 6 billion in the overall tableware market . it is difficult to predict the share of stainless steel tableware in the total table ware market. market size of each category in India based on the material used can be predicted.Based on the responses of senior managers in the organized glassware & opal ware -Based on the responses of a senior manager in the organized ceramic tableware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 91 . Segmentation Based on Raw Material The material used for their manufacturing may differ from manufacturer to manufacturer.

namely:   Domestic customers – for personal usage / gifting Institutional customers o Corporate customers – for gifting & as freebies o Hotel / Catering & Restaurant customers – for business usage Amongst the Institutional customers. Customer classification According to the usage of tableware. Domestic customers Vs.4 Billion INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 92 . This is because glass wares are available in variety of designs. the corporate customers include a majority of Pharmaceutical companies. the customers can be classified in two groups. Institutional customers for Tableware 44% Domestic customers Institutional Customers 56% Graph: Percentage share of the tableware market in terms of customer base in organized tableware market of INR 2.3.000 tones per annum. There are 16 units in the organized sector in India with a total installed capacity of 43. Ceramic ware comprising of crockery and tableware is produced both in organized and unorganized sectors. 10. Also.1. exports also form a major proportion of the total sales for all the manufacturers.Glassware has the largest market size in terms of value in the Indian tableware market. Apart from these two categories. Bone China crockery ware is being imported from Bangladesh and Sri Lanka in view of the better availability of raw material there. can be used in microwave as well as for serving and are used by most of the domestic as well as institutional players. opal ware which is unbreakable in nature is preferred by most of the consumers for domestic purposes as well in hotels / catering.

The fastest growing category is beverage range. in Opal ware Yera in Glass ware Bharat Pottery Ltd. where tumblers are the most fast selling items. there is a huge market for new players to enter this industry through proper marketing & sales network.5. the tableware industry in the organized segment is growing at the rate of 15-20% on an average taking into consideration the effect of slowdown. Major manufacturers in India The major domestic manufacturers in India for Tableware according to the material used for manufacturing are:      La Opala RG Ltd.4.1.Presently. 10.1. Growth Drivers for Tableware Industry Increasing per capita income Impact of growth in organized retail Increasing middle class population Key Growth Drivers Ownership of luxury products Openness to Trade Increasing Hotel & catering industry INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 93 . Thus. in ceramics & stone ware Art d‘inox in steel with matte finish Magppie in steel with matte finish 10.

000 hotel rooms o The hospitality industry is poised to grow at around 25-30% p. Government of India. with a total capacity of about 110.T. o The current market size of luxury-very premium goods and services is INR 840 Billion which is rising at 16% p. but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population** o These households will see their incomes balloon to 51.980 hotels approved and classified by the Ministry of Tourism.a. Increase in per capita income with the growth in I.. according to KSA Technopak  Increase in Hotel & Catering industry o There are some 1.a. Real Estate industry which leads to increase in expenditure o Planned expenses are to increase by 47 per cent and non-planned expenses increased by (about) 6 per cent.76 billion by 2010 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 94 .5 trillion rupees ($1.1 billion)—11 times the level of today and 58 percent of total Indian income**  Increase in the ownership of luxury products. and is expected to reach INR 826. ITES. which really adds to excessive expenditure*  Increase in the number of middle class & upper middle class o The middle class currently numbers some 50 million people.

after considering the drivers for the growth in Tableware Industry.o Dining in restaurants on weekends and other holidays. it is expected that it would grow at the rate of 15-20% for next five years. the demand for this category will not be affected much for the organized players. channelization of investment and deregulation in India would promote imports /exports with other countries *The Times of India: Advantage India. However. due to the economic recession in recent times. with family members and friends. has become a very popular concept in urban India  Openness to trade. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 95 . it would certainly affect the demand in this industry. But tableware is a need based category and with the increasing disposable income and growth in hospitality industry.Growing Young Population (March 2007) ** Business Week – May 19 2007: Next Big Spender‟s – India‟s Middle Class Thus.

imports have become cheaper 4. Bargaining power of Customers With fast growing middle class and changing lifestyle. Also. Analysis of Tableware Industry in India The tableware industry is highly disorganized in India. stainless steel utensils sold in unorganized market & melamine tableware which are cheaper are substitutes in this category 5. 1. huge demand is there. Threat of Substitute Products The organized market as well cheaper products being imported from countries like China are a major threat to the products manufactured in India or abroad. Bargaining power of Suppliers 2. Competitive Rivalry Industry shifting from highly unorganized towards organized sector.1. Also. with the increasing competition in organized market.6. there are few major players who are a part of the organized tableware along with importers who are selling brands from abroad by establishing their sales & distribution network in India. Joint venture of Versace with Rosenthal and several other players in the lifestyle brands are targeting the upper middle class after looking at the rising opportunities in this segment Intensity  High Medium Low INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 96 .10. bargaining power of customers is increasing Raw material is available in abundance in India & is also imported from abroad like Bone Ash. Competition is increasing because of the entry of new players & joint ventures with the existing players. Also. due to FTA between India & several countries. However. In addition. however steel prices are increasing which has increased the bargaining power of suppliers of steel tableware 3. However. people want change and get bored of their old tableware after some time. In addition. several players are coming in the lifestyle products category in Joint venture with established brands in India. Threat of new entrants Several new players & importers are coming in this market.

they can be used as a substitute for these product categories which are expensive. the threat posed by existing competition is medium because of the difference in the raw material being used for manufacturing these products. several new players are coming with the existing players diversifying their product portfolio. 3.With the increasing size of middle class & increasing disposable income. But with the increase in the number of new entrants. brand proposition. middle class & upper middle class. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 97 . 4. Thus. Thus. Also. Thus. Substitute products – Due to large base of unorganized market & economies of scale. Bargaining power of suppliers – Raw material for the manufacture of ceramic ware and unbreakable glass ware is imported from outside India from cheaper sources. Thus. products in this category are imported from several countries which would increase with the increase in demand in future.1. Threat from new entrants . this is an attractive segment to focus upon in household segment as well amongst the lifestyle goods.e. Thus. the bargaining power of suppliers is low for these material categories except in the case of steel ware because of the high bargaining power of steel suppliers in India. the stainless steel utensils can be manufactured at a lower price than glassware or ceramic ware. the threat posed by substitute products is medium in this product category. 5. Bargaining power of customers – Customers have a limited choice base in the organized market at present. 2.e. Competition amongst existing players – The players in the organized market are targeting the same set of customers in the domestic consumer‘s i. in order to capture a significant market share in this category. their bargaining power is also increasing with the increase in awareness level. But this bargaining power is limited by the product & quality attributes i. the threat posed by new entrants is high. Thus.

7. creating the brand image in the minds of consumer in the Indian market is very important for a new entrant by proper positioning of their products based on the strategy being followed by them. They need to adopt various marketing initiatives to promote their brand and sell their products through various channels rather than just one source. Critical Success Factors for Tableware Industry A well connected distribution network Targeting domestic as well as institutional customers Focus on easy to handle & low maintenance tableware CSF Creating a Brand Image Knowledge of needs & expectations of target customers Proper marketing activities in various media Based on the above-mentioned critical success factors.1. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 98 . it is very important for a new entrant that they have good distribution network with wide coverage and with minimum number of intermediaries to save on cost.10. In addition.

Plastic is one of the fastest growing industry segments in India.000 to 30. and the respective growth rates for 2002 Categories Molded Luggage Molded Furniture Writing instruments Kitchenware. Given below is the break up of the following consumer goods in polymer consumption.7 49.3 Growth Rates 10 25 20 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 99 . The Indian plastic processing industry possesses strong capacities and capabilities in these segments. Writing instruments and travel ware are other promising segments having a potential to generate export revenues. The plastic industry has been witnessing tremendous growth due to the widening of its application spectrum and penetration of new generation polymers in all the key sectors of Indian economy. and personal care products. personal care products.2003 KTA 150 140 40 190 520 Size in revenues in Billions 12. household ware and kitchen ware is the largest segment both in terms of domestic demand and the export potential from India.1 Overview Based on Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003.10. Table ware & Household products Total Source: Frost & Sullivan .2. molded luggage. Consumer goods include Household ware. molded furniture.0 13. revenues. Within this market. Consumer plastic goods account for approximately 15 % of the market. Plastic Containers Industry in India 10. Kitchen ware. and kitchen ware by US totaled $ 1000 million in 2002. The total imports of household articles. tailoring materials. there are 25. At present. Almost 50 percent of the plastic manufacturers have some operations in this particular category.2.6 14. etc. Toys. gift articles and novelties.0 9. Writing instruments. Consumption of plastics will be touching 4 million tons per annum in almost 2 years and is growing at a rate of 14 percent per annum.000 plastic processing units in the country.

They want quality products which are leakage proof. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of Consumer Plastic goods. The plastic products industry comprises of storage boxes & thermoware containers. The changing lifestyle and increasing disposable income is enabling people spend on products in this category which are either branded or imported and are also good in quality attributes.Indian plastic container industry comprises of a large number of unorganized players and few organized players who dominate with major market share in this industry. With changing preference of people for using plastic containers for storage purpose is promoting the growth of this industry. Organized Vs. Unorganized tableware market in India 42% Organized 58% Unorganized *Based on the responses of a senior manager of an organized player in plastic container market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 100 . air-tight and aesthetically appealing.

 Refrigerator & freezer boxes – These are air tight & liquid tight boxes. Mugs STORAGE BOXES used in kitchen. hot pots.10. which are primarily used for storage of fruits. water storage jugs etc. vegetables. jugs.  Microwavable boxes – They can be used for heating and cooking food items in microwave. which are perishable in nature.. flasks.  Storage Canisters. based on their application and benefits offered are classified as:  Dry Storage boxes – They are used primarily for the storage of food items which can be kept for a longer duration of time.  Food Preparation boxes – They can be used for preparing food items like shakes. salads. Rice. bottles.g. Wheat. juices etc. storage and serving purposes. mixing bowls etc.These are large sized boxes. Dry Fruits etc. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 101 . They are multipurpose boxes and hence used for cooking.2.2 Industry Segmentation The plastic product market is classified as: Plastic Container Storage Boxes    Thermoware Dine ware Storage boxes – This includes boxes for dry food items as well as cooked or uncooked perishable food items Thermoware – This includes lunch boxes. Dine ware – This includes bowls. Pulses. For e. used for stocking dry food items like pulses etc. jugs.

4. it is during the last 1. they are already importing plastic storage containers from Thailand for last 4-5 years. The plastic container industry is growing at the rate of 12-15% with the increasing storage requirement of people and more aesthetically appealing containers rather than stainless steel containers. Customer classification According to the usage of tableware. the customers can be classified in two groups. Tupperware Pearl Pet Eagle Thermoware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 102 . namely:   Domestic customers – for storage purpose / gifting Institutional customers o Corporate customers – for gifting o Hotel / Catering & Restaurant customers – for business usage and for promoting their products by offering plastic containers as freebies Apart from these two categories. As per the views expressed by a retail giant in household product category in India.1.5 years that the volume of import has grown from Thailand within the plastic container category.The level of imports for these storage boxes used in kitchen is increasing at a fast pace. Also. Ltd. exports also form a major proportion of the total sales for all the manufacturers 10. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion. Major manufacturers in India The major domestic manufacturers in India for Plastic containers are:      Cello Hamilton Housewares Pvt.2. 10.3.2. However.

10.5.2. Growth Drivers for Plastic storage containers Industry Openness to Trade Increasing disposable income & middle class Impact of organized retail Key Growth Drivers Increasing pattern of corporate gifting/ freebies Plastic replacing steel due to rising modular kitchen concepts Increasing storage requirements with increase in working women INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 103 .

people prefer steel containers for storage than plastic because plastic is considered unsafe. Analysis of Plastic storage containers market in India The plastic container market is highly disorganized in India although the majority of market share is possessed by organized players. 5. With increasing middle class & working women.10. Several players are also importing plastic containers from other countries with increasing demand & better quality offered.6. Competitive Rivalry The number of players in the organized market is less but with increase in imports due to FTA agreement with several countries. Also. Thus. 1. products in this category are imported from several countries which would increase with the increase in demand in future. this is an attractive segment to focus upon in household goods. huge demand is there. Bargaining power of Customers With fast growing middle class. Also. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 104 . People tend to prefer branded products and hence the bargaining power is low due to less number of players in organized market Raw material is available easily in India & is also imported from abroad like Polycarbonate. The new entrant should offer products which are good in quality and comparable in price offered by existing players. the threat posed by new entrants is high. Polyurethane are available at lower price in Asian countries than in other European countries 3. competition is increasing 4.With the increasing size of middle class and increase in number of working women. Threat from new entrants .2. Threat of Substitute Products The unorganized market offers cheap substitutes in this category. increasing working women and changing lifestyle. Bargaining power of Suppliers 2. new entrants find this market very attractive Intensity  High Medium Low 1. Increasing organized retail is also supporting the growth of this industry. Threat of new entrants Several new players & importers are coming in this market.

Substitute products – Due to large number of unorganized players in the plastic product category. air-tight. Competition amongst existing players – The existing players are posing threat to the new entrants due to established brand name and trust in the minds of customers. Thus. the intensity of threat posed by them is high in this product category. Bargaining power of customers – Bargaining power of customers is low in organized market because of the good quality plastic being used for the manufacturing of storage boxes which allows them to spend. Polyurethane are available at cheaper price in Asian countries.2. Polycarbonate. 5. Bargaining power of suppliers – Raw material for the manufacture of plastic containers i.e. Hence. they imitate these products and offer them at much lower cost due to usage of low quality plastic. Thus. quality is important for the target customers who are willing to shell out money for the product attributes like leakage proof. 4. Hence. the threat posed by bargaining power of suppliers is low in this product category. good aesthetic appeal. the threat posed by these substitute products is moderate because of the increasing preference of people for branded & good quality products. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 105 . 3.

both at the domestic and the export level.2.7. Imports from the Chinese manufacturers are hampering the growth of the industry. which can help to boost the production in the future Many players in the medium scale industry are also selling branded products.  Most of the companies are privately owned entities and are lacking in managerial aspects. Export markets are tapped by very few players because of non-availability of resources in terms of representations in the foreign markets as well as capacities. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 106 .10. which will be good for the future prospects of the industry The amount of investment required to start the business in this segment is low Weaknesses    The industry is dominated by a few players in terms of revenues as well as number of goods produced. Indian products find it difficult to compete in the price-sensitive markets. Strengths and the weaknesses of the industry Strengths    There are access capacities available in the market.

Also.2. they should create a brand image in the minds of consumer about the benefits being offered by their products over other similar products. Critical Success Factors for Plastic storage containers A well-connected distribution network Focus on ―Leakage proof. air tight & aesthetically appealing‖ products Targeting domestic as well as institutional customers for freebies CSF Creating a Brand Image Knowledge of needs & expectations of target customers Trained sales team to create awareness amongst customers Based on the above-mentioned critical success factors. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 107 . it is very important for a new entrant that their products are different from the ones offered by existing players. They should have a trained sales team to promote their products rather than spending much on advertising. They should have a large presence across all the regions in India.8.10. They should target working women for this product category.

For products that do not fall in the FTA. either single brand or multiple brands from several countries like China.2 Current Import Duty Structure Players importing products in India from other countries. They are importing brands like Luminarc. they have to pay custom duty for importing the tableware & plastic products (containers & storage boxes) from abroad. Major brands being imported in Indian tableware market        Corelle in Opal ware Milton Treo in glassware & opal ware RAK Porcelain in ceramics & porcelain Luminarc in opal ware Noritake in ceramics & porcelain Crysal D‘Arques Paris Other Chinese brands INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 108 .. state local taxes are charged at 12 % based on the states where it‘s sold. total custom duty can be as high as 50 % of purchase price. Imports structure in Indian Tableware & Plastic containers market 11. 11. In order to import products in this category importers have to pay import duty 11.11. are not facing any barriers at present. In both these categories. World Kitchen. the duty paid is half of what is paid in case of imports from other countries. who are importing products in tableware category. Iran. Overview In case of tableware category. In case of SAARC countries like Pakistan. RAK Porcelain etc. Apart from custom duty. Sri Lanka. total duty paid by importer is 30% (Basic Duty + Additional Duty + Educational Cess) of the purchase price.3. In case of plastic containers & storage boxes. Thailand and many others. the major players which are importing consist of Lock n Lock.1. Corelle. Paris. Sri Lanka. there are players like Shubhda Impex. RAK Glass etc. Crystal D‘Arques. Tupperware etc.

& sell them under their own brand like Milton sells glass ware imported from other countries with the brand name ‗Milton Treo‘. through licensing agreement with Indian manufacturers. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 109 .11.5. In addition. they might also import products from countries like Europe. however. Players like Cello have tie-ups with Italian brands like ENJOY manufacturing the products in India under Cello‘s brand name through licensing agreement. import products from Italy. Manufacturers in plastic products category like Cello & Hamilton. 11. similar items can be co-branded and sold. The advantage for this kind of model is that the well-established players in Indian market can use their sales & distribution market for similar product categories imported from other countries. their channel structure may differ in terms of distribution of the products in this category. China etc. This helps the foreign manufacturers to utilize the patent/ trademark of Indian manufacturers and can sell their products in Indian market to the same target customers. Major brands being imported in Indian Plastic containers market   Lock n Lock Tupperware These brands are imported by both Indian manufacturers as well as importers (in organized market). Thailand.4. Channel Structure for Importers The channel structure for manufacturers importing tableware & plastic containers from other countries is: Multi brand outlets Exporter Manufacturers Distributors Own Stores es Dealers (in some cases) Retailers / Customers In case of manufacturers in tableware category. Manufacturers & importers follow the same import procedures.

in case of importers who are importing multiple brands. However. However. Thus. they have a limited presence due to lack of proper infrastructure in terms of distributing these products across the country. Lock n Lock etc. sourcing price for importers are around 60% . However. RAK Porcelain. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 110 . Arc International sells Luminarc. Thus. The super distributors may be multi brand distributors or exclusive distributors as in the case of Noritake. Noritake. they may promote those brands / products which they think is more profitable to them or the margins are high.80% less than the selling price varying from high volume to high value items. The advantage of selling products through exclusive importers is that they would focus on establishing the brand name & selling the same through their distribution channel.The channel structure for importers in tableware & plastic containers (both organized & unorganized players) in India who sell products with the same brand name as they are sold in their own country is: Retailer Imports Importers / Super Distributor Customer Distributor / Dealer Retailers The major importers in India are unorganized players. some of the organized players in both the categories who have set up their offices in India for distribution of the brands manufactured abroad like World Kitchen sells Corelle. for products which are imported. In case of tableware. the margins are very high. it is important that either they are sold through a licensing agreement with an established player in the market in that country or through exclusive distributors of their products being imported.

they would save on cost at each level of value chain. Bihar. In the year 1999 the company merged with itself Radha Glass. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 111 . The new unit avails an exemption of excise duty and income tax for 10 and 5 years respectively. It has a range of 100 products including tea cups. bowls. beverage & barware. world class quality. plates. About the company . With the increasing demand of products in these categories. Art d‘inox. promoted by Mr. data for the manufacture and sale of crystal ware (Brand name: Solitaire) in India and abroad. Magppie.La Opala RG Ltd. by focusing on those activities in the value chain to squeeze out the cost from value – adding activities. decreasing their cost of manufacturing to pass on the benefits to customers. provide them at competitive price.e. mugs. thus. (LORL). a group company manufacturing plain Opalware. They also import bake ware from abroad.1. Inbound Logistics & Operations . chip resistant and 100% recyclable mark. and is involved in the business of manufacturing Opalware and Crystal ware products.1. casseroles and the like. a leading manufacturer of crystal ware globally. Sushil Jhunjhunwala and Ajit Jhunjhunwala. Yera etc.Case study for Tableware: Value chain of La Opala RG Ltd. La Opala‘s core strategy is cost leadership i. from Doosan Glass of South Korea. In order to achieve this.The company made a diversification in the field of glass tableware by producing (24% lead oxide) lead crystal ware at Madhupur. Understanding the Value Chain 12. Discussed below is the value chain of one of the leading tableware industry player. The major manufacturers in these categories are La Opala. information. microwave safe. La Opala has an USP of elegant designs. it is very important for manufacturers to maintain the availability across the country. It started manufacturing crystal ware in March 1996 sourcing the exclusive right to use the technical know-how. Value Chain of Tableware Industry The products being manufactured in India in tableware category include dinnerware.1. their value chain should be designed in such a manner that.12. 12. Another plant has already started functioning in Uttaranchal with imported equipments being used for manufacturing the new brand called ‗DIVA‘ in which the material used is almost unbreakable.

With the increasing demand of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 112 . Value Chain of Plastic Containers Industry The products. Westside etc. Tupperware. The major manufacturers in these categories are Hamilton Housewares Pvt. Their distribution network is as shown below: Own Stores Factory es Multi brand outlets / Institutional sales Raw Material Sourcing Distributor Dealer / Retailer Customer * Although La Opala does not has its own stores. The main outlets currently include departmental stores.Outbound Logistics – La Opala has a well-established distribution network across the country to make their products available all across the country. general utensils merchant and gift retailers. For example Magppie has its own stores. Marketing & Sales – They are targeting masses between the age group of 21-35 years*** of age and among the institutional players. 15 in South & 20 in East India. 25 in West. La Opala has a total of 85*** distributors across the country with 25 distributors in North. Thermoware & Dine ware. include Storage Containers. They are promoting their products through distributor. They introduce several consumer schemes like scratch card system & festive discounts.2. Services – They tend to provide new varieties at economical cost to the customers like unbreakable material being used to manufacture tableware. through advertisements in print media and are planning to come on TV. Cello. Ltd. they target Pharmaceutical companies and Four & Five Star hotels. They have tie ups with several multi brand outlets like Shoppers Stop. *** Based on the responses of a Senior Manager at La Opala 12. some of the manufacturers do.. Eagle Thermoware etc. manufactured in India in plastic container category.

Case study for Plastic containers: Value chain of Cello Thermoware Ltd. or Hot Pots. WIMPLAST -Italy & SUMMITOMO – Japan Strong in house R&D base. G. that the Indian market had ever seen     Mr. at a small factory in Goregaon.Germany. Kenya & U. . Deputy Managing Director.E. Managing Director and Mr. 12.1. 1986. developed the Unique Breakthrough Insulation technology THERMI-GUARD Many product designs PATENTED in Europe They have warehouse and sales offices in different locations in India. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 113 .2. with just 60 workers and 7 machines engaged in the manufacture of the finest range of Casserole. U. Pardeep Rathod. as they were later positioned.D. Chairman. Sri Lanka. spearheaded the growth & diversification into new products and markets First & Largest Manufacturer of Branded household products in India.A. About the Company  Cello Thermoware ltd. having wide range of plastic moulded products Annual sales turn over of more than USD 100 million and exports of USD 28 million 2100 employees.Plastic containers. Nepal.A.more than 300 engineers and plastic technologists Inbound Logistics & Operations      They have increased production capacity by 1 million & are continuously adding on to their capacities of production every year of 10 % -15 %.S. Discussed below is the value chain of one of the leading tableware industry player. value chain of manufacturers should be such that products are available across all geographies. Rathod. Investment of more than USD 50 million in ultramodern plastic processing machines from BATTENFIELD. Bombay.Founded by Mr. in May 10. Pankaj Rathod.

e.K. Italy. summer season etc.. they directly sell through the factory They have 90 exclusive distributors in this product category throughout India. Japan etc Outbound Logistics –     They sell it through distributor network who then sell it to the retailer For organized retailers.S. Regularly export to more than 60 countries including U. Services –  Availability is a major concern in this business. They are planning to increase the number of distributors by 100 in next 1-2 years Multi brand outlets / Institutional sales Factory Raw Material Sourcing Distributor Dealer / Retailer Customer Sales & Marketing –    Dealer oriented activities are incorporated i. Cello ensures that their products are available across all cities through a well connected distribution network INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 114 . Germany. U. receive more benefits in terms of the revenue Direct selling team is in place for corporate sales They also incorporate schemes for customers in festival seasons like Diwali. those dealers who achieve higher sales target. Thus.A..

the major reasons when consumers find that they need to buy Tableware were observed as:      For occasions like Kitty parties. Their value chain should be organized in such a way that each activity aligns with the strategy they want to incorporate in the Indian market 13. Customer Purchase process 1.e. SEC A2/B1 . Also. birthday parties For changing old tableware with new ones With increasing requirements of family members For gifting on occasions like Diwali. then they need to replace them with a new set Other than the above mentioned reasons.1.Housewives‟. in this stage the consumer recognizes the need for purchasing a particular product. SEC A1/A2. FGDs conducted across the country covered the consumer insights for four product categories inclusive of plastic products and utensils as well. Delhi „ I would purchase tableware when the need arises and for change‟ – Working . When the items break. SEC A2/B1 . they may purchase products in this category just because they like something while visiting a store (Impulse Purchase)    „I would buy tableware at occasions like birth day parties . 25-32 years. Kolkata INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 115 . Daughter‘s wedding etc. At the Problem Recognition / Need Awareness Stage – As discussed above.2.Working . for any player entering the tableware & plastic containers industry. it is very important to effectively utilize all the activities in the value chain based on the strategy they want to follow i. they may also purchase tableware if they can exchange their old tableware with new ones or some festive offers are going on (discounts). 25-32 years . 38-45 years .Thus. Overview As mentioned earlier. Consumer Insights 13. Tableware – With the changing lifestyle & customer preferences. Cost Leadership or Differentiator.kitty parties & when many people are coming at a time‟. FGD findings for these two product categories are presented below: 13. Bangalore „ I would buy tableware in festive season or for show off. Anniversary.

SEC A1/A2.Working women. For microwave. Information Search – In case of tableware & plastic products. Hyderabad „ I would purchase plastic products when the need arises and for change‟ – Working . containers) are purchased whenever they need to store food items – perishable / imperishable. they may purchase them for changing the old boxes with new ones & for gifting on occasions like Diwali etc. SEC A2/ B1.   „ There are no specific occasion or any function for purchase of these items because plastic items are useful always‟. people in Southern India prefer to store food items in stainless steel containers rather than plastic boxes. their purchase would depend upon the kind of item to be stored like for perishable items. in an unplanned manner based on urge created by liking a product very much). consumers tend to purchase those products Print Media ( Newspapers & magazines) – customers tend to refer these sources to know about different brands in the market & schemes/discounts going on in the market at any point of time INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 116 . With the increase in number of working women. Kolkata 2. even if there is no need at present (impulse purchase which refers to buying decision made immediately. Also. With the modular kitchen concept coming in place. 25-32 years. people prefer to purchase plastic products which are aesthetically appealing and keep the food items fresh. since they are not very high value items. the purchase of plastic containers is increasing for carrying food items. 25-32 years . But they can also be purchase anytime you find them. the customer doesn‘t spend much time in searching information about such products because they are not very high value items and are purchased whenever the need arises or even if there is no need. most people prefer to use glass containers and not plastic containers across majority of the regions.Plastic Products – Although products in this category (storage boxes. they might purchase these items. they should be moisture proof. Also. Information Sources – The major sources of information for products in this category are:   Word Of Mouth – after hearing about the quality of products from friends/ family. With the difference in the storage of food items.

38-45 years. Variety – It should be available in variety of colors & designs.we see the brand we are purchasing should be trustworthy‟. SEC A1. 38-45 years.Housewives. we see that handling & cleaning of products should be easy‟-Working .It should look good & available in various shapes & designs. Ahmedabad „While purchasing tableware. luxury products. Usually customers have no fixed budget for this category of products. should be light in weight. SEC A2/B1. Finish of the product should be good Maintenance – It should be easy to handle and can be cleaned easily „For purchase of tableware . It should be trustworthy. they would not mind paying extra price for that       Brand. They should not loose color. several sub-aspects are present.we see them before purchasing the same as displayed in stores or if someone has given reference or told about the quality of products‟ . preferably they should be unbreakable. So even if it‘s expensive but satisfies them on quality & social status front. Retail stores – Most of the multi brand outlets display products of different brands. SEC A2/B1 .Working . Parameters identified as important to consumers while buying Tableware are as follows:  Quality – In this parameter.Most of the imported products are displayed in these exhibitions & customers visiting these places tend to purchase them if they like the products being displayed  „For purchase of tableware . handling of the product should be easy. touch & feel about the quality of products as well as the price range suitable for them  Trade fairs & exhibitions. Evaluation of Alternatives – This stage involves weighing different product attributes and their ability to deliver benefits based on the information collected in the previous stage & based on the requirements of customers. from where customers can see.  Price – This is considered less important in comparison to quality. 25-32 years.e. Bangalore 3. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 117 . Aesthetic appeal.It should be able to reflect social status i.

Kolkata „We see that after washing the color should not fade or disfigure & it should not start looking old‟Housewives. It should be long lasting. It should be air tight & leak proof in order to store food items in them. Bangalore The frequency of purchase of products in these categories is almost once in every six month.In case of Plastic products the major parameters are quality & functionality of the container. But it is not as important as quality of the products. they are admirers‟. Brand is also considered as an important parameter in the purchase of products in this category for upper middle class & higher class people. food items kept inside should not smell & the taste of food should not change. This includes that the plastic should be of good quality. & should be odor less‟. 3845 years. Lid should be comfortable & durable. in selecting any product children might influence the decision in terms of design & looks of the product. Purchase Decision – This involves decision related to what to purchase & from where to purchase & who will purchase.Working. Men are only involved in the financial decision making or in accompanying women while making a purchase. SEC A1/A2. Although there is no fixed budget kept for the purchase of these products.Working . But people also face barriers in the purchase of branded plastic ware because they are expensive and can be purchased only through agents like Tupperware i. they are not freely available in open market. „For purchase of tableware& plastic products. 25-32 years. 25-32 years.e. Delhi „Brand is an important criterion in the purchase of plastic ware like Tupperware‟. 38-45 years. SEC A2/B1. They should be available in various sizes. SEC A1. but price does mater to customers. we see that it should be air tight & food has to be preserved well. It should be hygienic & should be multi-purpose in nature i.Working. Mumbai 4. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 118 . Key decision maker in case of both tableware & plastic products are women. Husband only takes care of financial part.    „For purchase of tableware . However. SEC A2/ B1.e. it can be kept in fridge & microwave. we are the Decision maker. They should look good & after washing the color should not fade or it should not get disfigured.

Point of Purchase- In order to purchase these items, customers prefer multi brand outlets like Pantaloons, Shopper‘s Stop, Big Bazaar etc. where they can see, touch & feel these items & can compare with other brands as well in terms of functionality as well as prices. Also, they find variety in terms of colors & designs under one roof in these stores and they can go their any time along with their family. They prefer exhibitions as well to purchase these products, but the major problem, which they face in these exhibitions, is that no exchange is possible in these exhibitions as they are temporary in nature, which is not the case in case of multi brand outlets or shopping malls.
„For purchase of tableware & plastic products, we purchase from malls, exhibitions & Home furnishing stores‟Working, SECA1, 38-45 years, Mumbai

5. Post Purchase Evaluation – In these product categories, customers expect that there should be an exchange mechanism if the product is defected and some kind of guarantee / warrantee schemes should be provided based on the kind of product they are purchasing. Also, customers should be made aware of such schemes in advance so as to build trust in their mind.

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Learning from Consumer Insights - Summarized

Tableware – Whenever the need arise, with the increase in number Need Trigger of family members or parties and when they need to replace the old tableware. They may also purchase for gifting on occasions like Diwali or Marriage in the family. Plastic Products – When they need to store food items but mostly Information Sources impulse purchases, sometimes bought for gifting purpose as well. Tableware & Plastic Products – Newspapers, Magazines, Trade Fairs / Exhibitions, Word of Mouth from Family or Friends

Tableware – 1. Quality 2. Price 3. Brand 4. Variety 5. Aesthetic Alternatives Evaluation Plastic products – 1. Quality 2. Functionality 3. Hygienic 4. Variety 5. Aesthetics Tableware & Plastic products – Wife plays a major role in purchase Purchase Decision of the products in these categories. Kids influence for new trends and designs. They prefer to buy from well-established brands or chain of showrooms. Husband can influence in terms of spending or budget. These products are purchased once in six months with no fixed Post Purchase Behavior budget in mind Tableware & Plastic Products – Customers look forward for provisions like warranty, replacement of defected products & should be communicated about the same Appeal 6. Maintenance

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14. Conclusion
14.1. Market Attractiveness
Based on the understanding of Tableware & Plastic Storage Container category, an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these. This ranking has been done based on the various criteria, such as:       Industry Growth Stage Growth of Customer Segments Growth in Allied Sectors Competitive Scenario Potential Entry Barriers Scale of Investments required etc.

The findings of the above analysis are as follows: Market Attractiveness

Market Segment

Main Criteria / Advantages Demand is huge and it‘s the fastest growing category (more than 20% p.a.); Competition is high ;Both domestic & institutional customers purchase products in this category for

TablewareBeverage Range



personal as well as gifting purpose; Entry barriers are minimum and customers change products in this category very often; Investment required in terms of plant setting & manufacturing cost is less than other categories; Margins are low Demand base is increasing with the increase in possession of

TablewareDinnerware



lifestyle products; Few players in the organized market; Growing product category (around 20% p.a.) ; Both Domestic & Institutional customers purchase products in this range; Investment required is more than in Beverage

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

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Entry Strategy In order to enter the Indian tableware market. Entry barrier is low. Investment required is more than other categories. Competition is less. Margins are high Demand is huge in this segment. following are the key take-outs for potential entrants in Indian Tableware market: 15. Plastic Storage Container Growth is almost stagnant at 12-15% p. a new entrant should focus upon Beverage Range & Dinnerware in Glass material for entry in the Indian Tableware market.1. Investment required is low in this product category. Recommendations Based on the analysis of tableware industry in India. Margins are low Thus. Customer base is TablewareBarware Range  limited to institutional customers (Hotel & Catering Industry) & upper middle class segment in domestic customers. Margins are high Comparatively slow growing category. these entry mechanisms are less risky in comparison to fully owned INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 122 . Competition is high.range category. Both domestic as  well as institutional customers purchase products in this category. Through M & A they may use the established distribution network of the existing player along with inbound and outbound logistics for managing the product availability and delivery to the final customer.. Tableware is the most attractive category and within tableware.a. JV has its own pros & cons since it will limit the control over business and dilution of control takes place and the partner may become a competitor. 15. the potential investor should enter either through Joint Venture or Merger & Acquisition with the existing player in this industry in India. But the major advantage of these mechanisms is that an investors can use the technology as well as the name of the existing brands in Indian market. Also.

they should be positioned in such a manner that they are different from the other products in this category in terms of quality of plastic used. Thus.e. they should tie up with the existing player in the Indian market with similar positioning of products in tableware segment to effectively utilize the value chain of that player and pass on the benefits to customers.3. In order to enter the Indian plastic container industry it is very important that the products are widely available across all geographies. leakage proof. In case of Plastic containers for storage purpose. middle class & upper middle class women. Positioning of Tableware & Plastic storage containers In order to target the masses i.perishable & imperishable. a new entrant should first enter the Indian tableware market with beverage range particularly tumblers in variety of shapes & designs and them they can increase their product portfolio with barware and dinnerware as well when they are able to establish their brand name in the Indian market. scratch free.e. Thus. the new entrant should enter either through Joint Venture or through strategic alliance with an existing player in that market. unbreakable. easy to handle and clean & available in variety of designs & colors across all regions in India. In plastic containers for storage purpose. color & utility. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 123 . they should enter the market with products for storage of perishable food items and can be used in both refrigerators & microwaves. Also. tableware should be positioned as easy to maintain i. they should offer variety in terms of size. Later. Target Product Categories Based on inputs from industry experts. Also.2. the fastest growing category in tableware is Beverage range followed by Dinnerware.manufacturing facilities where the chances of loss are high. in order to enter this market in India. they can sell their products to the same target customers. 15. beneficial for storage of all kind of food materials. 15. Also. they can also offer large containers for storage of imperishable items and thermoware as well.

Target Customers Based on the analysis of the Indian Tableware & Plastic storage container market. Multi channel or hybrid distribution network should be used where a marketer is following a multi-channel or hybrid distribution system. 15. However. For selling to domestic consumers at large. In case of dinnerware & plastic storage containers. For beverage and barware. Personal Selling Systems should be employed where a person whose main responsibility involves creating and managing sales (e.5. the marketer must be careful with this approach due to the potential for channel conflict. the target customers are domestic users who use these products for their personal usage or for gifting. salesperson) is involved in the distribution process.4. Distribution In order to sell the products in tableware & plastic storage containers category to institutional customers. 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. shop -n-shop model where dedicated space in an outlet is provided to Magppie. number of working women is increasing who need plastic storage containers for themselves & their kids which are air-tight. In the direct distribution system. Also. there is a need for direct distribution system where there are no other parties involved in the distribution process that take ownership of the product.. there is a considerable increase in the disposable income and people are purchasing more number of lifestyle goods because of the rising income levels. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 124 .15. exclusive boutiques. the target customers should be Corporate & Hotel/ Catering segment for gifting or as freebies for promoting their product and for personal usage.e. leakage proof and safe. generally by persuading the buyer to place an order.g. This approach expands distribution and allows the marketer to reach a wider market i. selling through company stores as well as multi brand outlets like Magppie sell their products through Multi brand outlets. Also. 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.

it is very important that the new entrant specifies & communicates about the quality they are offering. it is very important that the product attributes are specified clearly not just to the consumers but internally within the organization & how these product attributes would help in satisfying the customer requirements. exhibitions etc. should be employed on occasions like Diwali etc. Thus. For an investor in the tableware & plastic storage containers market in India.  Inbound Logistics & Operations – After having tie-ups with the existing players in India who are manufacturing products similar to the positioning of the products manufactured by a new entrant. in order to successfully position the brand in consumer‘s mind it is important that proper mix of brand name.. how it is different from others & establish an image of credibility in the minds of consumer.15. product guarantees.V. Also.7. should be employed. in order to establish the brand image of its product. Also. 15. raw material acquisition would be easier from the existing suppliers in the Indian market. Brand building & Promotion In order to build a brand in a new market. Value Chain It is very important for a new entrant to align all the activities in the value chain in accordance with the strategy adopted for selling their products in India & based on the need gaps faced by the consumers from the existing players. it is easy to utilize the technical know-how of the existing manufacture as well as their patent/ trademarks. service standards. schemes like scratch card. in order to reinforce this image in the mind of customers. T.6. proper mix of advertisement through print media. packaging and the way in which it is delivered is employed. image. Also. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 125 . discounts etc.

500 tones per annum of opal glass tableware and 1. a new entrant should focus upon Tableware category – Beverage Range & Dinnerware in Joint Venture or Merger & Acquisition with an existing player and ensure that the products are available across all geographies and address customer needs in terms of scratch free. 16. on channels emphasizing on family shows and through web-sites like ebay. Thus. Annexure 16. Thus.1. Direct Selling & Exclusive Outlets and expand the distribution channel based on the demand of people across various regions in India. unbreakable & maintenance is easy and inexpensive. Also. Also.600 tones per annum of crystal ware under the brand name ‗Solitaire‘ INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 126 . they can utilize multiple channels of distribution – Retail. Profile of major players in tableware category 16.1 La Opala Company Profile  The Jharkhand plant of La Opala has a capacity to manufacture 3. Outbound Logistics – The new entrant can utilize the warehousing facility and distribution network of the existing player in the tableware & plastic storage containers market.They can utilize the existing network along with the establishment of new methods of marketing like direct marketing as employed by Tupperware.1.com  Service – The products if offered with some guarantee or replacement warranty for a fixed period of time.V. they need to educate the customers about the differentiating features of their products and benefits they offer to the customers. advertising on T. promotion schemes to attract customers during festive season can be incorporated and institutional players can be offered discounts based on bulk purchases.  Marketing & Sales .

V.3000 o For upper middle class. For institutional sales.INR 2000 – 4000 o For higher class –INR 1000 for six glasses ( crystal ware)   For selling their products in institutional segment . the product goes to dealers / retailers. They also have consumer schemes like scratch card.4 Billion Out of total sales worth INR 600 million. they directly pitch in for customers. Beverage range is the most fastest growing category amongst dinnerware. their last year sales were INR 600 million in the domestic market & exports worth INR 1.1.       Another plant at Uttaranchal has production capacity of 4.2 Yera Company Profile INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 127 .000 tones per annum and manufactures opal glass tableware under the brand name ‗DIVA‘ La Opala has 10% market share in opal glass ware market i. INR 400 million are into dinnerware & INR 200 million into beverage & bar range They are growing at an average of 20-25% p. 16.      The margin they pay to distributors is 10% and dealer gets a margin of around 20-25% on the amount being sold by them They also sell their products through multi brand outlets where products are directly transported through their factory They imported bake ware from other countries worth INR 350 million in last year They use print media for advertising about their products & are planning to come on T.a. they target pharmaceutical companies & five star hotels They have a total of 85 distributors (multi brand) in the country. beverage & barware and bake ware They are targeting masses in India in the age group of 21-35 years for selling their products Their price range varies according to the target customers – o For masses – INR 1200 . From distributors.e. discounts etc.

Ltd. They are utilizing their production capacity fully. has a market share of 40% ( i. cups & saucer.1. bowls etc. Bharat Pottery Ltd. dinner sets etc. Gujarat with total production capacity of 165 tones per day. exhibitions and advertising in print media They are importing Bar ware from China & Iran worth INR 200 million 16. lemon sets.3. 1 in glass ware market. jugs. 60% sales were among domestic consumers & 40% sales were among institutional & hotel/catering sector They have a total of 400 dealers across India & around 62 in North They sell their products through dealers/ distributors ( multi brand) to retailers For institutional sales .) They are targeting middle class people in India & price of products being manufactured by them lies in the range of INR 50 – 1000 Last year total turnover for Yera was INR 650 million out of which 90 % of the sales were in domestic market & 10% sales were in exports Out of the total domestic sales. They have achieved sales of INR 20 million per month – highest amongst all ceramic ware companies The total market for ceramic tableware is INR 2130 million and Bharat Pottery Ltd. dinner sets. Their market share in total glassware market of INR 12 Billion is 5. they have a direct sales team They promote their products through trade fair. Company profile      They have a manufacturing facility in Jaipur with the production capacity of 2 lakh pieces per day They have a turnover of more than INR 1 billion last year They are into dinnerware and beverage & bar ware – plates. tumblers. Platters. mugs. They are into dinnerware & beverage range. INR 850 million) in this market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 128 .4% They manufacture plates. The company is No.e. glasses.             The company has a manufacturing facility in Baroda. Tumblers are the fastest growing category amongst the products being manufactured by Yera (Shreno Pvt.

4. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 129 . Haryana They manufacture around 4. For institutional sales. glass . 25% are hotels/ catering & 20% are institutional segments      Their products lie in the price range of INR 4000 to INR 10000 ( dinner set) They have a total of 150 distributors in India distributed district wise They sell their products from distributors to small retailers.1. Pantaloons etc. serving ware .00.. magazines and introduce promotional schemes to attract customers 16. home accessories & office accessories They use steel with ceramics. They give advertisements in newspaper. wood & leather to manufacture these items They are targeting upper middle class Their product range starts from INR 300 -15000 Major portion of their sales come from corporate sales (60%) & from domestic sales (40%) Bar & beverage range contributes to around 50-55% of their total sales They have their own company stores to sell their products & also have distributors who sell to retailers (Multi brand outlets). where 55% are domestic customers .000 units per month They are into the manufacturing of tableware . 85% consist of dinner ware & 15% consist of beverage range . they have a sales team They also have tie-ups with multi brand outlets like Shoppers Stop. Art d’ inox Company Profile          Their manufacturing facility is located at Rohad .   They are growing at the rate of 15-20% per annum where ceramic tableware industry is growing at the rate of 5-10% Out of the total sales of Bharat Pottery Ltd. 85% is sales in domestic market where as 15% sales come from exports In the domestic sales. Big Bazzar .

They are targeting upper middle class & institutional players Price range for their products start from INR 700 – INR 75000 Out of their total sales.2.1. Profile of major players in Plastic storage container category 16. exclusive boutiques. Household Plastic Items. Plastic Moulded Furniture. they have 10 stores of which seven are into retailing stainless steel products and three in modular kitchen They are planning to open 40 more stores in next 3-4 years They sell their products through Multi brand outlets. tabletop accessories. beverage range.2. through PR activities & CRM. Also. they initiate special offers for customers 16.1 Cello Company Profile  CELLO Group are the manufacturers of Thermoware. Dining & Barware are the fast growing categories whereas Décor is a slow growing category          They are presently growing at the rate of 35% p. whereas industry is growing at 15% 20% p. For institutional sales.5.e.a. they sell through distributors They promote their products through advertisements in print media. shop -n-shop model where dedicated space in an outlet is provided to Magppie For channel sales i. they have a sales team to directly pitch in for corporate who purchase their products for gifting & five star hotels 16. to multi brand outlets . Magppie Company Profile    Their manufacturing facility is located at Kundli .a.. décor. barware. Vacuumware. 60% comes from exports & 40% from domestic sales Presently. Haryana They have a turnover of more than INR 1250 million They are into the manufacturing of dining. Nonstick Cookware items and Toothbrushes INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 130 . Writing Instruments.

1 million per month Their products percentage break-up is 30% . Polypropylene & High tensile strength plastic as raw material The present sales turnover of CELLO has reached INR 3. protective shield.2 years    They select those distributors who exhibit a good financial background and ability demonstrated in similar line of products for 4 – 6 years They have introduced dealer oriented activities rather than the usual promotion activities to sell their products.Lunch boxes.T. They give extra benefit to dealers if the sales are more They are importing steel flasks from China & have tie-up with Italian brand & Thai brand ‗ENJOY‘ to manufacture the same with their name in India for 10 years 16. They tend to avoid intermediaries & are planning to increase the number of distributors by adding on 100 distributors in next 1 .         Cello has seven up-to-date manufacturing units in Daman (U. with latest molding machines and excellent infrastructure Cello has developed the unique. they directly sell through company warehouses They have 90 distributors who are exclusive distributor in this product category through out India. which is innovative.thermoware Their products are priced in the range of INR 2500 per unit of thermoware They sell it to distributor network who then sell to retailer and for selling through organized retail. 70%.2. They have a distributor after every 100 kms. giving Cello an edge over rival products They use Polycarbonate . Tupperware Company Profile    They have their manufacturing facility in Hyderabad They offer products in plastic kitchenware which are classified as.Thermi Guard. 000 – INR 0.2.) and one in Pune. but in metro's they have 2-3 distributors /city.5 billion They are targeting middle & upper middle class to high income group having income class of above INR 25. breakthrough product . food preparation items & serving items They use Polypropylene ( cloudy view plastic) & Polycarbonate ( clear view plastic) as raw materials in the manufacturing of their products INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 131 . Dry storage boxes .plastic .

they have a direct selling team in the company For promoting their products.      Milton's world-class plants in Pune. Soft thermoware items & regular household items like trays. They are already using F.5 million & above The products for these customers are in the price range starting from INR 2000 – INR 3000 like Barware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 132 . women who join as a consultant and after appointing six more consultants in their team. they target another segment of people i. Hamilton Company Profile    Milton is one of the oldest players within the organized plastic Industry in India Milton developed its own technology and technical know-how and pioneered the Thermoware segment Milton has over 350 key selling items in its product basket ranging from Casserole.e. Whereas cloudy plastic products are less expensive and fast growing category Their products are priced in the range of INR 145 for a container to INR 2500 for a dinner set They are targeting SEC A & SEC B women in the age group of 25 year onwards They have a direct selling team i.e. containers. loyalty club for consumers who want to keep in touch with what is going on in Tupperware 16.   For institutional sales .2. Vacuum flask.3.M and undertake several below the line activities like kiosks in malls. Water Jugs. school activities for students who use lunch boxes most often. tubs etc. They source their products from distributors. they do advertising in women magazines and are venturing into TV.    Clear plastic products are more expensive. hence they are slow growing category. & Silvassa have been awarded the ISO 9001 :2000 certification for successful implementation of Quality Management Systems Their products are targeted to the class of customers who are masses means lower middle class & some middle class pre dominantly due to the basic gifting nature of Indian culture The price of their products ranges from INR 300 – INR1000 Also. buckets. Water Bottle. insulated and non . they become managers. upper middle class & higher income group of annual income of INR 0.insulated Tiffin.

big towns . mini towns in India INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 133 . mini metro . Marketing takes place through distributors (more than 200) present in every metro.

Importers need an Importers/Exporters Code Number from the Directorate General of Trade in order to be able to import 16. Import Legislation in India With the globalization of the Indian economy and consequent upon comfortable balance of payments position. coffee and cocoa. These terms have almost universal acceptance and are explained below: Ex-work 'Ex-work' means that the seller's responsibility is to make the goods available to the buyer at works or factory. Under this Act. To avoid ambiguity in interpretation of such terms. Paris. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 134 . The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer. should be fully conversant with the mode of pricing and the manner of payment for the imports. Principal Law & Import Export Policy Principal Law Imports in India are governed by the Foreign Trade (Development & Regulation) Act 1992. imports of all goods are Free except for the items regulated by the policy or any other law for the time being in force.16. It is mostly used for sale of plantation commodities such as tea.1.3. A large number of Consumer goods are freely importable without license.2. Mode of Pricing and INCO TERMS While finalizing the terms of import contract. The importer for his benefits should know the meaning of the technical terminology. These terms thus represents the minimum obligation for the seller. has give detailed definition of a few standard terms popularly known as 'INCO TERMS'. the Government of India has liberalized the Import Policy and practically all Controls on imports have been lifted. the Importer. the overseas suppliers normally quote the terms prevailing in international trade. Imports may be made freely except to the extent they are regulated by the provisions of Import Policy or by any other law for the time being in force. International Chamber of Commerce. In exercise of the powers conferred by the Foreign Trade (Development & Regulation) Act 1992 items.3. 16. not appearing in Prohibited list or restricted list can be imported freely without any import license.3. need to secure an import license. For import of items appearing in the restricted list you. As regards mode of pricing.

The buyer has to bear all costs and risks of loss or damage to the goods hereafter.3. The seller's obligations are fulfilled when the goods are delivered to the carrier. but they are also used for road transport. the risk is already transferred to the buyer at the port of shipment itself.3. 1975. free of cost to the buyer at a port of shipment named in the sales contract. Such B/L if issued must be converted into 'Shipped on Board B/L' by using the stamp 'Shipped on Board' and must bear signature of the carrier or his authorized representative together with date on which the goods were 'boarded'. Customs Duty Customs duty is levied under the Customs Act. Free Alongside Ship (FAS) Once the goods have been placed alongside the ship. 1962 on the import of goods into India. The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. This being a shipment contract. As will be seen though the seller bears the cost of carriage to the named destination.Free on Rail (FOR)/Free on Truck (FOT) These terms are used when the goods are to be carried by rail. The rates of customs duty are laid down in the Customs Tariff Act. the seller's obligations are fulfilled and the buyer notified. the point of delivery is fixed to the ship's rail and the risk of loss or of damage to the goods is transferred from the seller to the buyer at that very point. Customs duty on imports comprises the following:    Basic Customs Duty Additional Customs duty in lieu of excise duty Additional duty of customs to countervail state taxes/VAT 135 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY . Cost Insurance Freight (CIF) The term is the same as C & F but with the addition that the seller has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage. 'On board' means that a Received for Shipment' Bill of Lading is not sufficient. Cost and Freight (C & F) The seller must on his own risk and not as an agent of the buyer. contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight. Free on Board (FOB) The sellers‘ responsibility ends the moment the contracted goods are placed on board the ship. 16.

additional duty in lieu of and additional duty of 4 % in lieu of sales tax/VAT payable on the sale of goods is also applicable on the imported goods. imported goods. with most products being charged duty at a rate of 12. are subject to an effective customs duty rate of 36. Certain specified categories of goods are exempt from this levy in accordance with commitments under the WTO. and South Asian Association for Regional Cooperation (SAARC) countries and Singapore to promote preferential tariffs for certain identified goods. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 136 . benefit under export promotion capital goods scheme etc. Further certain exemptions/concessions (drawback of duties. Sri Lanka. Education Cess The general rate of basic customs duty ranges between 0 % and 20 %.) are available for import of specified products such as IT products or for imports under specific schemes and projects. The primary basis for the valuation of goods under the Indian customs law is the transaction value. Similar trade agreements with ASEAN.5%. The government of India has entered into a number of free trade agreements with trade partners like Thailand. 2 % education cess is also charged on the aggregate customs duties. Thus. which have a basic customs duty rate of 12. Mercosur countries and the European Union are also on the anvil. In addition.74 % because of the additional duties.5 %. However.

Ltd.. Mumbai g) Living in Style. Delhi c) Evok (HHRL). Mumbai b) Style Spa Furniture Ltd. Mumbai h) Noritake. Delhi 2. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 137 . Delhi f) Art d'Inox. Gurgaon k) Yera.Future Group. Manufacturers & Retailers a) Godrej & Boyce Mfg. Gurgaon d) Milton Global Ltd ( Hamilton). Co. Delhi j) Tupperware India. Mumbai e) House full International Ltd. References Primary Research In-depth interviews were conducted with following categories of organizations 1.. Delhi l) Big Bazaar . Mumbai f) Fine Living – Wooden Furniture and Interior Concept.. Delhi i) Bharat Bonechina. Mumbai b) Home Stop. Chennai i) Shudhda Impex. Retailers and Importers a) Durian Furniture. Mumbai d) Furniture Bazaar. Mumbai c) Home Town.17. Delhi g) Cello Thermoware Ltd. Mumbai h) Magpie International Ltd. Mumbai e) La Opala RG Ltd.

Kolkata 4. Mumbai (2) 3. USA. Industry Associations a) EPCH – Exports Promotion Council for Handicrafts.Imports 3. The World Furniture Outlook. Frost & Sullivan Report INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 138 . A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products. These were conducted across following cities 1. EPCH Country Study. Delhi Nine Focus Group Discussions were also conducted to obtain consumer insights for the identified product categories. Chennai 6. Report on Furniture Industry in India. Indo Italian Chamber of Commerce. Ahmedabad 5. India 2. D&B Report 6. Bangalore Secondary Research Sources 1. CSIL Report 4. Delhi (2) 2. IBEF Report 3. Market feasibility study and Business development plan for the Handicrafts sector. Frost & Sullivan Report 5. Hyderabad 7. Furniture Market and Opportunities.

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