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

.............. 13 E.................................................4............... Major Importing Nations ..........................................................2............................................ 23 2............... 20 1.....................................4.................................................. Global Crafts and Decorative Industry ............................................................................18 1... 14 E.......... 18 1. 13 E... 11 E.................................. Consumer Insights ............................5....................................................2..............1.. 22 1......... 12 E.............................................. INDIA – Important Trends in Indian Economy ................................27 3............. 11 E.......4...................... Overview: ......................1...................................................................................1.........................................1....5....................2.......... India – a preferred destination for International Business .......................... Overview ....................................... Recommendations for Thai Investors .................................11 E........ 21 1......................................... 13 E..........................................................1............2.2.............. Industry Analysis .... 21 1...........................4...................................................................... The main furniture exporting countries .............................................................................3.............. 16 1......................... Major Exporting Nations ......24 3...................................................6............ 27 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -4- ............................ Indian Décor and Handicrafts Industry ....2.............. 14 E...........2.........................2........ Segmentation – Exporting Nations ............... Overview: ..............2..............................3.....1.........2.............................................................................................. 18 1...................... Furniture Industry .... Understanding the Value Chain of Furnishing Industry.........1........................... 21 1.......................5..................... Global Furniture Industry ........................................... 15 E.................................................. 14 E............7.... Global Furniture and Handicrafts & Décor Industry ...1....... Décor and Handicrafts Industry Value Chain ............................. Furniture Industry Value Chain ..... Furniture Industry Analysis...................................... Furniture Industry in India......................................TABLE OF CONTENTS MODULE 1 – Furniture & Decorative Items Industry of India Executive Summary ........ SWOT Analysis of Décor and Handicrafts Industry................................................................................1........................................................... 27 3.............. Furniture and Handicrafts & Décor Industry in India.........................1.1.......................

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

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

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

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

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

Understanding the Value Chain of Furnishing Industry E.of infrastructure & technological support.4. internet has emerged as a major distribution channel for décor items handicrafts items INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 13 .4.1.4. E. 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. lack of awareness of international and new trends and poor promotional campaigns are a few drawbacks that need to be addressed.2. 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. The channel flow across these two categories is summarized in respective charts below. 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 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. 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.

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

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

Mid Size Offices Handicrafts & Décor Products Imports Buying and Selling Agents. After Sales Support. Thailand is perceived to be price competitive Thailand  Positioned as a country with delicate. High Quality. Thailand is seen as a country with a status quotient attached with its products. 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 . Better packaging. Warehouses in Tier 1 cities. Large Volumes. Strong Logistics Network. Recommendations for Thai Investors The recommendations for the identified four potential market entry segments can be summarized as follows:-. Better Packaging. 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) .E. Warehouses and connectivity through strong Logistics Network. Timely Delivery. through wholesalers Middle Class Large Product Assortment. Perceived as a shopping destination of moderately affluent class of the society Office Space in India is growing rapidly.middle and Upper middle class ready to pay extra to ensure durability However. Product Exclusivity.7. Availability. Customization Household Furniture – Low End Segment Imports Tying up with existing Retail Chains – Hypermarket Format Middle – Middle Classes Competitive Prices. Well – Established Brand Name. considered as a price competitive country. 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. 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. Ethnic / Culture based Positioning INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 16 .

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 18 .6% 22.5% 24. 12% U. Growth of the imports/consumption ratio has been rapid. 18% Germany. Germany. 3% Emerging Countries World Furniture Production Other Emerging Countries. Global Furniture Industry 1. the United States. It is now leveling off and it is estimated that in the next few years it will remain at a level of about 30%.7% 30. providing the most important stimulus to world furniture trade. Japan. in order of furniture production. The seven major industrial economies (which are. The opening of furniture markets over the past Ten Years The most important structural Imports/Consumption Ratio 35% 30% 25% 20.K. 7% Japan.1. 15% France.. China and Poland.0% 29. reaching 25% in 2001 and almost 30% in 2006.S. 3% Developed Countries of the world total. 3% Poland. 21% India. where the trade deficit for furniture was almost US$ 22 billion in 2006.1.8% 28. Global Furniture and Handicrafts & Décor Industry 1.3% 24. 3% Canada. Canada and France) together produce 50% in value of the world total. particularly important in the United States.3% 29.1.9% phenomenon of the past decade is the increased degree of openness of the furniture markets.1. where production is increasing rapidly.. world production of furniture is worth about US$ 307 billion. The furniture production of all developed countries combined covers 65% Other Developed Countries. the United Kingdom. 3% Italy.5% 26.2% 20% 15% 10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21. Italy. 8% China. Overview: According to the CSIL‘s (Centre for Industrial Studies) ―World Furniture Outlook 2008‖ report. 4% U. measured as the ratio between This imports increase and is consumption. Furniture production in emerging countries currently amounts to 35% of the world total in value. There are two countries.

Therefore. especially to Germany INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 19 . more than 40% of total foreign furniture trade is within the region. trade within regions amounts to about 47% of total world furniture trade. On balance. 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. It is expected that this figure will grow by 5% in 2008. only one-half of world furniture trade can be considered "global" in the sense that it takes place between countries in geographically distant regions. Canada and Mexico) about 33% of foreign furniture trade is within the three countries In the Asia and Pacific countries. in which case. mostly from Italy From the new EU members to Western Europe. 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. it would be equal to US$ 102 billion. World trade of furniture grew by 7% in 2007 and was equal to US$ 97 billion.International trade of furniture has grown faster than furniture production because of the opening of the main furniture markets in the last ten years.

About 52% of exports come from developed countries. Other major furniture exporting emerging countries are Poland. Percentage breakdown by geographic area in 1997 and in 2006 was also studied. Germany. however. 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.2. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 20 . The main furniture exporting countries The main furniture exporting countries are China. with imports growing from US$ 8. 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 2007.6 billion in 1997 to US$ 25. Italy moves from first to second and Poland from eighth to fourth. 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%.1.S.1. Canada and Mexico. Vietnam and Malaysia. Italy.3 billion in 2007 (preliminary) in current dollars. Poland and Canada. China moves to the first position becoming the leading exporter. The U. are number one furniture importing country on a world scale.

As a result. these countries. Japan. Major Importing Nations The top 10 markets. 1. Increases in population and multi-ethnic composition are other factors that make this market attractive. Hong Kong. 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. Despite the fact that it is a highly competitive market.3% of the world imports.8% of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 21 .1. Belgium and Spain. the world crafts and decorative market has been witnessing a good growth from 2001 onwards. are now exposed to sophisticated designing. USA is the largest importer accounting for 32. Global Crafts and Decorative Industry 1. product requirements and standards. to become the single largest exporter with a market share of about 30% in the total world exports. Overview Driven by positive changes in major markets like USA and Europe. manufacturing processes. As a result. France. Hong Kong and Taiwan.2. Currently. and consumer preferences. which include countries such as USA. However.2. which are usually machine made. This has enabled a country like China to leverage its inherent strengths like availability of abundant and quality labor. and raw material. the market is becoming highly price competitive in the low and medium value market segments. Exporters are at their best in delivering products low price products that match consumer preferences. the demand is more for low price products.5% of the total world imports of crafts and decorative products.2.4% of the total imports followed by UK which accounts for 7.2. Another significant change is the surge in contract manufacturing arrangements between EU and Asian countries like China. it continues to remain the most attractive market because of the sheer purchasing power and stability of the market. account for 77. the market is more oriented toward fashionable products and hence. Germany. United Kingdom. which result in shorter product cycles. which have been doing well on basic factors of production like labor and raw material. technology. Germany is the second largest importer and accounts for 8.1. prone to impulse purchases. Canada.

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

These are mostly machine made. China and India are the two leading competitors Low –End Market Segment VALUE among Asian countries. Hungary and Romania and Asian countries like Hong Kong. Germany. France. a large proportion of produce from Hong Kong and Taiwan are machine made. 2. whereas Indian products are mostly handcrafted and exemplify a high degree of craftsmanship. These countries occupy leadership positions in categories like ceramics. 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. 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. furniture. 3. glassware. woodwork and some varieties of textile from other Asian countries are mostly handcrafted. Hong Kong. USA.1. Apparently.2. Barring Hong Kong and Taiwan. Taiwan. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 23 . About 90% of products of Chinese origin are completely or partly machine-made. V O L U M E Middle Market Segment High – End Market Segment furniture and lighting articles. Taiwan. They also re-export product imported from other neighboring Asian countries. products categories such as basketwork. Belgium.Countries like Italy.Eastern European countries like Poland. Czech Republic. Vietnam.In the low and medium value products. Indonesia. Turkey. Middle Market Segment . Malaysia and Philippines are the other leading Asian suppliers of low to medium value products. The main factor that distinguishes product from these countries is the level of mechanization. Korea are major players in the medium value products.4. Thailand. leather goods. ceramics. toys and dolls. High-End Market Segment . Low – End Market Segment . and supply high value crafts and decorative products.

Brazil.50% 1% 2% 4% 6% 8% 10% between 2012 and 2014 to become the third largest. It will command 60% of the country‘s spending power. If the same is achieved. Indian income levels will almost triple in next twenty years. Important Demographic and Economic Trends 1. India will create a sizeable and largely urban middle class.896 INR. To be precise. 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. 2.20% 8% 6% 3.Given the substantial scope for continued productivity increases in Indian businesses.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. INDIA – Important Trends in Indian Economy Moving its population out of poverty and generating huge demand. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 24 .3% can be assumed from 2005 to 2025. UK. Average real household income will grow from 113.744 INR to 318. India today is seventh most attractive destination for foreign direct investments. Considering the fast growing and barely tapped middle class market. The emerging middle class will surge tenfold. China. Rising India . This is much faster than income growth in other major markets. with an exception of China. Tripling Indian Incomes . India has undergone tremendous economic development in last few decades. competitiveness of Indian economy and favorable demographic trends a compounded annual growth rate of 7. the shape of the country‘s pyramid will also change dramatically. Following part of this chapter outlines the major trends and changes that India has gone through during past decades.3%. 3.2. India has now become one of the most favored destinations for international businesses to expand. with a CAGR of 5. after US. Exploding Middle Class – As Indian incomes rise.

6 2. assertive and risk takers generation.5 9.5 6.0 2.7 3.9 10. India will be defined as a country with self-confident. 16% of its population belongs to an age group of 25 to 34. The aggregate consumption in India will grow from 17 trillion INR today to 34 trillion by 2015 and INR 70 trillion by 2025.2 Total Population: 1.6 8 10 12 0 2 4 6 As can we also see from the above chart. Above-mentioned four factors combined result in a multiplier effect leading to an accelerated economic growth.5 9. Rising consumption Rising income Multiplier effect GDP growth Rising production 5. Young and Home Maker India .4.8 7.Target Segment for Home Furnishing market 6.8 1.9 49% below 24 years 9.6 4.5 8.11 Billion % Population 2011 16% between 25 – 34 years .1 1. 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.5 5.2 9.With 49% of its population below 24 years of age. 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. 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 .

this segment will be maximally responsible for the Home Furnishing product purchases. Housing Market set for strong growth – a) The size of the overall real estate industry in India is estimated by FICCI.lifecycle – Married Life. is residential space and the rest comprise office. hotels and hospitals b) India possesses the elements of very strong demand growth on the housing market in the coming decades. Other than the above-mentioned general economic and demographic trends. 2. shopping malls. Almost 80 % of real estate developed in India. to be around US$ 12 billion. This figure is growing at a pace of 30% for the last few years. By 2030 India will need up to 10 million new housing units per year.7% of the total household expenditures of India) INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 26 . rising incomes. following variables also have significant impact on Furnishing industry in India: 1. Considering the needs of this age group that is to make new homes. 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. decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction. Rapid population growth.

home furniture is the largest segment in the Indian furniture market. Godrej and Boyce – 23% 2. Millennium lifestyles. Renaissance. 20% Contract. Kian. Tangent.1. Dominant players in the organized sector with their respective market shares within the organized sector are listed below (also shown in adjoining chart): 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. Style Spa – 5% 3.1. @Home. Overview: Size of Indian furniture industry as estimated by the industry experts is approximately worth INR 350 billion. Industry Segmentation Application / Customer Segment Wise – As with the global market. According to industry experts. 3. Furniture Industry 3.2. the office furniture segment with a 20 per cent share and the contract Office. 65% segment. accounting for about 65 per cent of furniture sales.1. 15% Industry Segments Household.3. to name a few – Featherlite. accounting for the remaining 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 27 . As low as 10% (INR 35 billion) of the Indian furniture industry is the share of organized sector. This is followed by. Furniture and Handicrafts & Décor Industry in India 3.1. V3. This is divided into two broad categories – Unorganized Sector and Organized Sector. unorganized sector commands the market with a share of around 90% (INR 315 billion).

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

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

significant spends on home décor due to peer pressure INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 30 .1. leading to easier product availability Key Growth Drivers Tourism and Hospitality Industry growth – Rising number of foreign tourists in India. 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. Higher Disposable Incomes.Buying latest style/designs to keep up with the fashion / trend. growth in office space – IT/BPO/ BFSI Changing Consumer Demographics .3.4. Increasing number of double income families Retail Industry Growth – Increase in number of organized retail stores. factors and sub-factors having significant influence on the industry demand are as follows: Real estate growth – Increasing demand for residential space.Rising income levels. 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.

being spread all over the country in rural and urban areas. which are produced either completely by hand or with the help of tools. Indian handicrafts and decorative industry has a unique place among all the industries. 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 Handicraft Industry has the status of cottage industry in India. Such products can be utilitarian. According to one of the study. India is one of the important suppliers of handicrafts to the world market. creative. diversified product portfolio. which needs to be overcome. High potential for export and foreign exchange earnings and Flexible Production are few important features of Indian Handicraft and Decorative Industry. 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. Defining Handicrafts: Handicrafts can be defined as products. In spite of having diversified products. high ratio of value addition. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 31 . functional.2.1. Lack of awareness of international and new trends and Poor Promotional campaigns are a few drawbacks of industry. culturally attached. 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. Numerous artisans are engaged in crafts work on part-time basis. aesthetic. Lack of Infrastructure & Technological support. artistic. Cheap and skilled labor. traditional.2. The Indian handicrafts industry is highly labor-intensive cottage based industry and decentralized. Low capital investment.3 billion is being exported. some part of Indian market are still untapped and market is price sensitive. decorative. Handicrafts are made from raw materials and can be produced in unlimited numbers. Overview As it represents rich culture and tradition of the country. but it has shown promising growth and evolved as one of the major revenue generator over the years. However. Indian Handicrafts and Decorative Industry 3. It has shown continuous growth at the rate of 15-20% over the years and contributes major role for export and foreign earnings. religiously and socially symbolic and significant.3.

3. heritage and culture. They provide many opportunities for employment even with low capital investments and become a prominent medium for foreign earnings. Classification / Segmentation of the Industry: Handicrafts and Decorative industry comprises of diversified products portfolio and there is large variety available in market.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.2. Handicrafts are a substantial medium to preserve of rich traditional art. 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. The Economic Importance: Handicrafts are hugely important in terms of economic development. traditional skills and talents that are associated with people‘s lifestyle and history.

Lucknow. market development and innovative activity in comparison to the eastern states of the country. The following table lists the major clusters for the production of different handicrafts items in India. Amritsar. Jaipur. Mandap. Mysore. These regions are the major source of exports and have better infrastructure. Kolhapur. Kohima (Tribal) lndore. Jodhpur. only a few states and regional clusters contribute maximum to the exports. Kerala & Behrampur (WB) Amroha. each one specializing in one or other type of handicraft activity. Baroda. private enterprise and strong NGO movement. Baster. and socio-religious factors. Jodhpur.3. The rich craft heritage of India is unique and as diverse as its customs and traditions. Dharmshala / Chamba & Srinagar Agra. Chennapatna. Hoshiarpor. Nagina. Jaipur Agra. Indian handicraft traditions are influenced by the local topography. Sagru & Sanganer Kutch (Gujarat). Moradabad. Agra. craft traditions. 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 . Jaselmer Saharanpur. Jodhpur Kashmir. climate. Although artisans and artisans are found in most parts of the country. Aligarh.2. Jagdalpur. Jodhpur. Bangalore. Farrukhabad. Madras. Rajasthan and Uttar Pradesh. Handicrafts Clusters in India Handicrafts industry is widely dispersed across different states of India. Sambhal. Madras. Madras. Thanjavur. Jaipur is a classic example of effective synergies between tourism. Kerala & Jagadhari. Srinagar. Delhi. Baster. Jodhpur Rajasthan. Kullu. These are Gujarat. Jaipur. Jodhpur. Sambhal. Amritsar. Madras.3. Beedar. Madras. Baster Delhi. Jaisaimer. Jaipur. Rewari. Jaipur. Product Category Artmetalware Regional Clusters Moradabad.

3. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 34 . who purchase artifacts at low prices and sell them to the buyers at exorbitant rates. 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. 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. the artisans are not in a position to furnish any large-scale orders. who do not wish to lose their commissions by enabling direct contacts between the craftsmen and importers. This asymmetry of information is often exploited by the intermediaries. scrap and virgin metal. The raw materials with acute shortages include cane. Lack of information on buyers Local artisans are mostly illiterate and do not have information about their prospective buyers.2. dependence on simpler tools and social issues. identities of true craftsmen are guarded by the middlemen.4. silk. thereby pocketing the huge margins. Often.

the entire value chain of the Indian furniture industry can be understood under two broad categories:   Imported furniture Domestically manufactured furniture 4. Increasing income levels and influence of global lifestyle trends have also influenced many Indians to move towards imported furniture. Understanding the Value Chain 4. Furniture Industry Value Chain Given the significant contribution of imports.00 58. but it INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 35 . furniture imports in India have grown at a CAGR of 64%. Malaysia.00 Imported vis-à-vis domestic . The current furniture imports are mainly from China.Imported furniture is India is present in all segments – Low Price to Premium priced furniture.43 2005-06 2004-05 2003-04 2002-03 2001-02 0.93 20. This increase can be attributed to factors like increasing demand for furniture.1.93 40. China and Malaysia tops this country list by contributing the most to the industry. Germany.Over the 5-year period from 2001 to 2006. 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. which is of the same quality and better designs. Indonesia.1. Philippines and Japan.00 160.00 120. Furniture Imports in India (in Million USD) 152. It can be available at both cheaper and higher prices in comparison to domestic furniture. However. Korea. There is a segment of locally manufactured products.79 CAGR = 64% 80.4.1.00 92. Italy. fuelled by the boom in housing and commercial construction. Imports Trend .00 32. Spain.

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

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

Along with this.Godrej Interio is a unit of Godrej . Both the above-mentioned models sell directly to end customers.Depending upon the type of raw material to be imported. no other intermediaries are involved. located in tier 1. 2 and 3 cities of India. this model of distribution largely sells the latter. Direct selling through own retail stores 2. Franchisees – named Interio. navy etc. For example. Godrej Interio. Own retail Stores – named Lifespaces. Particleboard is preferably imported from Thailand and rubber wood from Malaysia. thus positioned as Home and Interiors Store. Godrej Interio also specializes in providing customized solutions to some specific institutional segments like labs. these can be multi brand stores. Distribution Structure Distribution channel adopted by leading furniture-manufacturing companies in India can be classified into two broad categories: 1.3. There are more than 500 franchisees. Distribution Channel Structure – Godrej Interio has adopted two types of distribution models: 1.1. is present in both office and home furniture. different players have different preferences. Interio owns around 58 stores spread across 25 cities in India. 2.One of the largest engineering and consumer products‘ company in the country having varied interests from engineering to personal care products. Case 1: Distribution Model of Godrej Interio – Brief Profile . 4. Catering to office as well as home furniture needs. Through distributors or franchisees Distribution channel structures of three major players are described below for better understanding. be it individuals or institutions. In contrast to the above category. This model sells both office as well as home furniture. with more focus on office segment. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 38 . the leading player in organized furniture industry of India.

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

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

These hypermarkets are typically multi storied. Example . which carries an enormous range of products under one roof. Furniture Industry and Organized Retailing India has seen a resurgence of Retail sector.000 sq ft. however one product category is restricted to one floor only.Big Bazaar. which is largely dominated by unorganized sector in terms of supply. large and small appliances. space that is allotted to furniture as a category may vary between 15.000 sq ft to 25. demand etc. In this category of retail. such hypermarkets in India are present in the range of 50. clothing and many items. The basic approach is bulk display and minimum handling by stores personnel. Through this format.000 square feet to 200000 square feet depending on various parameters like store location. 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 . 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 . Variety and Volume‘ is the latest trend.4. with discounts offered to customers who are willing to carry heavy appliances and furniture out of the stores. The result is a very large retail facility. the customer segment that is targeted is the middle class of the country. a unit of PRIL (Pantaloon Retail India Limited) is one such example. Furniture Bazaar is the section of Big Bazaar that focuses on furniture. mostly follows modern formats as far as retailing to end customers is concerned. The latter. In terms of space. India has grown from the traditional Mom and Pop stores present here and there in the neighborhood catering to the convenience of the consumers. Its product assortment goes beyond routinely purchased goods and includes furniture.4. Emergence of organized retail industry has its impact on the Furniture Industry as well. 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.Value.1.

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. 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.formats – online store and stand-alone stores (in few places). Home Stop (Shoppers Stop). Mr. In case of latter. example of Home Town is explained below: Home Town. The services section offers service options such as . Tilewala. bedroom market. For a detailed understanding of this category. grihapravesh. Plumber. Since this format has less diverse product range. Home Town is an amalgamation of the value and lifestyle propositions. music. a unit of PRIL. The markets section features products for living market. best wishes. Design Centre. Home Centre (Lifestyle) etc. bedroom. door delivery and installation. is divided into three sections – exhibitions. The store also has a customer service desk to help customers with any service related challenges. these can be termed as home improvement stores as well. These kinds of stores provide a high level of service in their focus categories. Painter. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 42 . kitchen market.Mr. the appropriate term would be specialty stores. The displays echo the aspirations of the consumer. dining market. so appears eminently approachable to the budget-buyer. bathroom market. dining room. markets and services. thus it is comparatively easy to manage the supply chains. Electrician. This category of stores is explained in the next section. Carpenter. mattresses. Mr. Home furnishings. keeping traditions alive in a contemporary world. Examples of such formats in Indian furniture industry can be Home Town (Pantaloon Retail India Limited). 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. Home Town has live displays of various rooms such as living room. the aspirational customer as well as the lifestyle-driven customer. Mr. e Zone (consumer durables and electronics) and Depot (books. kitchen & bathroom in the exhibitions section. etc). kids' room market. kids' room.

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. Even the smaller independent shops that deal with the traditional.4. The importers/retailers prefer to deal directly with the producers /exporter. ethnic products do most of their own importing and dealing with manufacturers.2. As such the importers/wholesalers are increasingly buying from producers with export marketing capacity. Secondly. 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. which has further INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 43 . Handicrafts & Décor Products Value Chain The Handicraft supply chain of India consists of importers and wholesalers who supply goods to retailers and small chains. The reason being. importers/ wholesalers and large retailers want a closer relationship with production in order to implement customized product development. 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. thus eliminating the need for an independent exporter and as they are working less with sales representatives.

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. However. with respect to products. 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. This is mainly because the large retail chains prefer to import directly from the producers and thus eliminate the role of the importers/wholesaler. department stores and hypermarkets are becoming the more prominent distribution mode. that are functional and not purely decorative. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 44 . Since the large department stores cannot compete on the terms of price. The most popular channel for distribution of the more traditional. they cater to the higher-end market with special up-market ranges. ethnic products of the decorative type is the large number of small and independent retail stores.accelerated the flattening of the distribution channels.

No other significant barriers Low INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 45 . Intensity of competitive rivalry – what is the level of competition among the existing players of the industry 4.g. Indian Furniture Industry Analysis – Five Forces Model To determine the competitive intensity and thus the attractiveness and opportunities of the Indian Furniture Industry. huge demand is there. However. (E. Bargaining power of the customers – how strong is the position of buyers. Bargaining power of Suppliers Low. traditional furniture. Only a limited number of dominant players are present in the organized sector. small homes. Bargaining power of the suppliers – how strong is the position of suppliers. Such concepts might take years to come. large business conglomerates are planning to enter the industry in organized sector. it is important to consider the following five critical factors: 1. industry entry does not require very huge investments.5. with imports getting easier day by day Till date. Supply side is largely dominated by the unorganized sector 2. At the same time. Threat of new entrants Because of growing domestic market. Threat of substitute products – How easily can furniture be made cheaper or substituted by other products 5. as raw material is not only available from local abundant supplies but can be imported as well. but can have significant impacts Intensity  High Medium 5. Is there a monopoly in supply side? 2. Bargaining power of Customers With fast growing middle class and changing lifestyle. 3. virtual office space. Threat of new entrants – How easy or difficult it is for new players to enter the industry? 1.1. in absence of the latter there is a possibility switching to unorganized 3. Reliance. Aditya Birla Group). Threat of Substitute Products No significant threat except for the possibility of new concepts like plastic furniture. Competitive Rivalry Industry shifting from highly unorganized towards organized sector Moderate competition among handful of players existing in organized sector 4. Industry Analysis 5.

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

Therefore. 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. can motivate the new and young homemakers of India to buy plastic furniture. a handful of players have mushroomed in the latter segment of the industry. Especially those. to sum up. However. For e. convenience. 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. the industry might also think of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 47 . there is maximum one player having a significant presence in one product segment. the internal competitive rivalry can be said to have a force of moderate level on the overall attractiveness of the furniture industry.3. These changes / new concepts can be:  Plastic Furniture: With time. Godrej in office furniture. Factors like lightweight. Given this. Style Spa in bedroom furniture. Threat of Substitutes There is no significant threat of furniture being replaced by other products as such. will prefer such options. with 90% share. plastic furniture has grown and taken a share in living rooms of most of the Indian households. On the other hand.4. 5. rapid and day-by-day increasing growth of the organized sector. Nevertheless. Considering this. easy to maintain etc. This huge demand and lesser number of players in the organized sector has been the reason behind insignificant competition among the existing players. there is a possibility of other concepts of furniture usage coming into picture and affecting the current product basket. who do not have a permanent residence and keep shifting their locations.1. unorganized sector takes away the major proportion of the overall Indian furniture industry. there has been a recent.5.1. Durian in living room furniture. the proportion of Indian population that wants to buy branded furniture is increasing day by day.g. That too. Competitive Rivalry Today also.

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

It plans to add one more furniture store in Hyderabad by early 2009.000 products catering to every need of a household. mobiles. The More Megastore is a one-stop shop for the entire family. a live bakery and a cozy café for parents to relax. at the end also consists of a set of recommendations with suggestions on all the above-mentioned factors.Reliance Retail to set up 100 Reliance Trends stores by 2011 .Reliance Retail plans to set up 100 Reliance Trends outlets by 2010-11." Birla said. marketing with right positioning platforms. To summarize the above analysis of the industry. including two more in NCR and two in Hyderabad. setting up most suitable distribution channels. Except for the threat of other new entrants. every household product for the woman of the house. The company is also expanding its newly launched Living Furnishings format. The company plans to have five more stores by end of the fiscal in March 2009. "As you walk through the Megastore. besides making a foray into furniture segment and adding more stores for home furnishings. it can be said that there is huge demand but limited number of dominant players." he added. this report. apparel and what-have-you for the husbands and wives to shop together. targeting the most apt class of consumers.The Delhi store has been set up under the label of ‗Reliance Living‘. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 49 . For interested players. 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. furniture. "While our conveniently located neighborhood super marts all over the country provide all the daily and weekly shopping needs. Aditya Birla Retail Ltd (ABRL) has announced plans of investing Rs. 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. which opened its first furniture store — Reliance Living Furniture — in Delhi. you will find an excellent toys and stationery mart for children. 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. electronics. is also looking to expand the format while synergizing it with home furnishing format. where two stores from furnishings and furniture segments would be co-located. Reliance Retail. The retail arm of Aditya Birla Group. there is no significant threat. Here we offer an extensive range of 60.

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 . small cities. diversified and potential market It has strong. diversified and supportive retail infrastructure Diversified product range that service different market Low barriers of new entry Abundant and cheap labor hence can compete on price Low capital investment and high ratio of value addition Aesthetic and functional qualities Variety of products categories Exporters willing to handle small orders Increasing emphasis on product development and design up gradation 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.2. Indian Handicrafts & Décor Industry – SWOT Analysis           Large.5.

quality and delivery for different segments. Inadequate supply chain management and distribution reduces the sector‘s commercial viability and economic sustainability. 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. some part of Indian market is still untapped and market is price sensitive.  Products are high priced in big and metro cities. Increased and better technological support and R & D facility in competing countries  In spite of having diversified products. South Africa.  Craft producers have to compete on price. which are beyond the reach of people belonging middle and lower middle class. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 51 .   Inappropriate energy supplies to rural and sub-urban areas.      Development of sectors like Retail.

As per the scope of the study.000 (Twenty Five Thousand Rupees) in last six months. considering the role of males as chief wage earners and financer in most of the decisions. and especially in case of furniture and furnishing.6.1.Each respondent should have purchased furniture worth at least or greater than INR 25. A brief profile of the respondents identified for these discussions is given below:   SEC* A1. In order to get responses that are more accurate. but it is catching up fast with the middle . Consumer Insights The recent trend in the Indian consumer mindset is ―the concept of good living‖. 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. focus group discussions (FGD) were conducted across India as a part of this study. there was a special focus on four product categories – INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 52 . This qualification criterion enabled the respondents to answer and discuss the information areas more appropriately by linking their thoughts with their last purchase. Objective of the FGDs being capturing the consumer behavior. across two age groups – 25 to 32 and 38 to 45 years SEC A1. one FGD was also conducted with working males. they have a significant role. However. one more qualification criterion was applied within the above-mentioned profile of respondents . Detailed findings from these FGDs are as follows: 6. this fact was vetted that females play a major role in most of the household purchases. A2 and B1 working females and housewives. out of nine FGDs. at the same time. Thus. This concept is not only gaining importance in the upper class of the society. Respondents Profile Based on exploratory study. respondents were asked for their inputs on various behavioral and perception based aspects with respect to buying household items.middle and upper – middle class as well. A2 and B1 males. which is done based on the educational qualification and occupation of the chief wage earner of the household. playing a role of chief wage earners in their households between 38 and 45 years of age *SEC refers to socio economic classification. To understand the in-depth consumer behavior associated with home furnishing purchases.

Home Décor products. These behavioral sciences help answer questions such as why people choose one product or brand over another. In addition. 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 . Purchase Decision Process – An Introduction Behind every visible act of making a purchase. 6. how they make these choices.Furniture. 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.2. Utensils and Plastic products. depending upon the degree of complexity and level of involvement in the product. All consumer decisions may not always include all stages. lies a decision process. not all decision processes lead to a purchase. Following part of this section outlines the findings from these group discussions for the furniture and Home Décor products. The figure given below represents the five common stages of any buying process. The purchase decision process is the stages that every buyer passes through in making choices about which products and services to buy.

Furniture – Given that. furniture is purchased in any of the following cases – old furniture goes faulty.6. 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. In this study.2. Delhi Other than these two occasions. there is limited space in household. 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 . we were shifting to our new home and I didn‟t want to carry any old items there” Homemaker. for gifting in daughter child marriage and sometimes due to attractive offers available in the market during festive seasons like Diwali. people end up changing their furniture. 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. 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. In addition. SEC A2.1.” Homemaker. As expected. Delhi “Last time when I bought furniture. Problem Recognition / Need Awareness Stage This is the stage when consumer recognizes a problem or need. SEC B1. furniture purchases are always need based.

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

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

” Homemaker. 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. 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 . Evaluation of Alternatives “Some time back. there is no such stage of information search phase. yet the first factor influencing the buying behaviour will be its looks. 6. Delhi In this stage. 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. durability of the furniture also takes in the first position along with aesthetics as far as important parameters are concerned. SEC A2. Before this I never knew about Thai products. they buy also. This stage involves weighing different product attributes and their ability to deliver benefits. Since furniture is still considered to be a product for long term utility. 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. As identified in the Home Furnishing and Décor Report 2008. while I was in a trade fair. I saw very beautiful products from Thailand.3. Furniture though has a purpose.In case of interior decoration item purchases.2. Investigation of this stage leads to the understanding the most important and in-depth aspects related to consumer behavior. traditional and contemporary in that order. how does it appear in the first looks. the information collected in the above stage is used by the consumer to evaluate alternatives. Sometimes. visiting exhibitions become the source of information and point of purchase as well.

It should not happen that if I am buying imported furniture and I face some problem and if I go back.Married. As most of the players who are selling furniture imported from other countries. Reason behind this is that furniture is a Value Additive and Long Term Use Product. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 58 . Second most important parameter is the Functionality. but not ready to compromise on quality. Thus. storage etc. the secondary functions like multifunctional. 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. the shop keeper tells me that we are not responsible. Working. 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. What is the seating arrangement required in the house. Overall few statistically significant differences are found in terms of home decorating preference. Having satisfied the primary functionality that is seating or sleeping. 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. Customers do not want to limit their transaction up to buying a product. as this is imported from some other country” . Bangalore as a negative point or limitation for buying imported furniture.contemporary styles higher in their overall value system. will come up. This factor will influence the type and size of Furniture Purchase. They want the company to take care of the furniture whenever they shift places. SEC A2. For example – Is it a sofa cum bed. whenever furniture needs repairs or services like making the furniture termite resistant. does it have storage capacity. 30. Price affects the decision but does not impact much as compared to other factors like durability and designs. many times this factor acts “Furniture should be durable. Based on the customer inputs. The other styles included in the survey are shown in the chart. customers have developed resistance for buying imported furniture until and unless it comes with a warranty period and long buyer – seller relationship advantage. should come with at least one year of warranty.

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

the role is clear.4. furniture purchase decision is mainly in the hands of the woman in the house. in either case – be it homemakers or workers. The roles can be divided as follows: Decisions related to design.Where to buy and What to Buy. Objectives of these focus group discussions also included identification of the decision makers. domestic. functionality (bed with or without drawers/storage boxes. equal role of both husband and wife “Last time I bought furniture. if imported – which country.) – Wives Decisions related to point of purchase. For marketing any product successfully. it is of critical importance to market it to the right person and from the right place. it was a joint decision between me and my husband. this role shifts accordingly. SEC A2. but in case of joint families. These findings are as follows: Furniture – Given the fact that Indian homes are still a place to be managed under females. Purchase Decision This stage mainly includes following decisions . Ahmedabad INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 60 . fabric (in case of upholstered). Depending upon the family composition. Finally. influencers and most preferred points of purchase. Based on the various factor considered and evaluation of alternatives. sofa cum bed etc. considering that furniture is a high value and long-term investment. while elder women (mother in law) also plays a major role. imported vs.6. In case of nuclear families. type of wood – Husbands Decisions related to price / budget – Joint decision. 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. husbands are the influencers and their influence matters to such an extent that the decisions can be termed as joint 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. women of the younger generation take the decisions. However. purchase decision is made. 38.2. all three of us who went and bought it” – Housewife. In addition. color.

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

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

Need Trigger Sometimes for occasions like Diwali or Marriage in the family Interior Decoration – Mostly impulse purchases. Furniture – Customers look forward for provisions like warranty. look and feel of the product matters. Quality. Word of Mouth from Family or Friends Interior Decoration – Trade fair / Exhibitions Furniture – Aesthetics. Kids influence for new trends and designs. After Sales Services / Warranty Period Alternatives Evaluation Interior Decoration – No such considerations. Husband can influence in terms of spending or budget. Price. if the product is very expensive. Sometimes bought for gifting purpose or if suggested by Vaastu experts Information Sources Furniture – Newspapers. Wife plays a Purchase Decision major role. buys.Learning from Consumer Insights . price can be a constraint Furniture – Joint decision between husband and wife. 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 . Purpose. Sometimes. Magazines. Trade Fairs / Exhibitions.Summarized Furniture – While shifting to a new house. while renovating a house.

But in some. will spend weekends shopping” * As a part of the Focus Group Discussions. it is better than China and India. who is young. unlike Dubai. more traditional in his approach. experimental in approach.” “In some product categories. hobbies etc. lifecycle stage. weekend spending pattern. working with MNCs.6. would shop from places like malls. (B) Person buying furniture from China and (C) Person buying Indian furniture.” “Comparing with other countries.3. like decorative items Thailand is costlier than India. Based on their imagination of the above-mentioned three personalities. mostly bachelors or 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. they are innovative. 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. and would like to spend his weekends either shopping or travelling” “A person buying Indian furniture would be middle aged. newly married. Projective techniques are used to understand the in-depth feelings. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 64 . affluence. Customers’ Perceptions about Thailand In terms of Product Quality & Designs “Thailand offers more variety in designs. would like to spend weekends with family members” “A person buying Chinese furniture will be again young. A summary of responses is given in the box above. working in call centers. designs are attractive and eye catching. 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. like furniture. motives and perceptions of the customers. value systems. respondents were asked to describe the latter in terms of age. I did a lot of shopping because I could afford most of the products there.

So. 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 .7. After Sales Support. considered as a Household Furniture – Low End Segment price competitive country. Customization Entry Strategy Distribution Route Target Segment Critical Success Factors However. Well – Established Brand Name. Thailand is seen as a country with a status quotient attached with its products. Availability. following are the key recommendations with respect to the four potential market entry segments. Better packaging. High Quality. Market Segments Key Take Out from the Market Study Middle class and Upper middle class are expanding. Exclusive designs. Recommendations for Thai Investors 7. Strong Logistics Network. Warehouses in Tier 1 cities. Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation. 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 .1. Either India is a complex country Household Furniture – High End Segment with cultural variations after every 500 Kms.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.

it is important for any entrant to understand the market first. 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. 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. Product Exclusivity.1. Given that India is a complex country and there are strong cultural variances leading to different taste and preferences. not volumes.Office Space in India is growing rapidly. Better Packaging. Buying and Selling Imports Agents. in this segment Thai investors should build up in terms of branded and high design furniture. Thus. Entry Options (a) High End Furniture Segment – The focus of this segment will be value.1. However. Handicrafts & Décor Products Positioned as a country with delicate. attractive and ethnic products in the handicrafts and décor industry Thailand is perceived to be price competitive wholesalers A detailed description of the entry. it is more appropriate for global players to enter India INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 66 . it would be of critical importance for the investors to understand the market deeply in order to build a strong position. Warehouses and connectivity through strong Logistics Network. distribution and brand building strategy is provided below: 7. Especially. through Middle Class Large Volumes. Ethnic / Culture based Positioning Among Indian customers.

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. Hyderabad. In the longer term. Thai manufacturers can just import their furniture here and get good margins. Rather than putting high investments in setting up own infrastructure. the entry process can be divided into two steps for better understanding of the market. As volumes based on price competitiveness would matter more than brand name or other criteria. Teknion also plans to establish a new showroom and a joint venture with Indian distributor. New Delhi. 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. benefit should be taken from the already established organized retail sector of India. 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. the liaison office is not allowed to undertake any business activity in India. Teknion‘s aim in India is to establish itself as a leading designer and promoter of high quality furniture solutions. Liaison/representative offices can be set up as an intermediate step before entering on the own or through a joint venture. Teknion imports furniture from its Malaysian operations. Typically. Presently. This company initially established a liaison office in India and the company‘s operations were focused in Chandigarh. It has an after-sales service function that includes reconfiguration and new orders. The firm also employs sub contractors for installation of its furniture solutions. Teknion plans to maintain an assembly unit with standard furniture and standard product ranges. (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. 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. Teknion employs permanent employees for its operations in India.through partnerships like joint ventures. This may be extended from time to time. An example of such an approach is explained below: Case Study – Teknion. Mumbai and Bangalore. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 67 . Presently.

Thus. Therefore. this route of entry shall be more beneficial. 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. In case of the commercial segment.1. Indian furniture industry has now become a part of the fashion industry.(c) Office Furniture Segment – As mentioned earlier. (d) Décor and Handicrafts Products Segments – Based on its positioning as a country with reasonable priced handicrafts and decorative products. Thus. Distribution Distribution or supply chain management is critical for furniture manufacturers for catering to both. For example. which have a strong regional presence and have good furniture designs. company needs to have its own warehouses at least in all the top six cities of India otherwise timely distribution becomes difficult. where the affluent and high-income middle class of India resides. 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. 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. Style Spa‘s one of the strength areas is availability of its furniture stores throughout India. it should have a strong logistics network to expand. the home and commercial segments. In case of high value products as well. Therefore. the aim should be to cut on huge investments of establishing own infrastructure and enter India through imports route. 7. the key requirement would be to ensure timely deliveries and satisfaction in terms of value for money. Last but not the least. The critical success factor in this case would be to make the product easily available in at least the top 20 cities of India.2. if any company wants to expand. For the home segment. logistics also play a very important role. which includes both office and hotels. Such requirements can be taken care off by having appropriate and required investments in the infrastructure as well. it is very important to make the right thing available at the right time. the most critical factor will be availability . INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 68 . 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. which at the back end is supported by its mother warehouses and twenty other small warehouses across India. There are some players.

any player wanting to focus in this category. This is applicable in case of both institutional as well as individual customers.3. there is one or the other item that is provided free of cost to the customers. At the same time. this segment of customer is price sensitive. Various methods that are prevalent in the market can be adopted. but quality and reliability factors play more important role as compared to price. These free products are mainly accessories and home décor products like lamp etc. Thus. Brand Building & Promotion First step for any new player is to create awareness about its products in the market. latter being the most appropriate method for introducing a new brand or product from a new country. package options for doing the entire bedroom/living room. interior decoration products or accessories free with furniture. still being a traditional country. Interactive Media and Trade fairs or Exhibitions. India.7. Such as discounts. new product introductions. it would prefer to have its infrastructure. follows many old rituals of buying new things or renovating the house around auspicious occasions like Diwali or a marriage in the home. should position as a well-known brand available at optimum value for money. In recent times. brand as a buying decision parameter has gained significant importance in the consideration sets of the customers. Once the customers are aware about the presence of a particular product or company. such activities are helpful mainly in the home furniture segment. Institutional Customers – As institutions. 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. be an office or hotel.1. interior and furniture that compliments or enhances its own brand. For any player wanting to focus on home furniture. Individual Customers – This segment of customers is also price sensitive. As far as promotion is concerned. such kind of promotions would be more helpful in Diwali or Marriages seasons. Therefore. The same can be done through various routes – Print Media. Durability and Trustworthiness. Well-known brand names are looked up to in this category as well to ensure Quality. Other than this. 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. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 69 . the next step is to build the brand value.

customers are ready to pay an extra buck for better quality and designs. 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. Minimum efforts and investments Household Furniture – Low End Segment  required for market development (entry through JV and distribution through existing hypermarkets) and promotion. Market Attractiveness Along with the above-mentioned entry suggestions in the four product segments. 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. No strong industry player in this segment INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 70 . There is no need for macro-investment. an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these.2. Limited number of sector strong players in the industry.7. Huge demand but limited supply from organized sector Office Segment of India is in a booming stage. Household Furniture – High End Segment  Given higher disposable income. Office Furniture  growing at a fast pace (20% CAGR). The findings of the above analysis are as follows: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base. This ranking has been done based on the various criteria.

style spa is importing chairs and dining table made from rubber wood. Annexure 8. Similarly. living room furniture (sofas.1. 35% imported o Half leather and full leather sofas we are importing solely from China. present in 145 cities across India   Style Spa and Zuari‘s combined last year (07-08) sales – 120 Crores Only manufactures bedroom furniture. dining table and centre table with glass and metal we are again importing from China only o From Malaysia. 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. present in all states of India o Similarly in case of Zuari.middle and upper . which are not their exclusive stores.middle class of customers 71 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY . dining tables) are imported – o Imports from Malaysia and China o Rough break up of sales – 65% manufactures. Style Spa positions itself as Bedroom Furniture Company.8. 65% of their business comes from Bedroom furniture Strength of Style Spa – its nation wide presence o With 90 style spa showrooms.1.1. Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 8.  Style Spa as a company targets middle .

economical Godrej Sales 2007-2008 – 800 Crores (2/3rd office furniture) Exports – 2. this dependence on the manufactured furniture will go down to 45-50%.1. value for money. wardrobes. which is bedroom furniture.000 units furniture per year. package options for doing the entire bedroom.beds. import component will go up. o Reason to grow more on imports is higher margins on imported products o For their strength. Such promotions are done in Diwali and marriage season. that is by 2011 o When expanding. 00. Godrej largely sells home furniture through this model o Franchisees – More than 500 in number. Production capacity of the factory – 2. these are only imported. Current dependence on the factory is 65%. by name of Interio franchisees located in tier 1.  Promotion activities undertaken: Discounts. new product introductions. We are not into manufacturing of chairs or sofas or dining at our factory. These can be multi brand stores. computer tables and study tables.  Expansion plans o Sales target for 2008-09 = 140 crores o Targeting 400-450 crores in next three years time. 2 and 3 cities. Style Spa will continue to depend on its factory only. entertainment units. Godrej Interio        Godrej Interio is primarily into furniture – both home and office Also serves some special segments like navy. while the company expands. 8. this model sells both office and home furniture INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 72 . This includes only bedroom furniture . 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. TV trolleys. dressers.2. bedside tables.5 percent of the above amount Two type of distribution models: o 58 Own retail Stores – by the name of Lifespaces.

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

 Durian has a main/central warehouse (2. table stands. part is imported (depending upon demand of the project). Orders from different showrooms come to the central warehouse through their ERP system.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. arrangements are made for the logistics and material is finally sent to the destination showrooms.of the material is manufactured. anything related to home décor INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 74 . Accessories like table lamps. Then as per the orders.Families with at least Rs 40. There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi.2 lakhs sqft area) in palgaon (100 Km from Mumbai).

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

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

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

beverage range is the fastest growing product category growing at around 20-25% p. Luminarc etc. RAK Glass.. Bharat Bone China Ltd. 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). Art d‘Inox as well as multinationals like Corelle. Magppie. the market size of Glassware. The organized tableware market which is around 8% of the total market comprises of both domestic players like La Opala RG Ltd. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 78 .1.a.market is growing at the rate of 15-20% on an average after taking into consideration the effects of slowdown. Based on the application of tableware . Tableware Industry in India The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. 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. Out of these segments.Executive Summary E. and contributes maximum to the sales of tableware manufacturers.The organized tableware .. at INR 12 billion which is the largest in the total tableware market in 2007-08.

purchase of products in these categories is expected to rise in future.. They want quality products. 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.The major sets of customers in tableware are domestic consumers & institutional consumers (hotel/ catering & corporate players). Ltd. E. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of consumer plastic goods. The domestic consumers at present occupy the largest consumer base for products in this category. with the increase in gifting trend amongst Indian consumers & growing number of hotels / restaurants. molded luggage. The kitchenware. and molded furniture. Cello. Tupperware. which are leakage proof. The changing preference of people for using plastic containers for storage purpose in turn is promoting the growth of this industry. Plastic Container Industry in India The consumer plastic goods industry includes household ware. 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). INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 79 . kitchenware. Eagle Thermoware etc. Pearl Pet. writing instruments.2. The organized plastic container market has few major players who are Hamilton Housewares Pvt. airtight and aesthetically appealing. However.

3.1.e. 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 . Value Chain for Manufacturers – The tableware & plastic container industry in India follows a similar value chain model. 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. In order to minimize expenditure at each level of the value chain. thereby enabling the growth of this industry.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. through multi-brand outlets & retailers with minimum number of intermediaries in between to ensure presence across all geographies. E. In case of institutional players. Also. 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. through company‘s own stores. reach to maximum number of customers possible and to save on cost. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion.3. they should optimally utilize all the available channels for distributing their product i.

after analyzing the tableware industry in India. They may sell the products through various channels like through a distributor/ dealer. Existing competition & substitute products pose medium threat to the tableware industry. who are posing threat to an investor in this industry to varying extents. Tableware Industry The tableware industry is affected by existing competition. Customer Imports Importers / Super Distributor Retailer Distributor / Dealer Customer Retailers Customer E.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.3. Thus. variety & changing preference for purchase of lifestyle goods. However. the major target segment i. new entrants who would be entering this industry and substitute products. Industry Analysis E.1. supplier & buyer bargaining power. whereas the unorganized market is highly fragmented.4. The major threat posed to tableware industry is from new entrants due to the attractiveness of this industry. Value Chain for Importers – Importers or Super distributors in Indian tableware & plastic container industry can be exclusive distributors or multi-brand distributors. Thus. 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. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 81 . middle & upper middle class prefer to purchase products from the organized market due to better quality.E.4. for a new brand to establish its name in the Indian market. However. through retail outlets or directly sell to customers. it can be inferred that there are small number of players in the organized tableware market.2.

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

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







INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

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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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

84

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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sugar bowls. traditional or contemporary). manufactured domestically). However. mass merchants. Ceramic and porcelain table ware are used by household. and these table ware mainly comprise of coffee-tea sets. the western European tableware manufacturers have to pursue clever brand and price policies. tea and coffee pots.9.e. or low-end). Dinner sets. specialty stores. but also innovations in design. drinking glass sets. It is the large market very competitive with high professional importers/ distributors placing large orders.2 The Changing Consumers Tableware can be classified in six basic ways: style (formal or casual. material (fine china. Cooperation between the suppliers of machinery and raw materials has become much closer. plates. USA is one of the biggest market for ceramic and porcelain tableware. stoneware. dishes. And they prefer to spend their precious disposable income on leisure products rather than fine china. salad bowls. and retail category (the INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 86 . Global Scenario 9.1. barracks. In the last ten years. in particular because optimizing process quality is a challenge that can only be mastered by working together. tea and breakfast sets. Technology has to keep pace with these changes. the market for ceramic and porcelain tableware is different to that of Europe. it can be divided into three categories i. According to the use of tableware in USA. In addition.1 Global Tableware Industry: 9. Targeted outsourcing for manufacturers in high-wage countries is very much a part of this strategy and thereby introduces Asian manufacturers into the process. etc. price segment (high-end. hotels. therefore. distribution channel (department stores. End consumers now want a more personalized service in all areas. restaurants. place of origin (imported vs.1 Overview: Tableware is marketed these days as a lifestyle product. egg cup etc. sales of tableware have been trending ever lower in the traditional western European markets. mid-range.).1. cups and source boats. glass). The market leaders among the tableware manufacturers are pointing to the fact that it‘s not just technological innovations that count. soup tresses. positioning themselves not only in the up-market segment. 9.

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

At present. 9. the global capacity for polymer production is around 170 MMTA and is growing at a rate of 10. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 88 . five HPL supported FIBC units exported 7 KTA worth goods annually. Global Plastic Products Industry 9.8 percent of the chemical output. Commodity plastics contribute US $ 90 billion that is 5. This gives us an idea of the size plastic industry and the significance that it holds in the global scenario.2 percent annually and polyolefin alone make up for the 63 percent of the entire polymer industry. There are tremendous capacity expansions that are happening for polymers all over the world. a good global economic climate and ongoing substitution processes in favor of plastic have combined to foster steady expansion in the sector. These three regions form the major polymer production regions of the world.04 MMTA. The demand for the major polymers is growing at a rate of 5. The demand for Polyolefin is growing at an even faster 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. This becomes even more significant when the global polymer industry is growing by almost twice the rate of the global GDP. The global demand for polymers is 139.1. the firm predicts.3 MMTA out of which polyolefin form 89.2 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. Plastic Industry The global plastics industry is marked by dynamic growth with both quantity and quality aspects helping boost the upswing.2. For many years now. overall population growth. Based on Frost & Sullivan‘s Report -2003. Western Europe contributes to around 21 percent of the entire capacity.6 percent of the entire chemical output and polyolefin output is US $ 61 billion that is 3.9.2.2. Out of this. Currently. Plastic has occupied a major role in the lifestyle of the 21st century.The estimated demand from the US alone (for plastic food containers) has been estimated to touch as much as $21 billion by 2009.5 percent per annum.6 percent per year.

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. In the organized market. Magppie.. *The Financial Express – June 2007 10.1. 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. Art d‘Inox as well as multinationals like Corelle.10.e. the organized market is growing at a much faster rate than the unorganized market. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 89 . Luminarc etc. Bharat Bone China Ltd. Tableware Industry 10. there are both domestic players like La Opala RG Ltd.The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. around INR 2.1.2. Overview . who are a part of this large chunk of market size.1. RAK Glass.. Industry Segmentation The tableware market is classified according to their application & raw material being used for their manufacturing. Tableware & Plastic storage containers Industry in India 10.4 Billion including domestic manufacturers & brands imported from abroad which are sold through organized retail channels.1.

1.2. The growth in this category is fast with the changing lifestyle & increasing income of people. This is the fastest growing category in tableware especially among glassware.1. trays etc. pudding set. cutlery. the products are:  Dinnerware range – This includes plates (quarter / full). the tableware is broadly classified as: Tableware Market Dinnerware Beverage Barware Within each product categories. etc.4 Billion) comprises of Dinner ware i.   Beverage range – This includes glasses. saucer. salad bowls. Around 62% of the total organized tableware market (INR 2.5 Billion. 1. Segmentation Based on application Based on their application. cups. jugs etc. This category is growing after beverage range because of the growth in hospitality industry. lemon sets.10. dinner set. wine sets. Barware range – This includes ice buckets. fruit bowls. Rs.e. cocktail shakers. Category wise market share for organized tableware 38% Dining ware Beverage & Bar ware 62% INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 90 .

15 billion in the overall tableware market  Total market for opal ware is INR 6 billion in the overall tableware market . Hence. 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.10. Based on the responses of players in the organized tableware market. Segmentation Based on Raw Material The material used for their manufacturing may differ from manufacturer to manufacturer.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 . 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.1.Based on the responses of a senior manager in the organized steel tableware with matte finish .2. 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.

can be used in microwave as well as for serving and are used by most of the domestic as well as institutional players. Bone China crockery ware is being imported from Bangladesh and Sri Lanka in view of the better availability of raw material there. 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. 10. There are 16 units in the organized sector in India with a total installed capacity of 43. exports also form a major proportion of the total sales for all the manufacturers.000 tones per annum. the customers can be classified in two groups.4 Billion INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 92 . Domestic customers Vs. the corporate customers include a majority of Pharmaceutical companies. Also.3.1. Customer classification According to the usage of tableware. Apart from these two categories. 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. opal ware which is unbreakable in nature is preferred by most of the consumers for domestic purposes as well in hotels / catering. Ceramic ware comprising of crockery and tableware is produced both in organized and unorganized sectors. This is because glass wares are available in variety of designs.Glassware has the largest market size in terms of value in the Indian tableware market.

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. 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. in ceramics & stone ware Art d‘inox in steel with matte finish Magppie in steel with matte finish 10. there is a huge market for new players to enter this industry through proper marketing & sales network.Presently. 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.1.1. 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 . 10. Thus.5.

according to KSA Technopak  Increase in Hotel & Catering industry o There are some 1.76 billion by 2010 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 94 . 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. ITES.a.a.980 hotels approved and classified by the Ministry of Tourism.T.000 hotel rooms o The hospitality industry is poised to grow at around 25-30% p.1 billion)—11 times the level of today and 58 percent of total Indian income**  Increase in the ownership of luxury products.5 trillion rupees ($1. 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.. Government of India. with a total capacity of about 110. and is expected to reach INR 826. 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. Increase in per capita income with the growth in I. o The current market size of luxury-very premium goods and services is INR 840 Billion which is rising at 16% p.

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

huge demand is there. 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 . however steel prices are increasing which has increased the bargaining power of suppliers of steel tableware 3. several players are coming in the lifestyle products category in Joint venture with established brands in India. However. In addition. Competitive Rivalry Industry shifting from highly unorganized towards organized sector. stainless steel utensils sold in unorganized market & melamine tableware which are cheaper are substitutes in this category 5. bargaining power of customers is increasing Raw material is available in abundance in India & is also imported from abroad like Bone Ash. 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. Bargaining power of Customers With fast growing middle class and changing lifestyle. 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. Competition is increasing because of the entry of new players & joint ventures with the existing players. imports have become cheaper 4. due to FTA between India & several countries. However. Also. Bargaining power of Suppliers 2. Threat of new entrants Several new players & importers are coming in this market. with the increasing competition in organized market.1. 1. people want change and get bored of their old tableware after some time.10. Also. Also. Analysis of Tableware Industry in India The tableware industry is highly disorganized in India. In addition.6.

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

They need to adopt various marketing initiatives to promote their brand and sell their products through various channels rather than just one source.10. 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. 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. In addition.7. 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. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 98 .1.

Kitchen ware.1 Overview Based on Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003. Within this market. tailoring materials. molded furniture.3 Growth Rates 10 25 20 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 99 . At present. Plastic is one of the fastest growing industry segments in India.2. Consumer plastic goods account for approximately 15 % of the market. Table ware & Household products Total Source: Frost & Sullivan . 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. household ware and kitchen ware is the largest segment both in terms of domestic demand and the export potential from India. Given below is the break up of the following consumer goods in polymer consumption. there are 25. Plastic Containers Industry in India 10. personal care products.0 9. 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.000 plastic processing units in the country. Writing instruments. Almost 50 percent of the plastic manufacturers have some operations in this particular category. etc.2. The total imports of household articles. and personal care products.7 49. The Indian plastic processing industry possesses strong capacities and capabilities in these segments. Toys. Consumer goods include Household ware. gift articles and novelties. and the respective growth rates for 2002 Categories Molded Luggage Molded Furniture Writing instruments Kitchenware. and kitchen ware by US totaled $ 1000 million in 2002.2003 KTA 150 140 40 190 520 Size in revenues in Billions 12. revenues. Writing instruments and travel ware are other promising segments having a potential to generate export revenues.000 to 30.0 13.6 14. molded luggage.10.

Organized Vs. 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. With changing preference of people for using plastic containers for storage purpose is promoting the growth of this industry. They want quality products which are leakage proof.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. air-tight and aesthetically appealing. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of Consumer Plastic goods. 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 . The plastic products industry comprises of storage boxes & thermoware containers.

Dry Fruits etc. which are primarily used for storage of fruits.  Microwavable boxes – They can be used for heating and cooking food items in microwave.  Food Preparation boxes – They can be used for preparing food items like shakes. used for stocking dry food items like pulses etc. Pulses. mixing bowls etc. salads.. water storage jugs etc. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 101 . hot pots. bottles.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. jugs.10. Rice.2. storage and serving purposes. For e.  Storage Canisters.These are large sized boxes. Mugs STORAGE BOXES used in kitchen. which are perishable in nature. jugs. Dine ware – This includes bowls. juices etc. flasks.  Refrigerator & freezer boxes – These are air tight & liquid tight boxes. They are multipurpose boxes and hence used for cooking.g. vegetables. Wheat. 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.

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. it is during the last 1.3. 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. However.4. Major manufacturers in India The major domestic manufacturers in India for Plastic containers are:      Cello Hamilton Housewares Pvt. 10.5 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.2. As per the views expressed by a retail giant in household product category in India. Customer classification According to the usage of tableware. Ltd. 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. Also.1. the customers can be classified in two groups. they are already importing plastic storage containers from Thailand for last 4-5 years. Tupperware Pearl Pet Eagle Thermoware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 102 .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 .5.2.10.

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

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

which can help to boost the production in the future Many players in the medium scale industry are also selling branded products. 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. Strengths and the weaknesses of the industry Strengths    There are access capacities available in the market.10. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 106 .2.7.  Most of the companies are privately owned entities and are lacking in managerial aspects. Indian products find it difficult to compete in the price-sensitive markets. Imports from the Chinese manufacturers are hampering the growth of the industry. both at the domestic and the export level. 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.

Critical Success Factors for Plastic storage containers A well-connected distribution network Focus on ―Leakage proof.10. they should create a brand image in the minds of consumer about the benefits being offered by their products over other similar products.8. it is very important for a new entrant that their products are different from the ones offered by existing players. They should target working women for this product category. Also. They should have a large presence across all the regions in India. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 107 .2. 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. They should have a trained sales team to promote their products rather than spending much on advertising.

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

5. 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. & sell them under their own brand like Milton sells glass ware imported from other countries with the brand name ‗Milton Treo‘. their channel structure may differ in terms of distribution of the products in this category. 11. similar items can be co-branded and sold. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 109 . they might also import products from countries like Europe. Manufacturers & importers follow the same import procedures. 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. Thailand. In addition. through licensing agreement with Indian manufacturers. 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.4.11. 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). China etc. Manufacturers in plastic products category like Cello & Hamilton. import products from Italy. 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.

However. Arc International sells Luminarc.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. However. they may promote those brands / products which they think is more profitable to them or the margins are high. Lock n Lock etc. Noritake. 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. However. they have a limited presence due to lack of proper infrastructure in terms of distributing these products across the country. Thus. Thus. sourcing price for importers are around 60% . INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 110 . 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. in case of importers who are importing multiple brands. the margins are very high. for products which are imported. The super distributors may be multi brand distributors or exclusive distributors as in the case of Noritake. In case of tableware. RAK Porcelain.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.

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

Tupperware. They are promoting their products through distributor. Eagle Thermoware etc. manufactured in India in plastic container category. they target Pharmaceutical companies and Four & Five Star hotels. Cello. They have tie ups with several multi brand outlets like Shoppers Stop. through advertisements in print media and are planning to come on TV. For example Magppie has its own stores. Westside etc.Outbound Logistics – La Opala has a well-established distribution network across the country to make their products available all across the country. With the increasing demand of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 112 . Services – They tend to provide new varieties at economical cost to the customers like unbreakable material being used to manufacture tableware.. 25 in West. The main outlets currently include departmental stores. Thermoware & Dine ware. *** Based on the responses of a Senior Manager at La Opala 12. general utensils merchant and gift retailers. The major manufacturers in these categories are Hamilton Housewares Pvt. La Opala has a total of 85*** distributors across the country with 25 distributors in North. Value Chain of Plastic Containers Industry The products. Marketing & Sales – They are targeting masses between the age group of 21-35 years*** of age and among the institutional players. include Storage Containers.2. some of the manufacturers do. They introduce several consumer schemes like scratch card system & festive discounts. Ltd. 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. 15 in South & 20 in East India.

at a small factory in Goregaon. U.S.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 %.A. Sri Lanka. Kenya & U. spearheaded the growth & diversification into new products and markets First & Largest Manufacturer of Branded household products in India.E. Discussed below is the value chain of one of the leading tableware industry player. Chairman. Nepal. WIMPLAST -Italy & SUMMITOMO – Japan Strong in house R&D base.2. Pankaj Rathod. About the Company  Cello Thermoware ltd. Deputy Managing Director. in May 10. G.Plastic containers. Pardeep Rathod. with just 60 workers and 7 machines engaged in the manufacture of the finest range of Casserole. 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.A. 12.D. value chain of manufacturers should be such that products are available across all geographies. 1986. Case study for Plastic containers: Value chain of Cello Thermoware Ltd.Founded by Mr. Rathod. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 113 . that the Indian market had ever seen     Mr. Managing Director and Mr.Germany. Bombay. as they were later positioned.1. Investment of more than USD 50 million in ultramodern plastic processing machines from BATTENFIELD. 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. or Hot Pots. .

K. 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. Thus. U.e.. 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. Italy.A. 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 . summer season etc. Germany. those dealers who achieve higher sales target. Regularly export to more than 60 countries including U.S.. 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.

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

For microwave. SEC A2/ B1. 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. Information Search – In case of tableware & plastic products. 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.   „ There are no specific occasion or any function for purchase of these items because plastic items are useful always‟. even if there is no need at present (impulse purchase which refers to buying decision made immediately. With the modular kitchen concept coming in place. Also.Plastic Products – Although products in this category (storage boxes. most people prefer to use glass containers and not plastic containers across majority of the regions. Hyderabad „ I would purchase plastic products when the need arises and for change‟ – Working . With the difference in the storage of food items. they should be moisture proof. since they are not very high value items. With the increase in number of working women. their purchase would depend upon the kind of item to be stored like for perishable items. people in Southern India prefer to store food items in stainless steel containers rather than plastic boxes. they might purchase these items. containers) are purchased whenever they need to store food items – perishable / imperishable. 25-32 years. 25-32 years . 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 . But they can also be purchase anytime you find them.Working women. people prefer to purchase plastic products which are aesthetically appealing and keep the food items fresh. they may purchase them for changing the old boxes with new ones & for gifting on occasions like Diwali etc. in an unplanned manner based on urge created by liking a product very much). the purchase of plastic containers is increasing for carrying food items. Kolkata 2. SEC A1/A2.

Aesthetic appeal. They should not loose color. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 117 . 25-32 years.It should be able to reflect social status i. Retail stores – Most of the multi brand outlets display products of different brands. 38-45 years.e. luxury products.Housewives. should be light in weight. Parameters identified as important to consumers while buying Tableware are as follows:  Quality – In this parameter. handling of the product should be easy. It should be trustworthy.we see the brand we are purchasing should be trustworthy‟.we see them before purchasing the same as displayed in stores or if someone has given reference or told about the quality of products‟ . from where customers can see. touch & feel about the quality of products as well as the price range suitable for them  Trade fairs & exhibitions. Bangalore 3. several sub-aspects are present. Ahmedabad „While purchasing tableware.  Price – This is considered less important in comparison to quality. SEC A2/B1. SEC A2/B1 . SEC A1. 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.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 . preferably they should be unbreakable.Working . Usually customers have no fixed budget for this category of products. So even if it‘s expensive but satisfies them on quality & social status front. they would not mind paying extra price for that       Brand.It should look good & available in various shapes & designs. we see that handling & cleaning of products should be easy‟-Working . Variety – It should be available in variety of colors & designs. 38-45 years. 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 hygienic & should be multi-purpose in nature i. it can be kept in fridge & microwave. Men are only involved in the financial decision making or in accompanying women while making a purchase.e. Husband only takes care of financial part. but price does mater to customers. we see that it should be air tight & food has to be preserved well. SEC A1.    „For purchase of tableware . But it is not as important as quality of the products. This includes that the plastic should be of good quality. Although there is no fixed budget kept for the purchase of these products. Lid should be comfortable & durable. SEC A1/A2. It should be long lasting.In case of Plastic products the major parameters are quality & functionality of the container.Working . Mumbai 4. 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. It should be air tight & leak proof in order to store food items in them. they are not freely available in open market. we are the Decision maker. 25-32 years.Working. „For purchase of tableware& plastic products. They should be available in various sizes. food items kept inside should not smell & the taste of food should not change. they are admirers‟. However.Working. Brand is also considered as an important parameter in the purchase of products in this category for upper middle class & higher class people. They should look good & after washing the color should not fade or it should not get disfigured. Delhi „Brand is an important criterion in the purchase of plastic ware like Tupperware‟. Bangalore The frequency of purchase of products in these categories is almost once in every six month. Key decision maker in case of both tableware & plastic products are women. & should be odor less‟. Purchase Decision – This involves decision related to what to purchase & from where to purchase & who will purchase. in selecting any product children might influence the decision in terms of design & looks of the product. 3845 years. Kolkata „We see that after washing the color should not fade or disfigure & it should not start looking old‟Housewives. SEC A2/B1. 38-45 years. 25-32 years. SEC A2/ B1. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 118 .e.

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

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range category. Both domestic as  well as institutional customers purchase products in this category. Entry barrier is low. Plastic Storage Container Growth is almost stagnant at 12-15% p. Margins are high Comparatively slow growing category. following are the key take-outs for potential entrants in Indian Tableware market: 15. Competition is less. 15. these entry mechanisms are less risky in comparison to fully owned INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 122 . Margins are high Demand is huge in this segment. 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. Competition is high. Investment required is more than other categories. the potential investor should enter either through Joint Venture or Merger & Acquisition with the existing player in this industry in India. 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. Tableware is the most attractive category and within tableware. a new entrant should focus upon Beverage Range & Dinnerware in Glass material for entry in the Indian Tableware market. Entry Strategy In order to enter the Indian tableware market.1. Investment required is low in this product category..a. Customer base is TablewareBarware Range  limited to institutional customers (Hotel & Catering Industry) & upper middle class segment in domestic customers. Recommendations Based on the analysis of tableware 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. Margins are low Thus.

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

number of working women is increasing who need plastic storage containers for themselves & their kids which are air-tight.e. 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.4.g. Also.. In the direct distribution system. 15. leakage proof and safe. selling through company stores as well as multi brand outlets like Magppie sell their products through Multi brand outlets. exclusive boutiques. Personal Selling Systems should be employed where a person whose main responsibility involves creating and managing sales (e. Multi channel or hybrid distribution network should be used where a marketer is following a multi-channel or hybrid distribution system. the target customers should be Corporate & Hotel/ Catering segment for gifting or as freebies for promoting their product and for personal usage. but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population. In case of dinnerware & plastic storage containers. For beverage and barware. there is a considerable increase in the disposable income and people are purchasing more number of lifestyle goods because of the rising income levels. Target Customers Based on the analysis of the Indian Tableware & Plastic storage container market. This approach expands distribution and allows the marketer to reach a wider market i. the target customers are domestic users who use these products for their personal usage or for gifting. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 124 . For selling to domestic consumers at large. 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.5. salesperson) is involved in the distribution process. Distribution In order to sell the products in tableware & plastic storage containers category to institutional customers. However. generally by persuading the buyer to place an order. shop -n-shop model where dedicated space in an outlet is provided to Magppie. the marketer must be careful with this approach due to the potential for channel conflict.15. 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. Also.

packaging and the way in which it is delivered is employed. For an investor in the tableware & plastic storage containers market in India. 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. proper mix of advertisement through print media.15. Thus. Also. 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 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. should be employed on occasions like Diwali etc. image. exhibitions etc. T. Brand building & Promotion In order to build a brand in a new market.7.6. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 125 . raw material acquisition would be easier from the existing suppliers in the Indian market. Also. it is very important that the new entrant specifies & communicates about the quality they are offering.V. discounts etc.  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. 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. in order to establish the brand image of its product.. should be employed. in order to reinforce this image in the mind of customers. product guarantees. Also.

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

From distributors. Beverage range is the most fastest growing category amongst dinnerware.4 Billion Out of total sales worth INR 600 million. INR 400 million are into dinnerware & INR 200 million into beverage & bar range They are growing at an average of 20-25% p. their last year sales were INR 600 million in the domestic market & exports worth INR 1. the product goes to dealers / retailers.3000 o For upper middle class.       Another plant at Uttaranchal has production capacity of 4. For institutional sales. discounts etc. they target pharmaceutical companies & five star hotels They have a total of 85 distributors (multi brand) in the country.a.e. 16.000 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.2 Yera Company Profile INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 127 .1. 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 .      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. they directly pitch in for customers. They also have consumer schemes like scratch card.V.INR 2000 – 4000 o For higher class –INR 1000 for six glasses ( crystal ware)   For selling their products in institutional segment .

4% They manufacture plates. 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 .3. They are utilizing their production capacity fully.1. glasses. they have a direct sales team They promote their products through trade fair. They are into dinnerware & beverage range. exhibitions and advertising in print media They are importing Bar ware from China & Iran worth INR 200 million 16. dinner sets etc. jugs. lemon sets. Ltd. Gujarat with total production capacity of 165 tones per day. Platters.e. INR 850 million) in this market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 128 . 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.             The company has a manufacturing facility in Baroda. bowls etc. The company is No. Their market share in total glassware market of INR 12 Billion is 5. has a market share of 40% ( i.) 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. dinner sets. Bharat Pottery Ltd. tumblers. Tumblers are the fastest growing category amongst the products being manufactured by Yera (Shreno Pvt. mugs. 1 in glass ware market. cups & saucer. 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.

magazines and introduce promotional schemes to attract customers 16. 85% is sales in domestic market where as 15% sales come from exports In the domestic sales. glass . 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).000 units per month They are into the manufacturing of tableware . they have a sales team They also have tie-ups with multi brand outlets like Shoppers Stop. They give advertisements in newspaper. Haryana They manufacture around 4. Art d’ inox Company Profile          Their manufacturing facility is located at Rohad .. 85% consist of dinner ware & 15% consist of beverage range . where 55% are domestic customers . Pantaloons etc.00. 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. For institutional sales. home accessories & office accessories They use steel with ceramics.1. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 129 . Big Bazzar .4. serving ware .   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.

décor.. Household Plastic Items. Vacuumware. they sell through distributors They promote their products through advertisements in print media. Nonstick Cookware items and Toothbrushes INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 130 . 60% comes from exports & 40% from domestic sales Presently. Writing Instruments.a. beverage range. to multi brand outlets .e. They are targeting upper middle class & institutional players Price range for their products start from INR 700 – INR 75000 Out of their total sales. Haryana They have a turnover of more than INR 1250 million They are into the manufacturing of dining. shop -n-shop model where dedicated space in an outlet is provided to Magppie For channel sales i.a. tabletop accessories. For institutional sales. through PR activities & CRM. whereas industry is growing at 15% 20% p.2. Profile of major players in Plastic storage container category 16. Plastic Moulded Furniture.1 Cello Company Profile  CELLO Group are the manufacturers of Thermoware. 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. exclusive boutiques. they have a sales team to directly pitch in for corporate who purchase their products for gifting & five star hotels 16.2. Magppie Company Profile    Their manufacturing facility is located at Kundli . they initiate special offers for customers 16. Also.1.5. Dining & Barware are the fast growing categories whereas Décor is a slow growing category          They are presently growing at the rate of 35% p. barware.

1 million per month Their products percentage break-up is 30% . They tend to avoid intermediaries & are planning to increase the number of distributors by adding on 100 distributors in next 1 . but in metro's they have 2-3 distributors /city. breakthrough product .T. Polypropylene & High tensile strength plastic as raw material The present sales turnover of CELLO has reached INR 3.5 billion They are targeting middle & upper middle class to high income group having income class of above INR 25. with latest molding machines and excellent infrastructure Cello has developed the unique. 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 . 000 – INR 0.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.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. Tupperware Company Profile    They have their manufacturing facility in Hyderabad They offer products in plastic kitchenware which are classified as. giving Cello an edge over rival products They use Polycarbonate . They have a distributor after every 100 kms. 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.         Cello has seven up-to-date manufacturing units in Daman (U.Lunch boxes. 70%. protective shield.2. which is innovative.) and one in Pune.Thermi Guard.2. they directly sell through company warehouses They have 90 distributors who are exclusive distributor in this product category through out India. Dry storage boxes .plastic .

Water Jugs. 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. loyalty club for consumers who want to keep in touch with what is going on in Tupperware 16. they become managers.   For institutional sales .insulated Tiffin. school activities for students who use lunch boxes most often. They are already using F.2. women who join as a consultant and after appointing six more consultants in their team. tubs etc.      Milton's world-class plants in Pune. Soft thermoware items & regular household items like trays. insulated and non . buckets.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 .M and undertake several below the line activities like kiosks in malls. upper middle class & higher income group of annual income of INR 0.3.e. & 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. containers. hence they are slow growing category.    Clear plastic products are more expensive. they do advertising in women magazines and are venturing into TV. they have a direct selling team in the company For promoting their products. They source their products from distributors. they target another segment of people i. Water Bottle.e. Vacuum flask. 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.

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

1.2. 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. Mode of Pricing and INCO TERMS While finalizing the terms of import contract. These terms thus represents the minimum obligation for the seller. Under this Act. 16. As regards mode of pricing. the Importer. For import of items appearing in the restricted list you. Principal Law & Import Export Policy Principal Law Imports in India are governed by the Foreign Trade (Development & Regulation) Act 1992.3. 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. Importers need an Importers/Exporters Code Number from the Directorate General of Trade in order to be able to import 16. To avoid ambiguity in interpretation of such terms. The importer for his benefits should know the meaning of the technical terminology. has give detailed definition of a few standard terms popularly known as 'INCO TERMS'. In exercise of the powers conferred by the Foreign Trade (Development & Regulation) Act 1992 items. 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. the Government of India has liberalized the Import Policy and practically all Controls on imports have been lifted. A large number of Consumer goods are freely importable without license. should be fully conversant with the mode of pricing and the manner of payment for the imports. It is mostly used for sale of plantation commodities such as tea.16. the overseas suppliers normally quote the terms prevailing in international trade.3. imports of all goods are Free except for the items regulated by the policy or any other law for the time being in force. need to secure an import license.3. Paris. International Chamber of Commerce. coffee and cocoa. not appearing in Prohibited list or restricted list can be imported freely without any import license. Import Legislation in India With the globalization of the Indian economy and consequent upon comfortable balance of payments position.

The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. free of cost to the buyer at a port of shipment named in the sales contract. Free Alongside Ship (FAS) Once the goods have been placed alongside the ship. As will be seen though the seller bears the cost of carriage to the named destination. Customs Duty Customs duty is levied under the Customs Act. 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.3. the risk is already transferred to the buyer at the port of shipment itself.Free on Rail (FOR)/Free on Truck (FOT) These terms are used when the goods are to be carried by rail. 1962 on the import of goods into India. 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'. 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. This being a shipment contract. but they are also used for road transport. 16. The seller's obligations are fulfilled when the goods are delivered to the carrier. 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 . 1975. Cost and Freight (C & F) The seller must on his own risk and not as an agent of the buyer. The rates of customs duty are laid down in the Customs Tariff Act.3. 'On board' means that a Received for Shipment' Bill of Lading is not sufficient. Free on Board (FOB) The sellers‘ responsibility ends the moment the contracted goods are placed on board the ship. the seller's obligations are fulfilled and the buyer notified. contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight. The buyer has to bear all costs and risks of loss or damage to the goods hereafter.

In addition. are subject to an effective customs duty rate of 36.5 %. and South Asian Association for Regional Cooperation (SAARC) countries and Singapore to promote preferential tariffs for certain identified goods. Mercosur countries and the European Union are also on the anvil.5%. The primary basis for the valuation of goods under the Indian customs law is the transaction value.) are available for import of specified products such as IT products or for imports under specific schemes and projects. Certain specified categories of goods are exempt from this levy in accordance with commitments under the WTO. 2 % education cess is also charged on the aggregate customs duties. Education Cess The general rate of basic customs duty ranges between 0 % and 20 %. 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. benefit under export promotion capital goods scheme etc. with most products being charged duty at a rate of 12. The government of India has entered into a number of free trade agreements with trade partners like Thailand.74 % because of the additional duties. Thus. Further certain exemptions/concessions (drawback of duties. which have a basic customs duty rate of 12. Sri Lanka. imported goods. Similar trade agreements with ASEAN. However. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 136 .

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

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

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