INVESTMENT POTENTIAL STUDY INDIAN HOME UTILITY & FURNISHING INDUSTRY

Prepared By:

,
February 2009

IMRB International

January 1, 2008

Prepared For:

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

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

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

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

.............................................. Handicrafts & Décor Products Value Chain ......................................................... Indian Furniture Industry Analysis – Five Forces Model .......... 41 4................... Information Search ...............................................................................1......................... 55 6.....2................ Industry Growth Trends and Forecasts .... 52 6...... 33 3............................................................................................ Threat of New Entrants..................2...... 27 3........................ 35 4.... Bargaining power of Customers ....5........ 57 6.......................................4..... Handicrafts Clusters in India .............................................. 47 5........................ Industry Segmentation ... 38 4......................................................3.......................................................................... 60 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -5- ...................................................................................................................1................................ 43 5.1........ 53 6.......1...................................................................... 31 3....... 29 3................... 46 5....... Understanding the Value Chain .......... Purchase Decision Process – An Introduction ....2........4.................................1...........35 4.................. Indian Handicrafts and Decorative Industry .................. Competitive Rivalry .............................................. 48 5....................................................................................1..........2.............................. 54 6.............................2...........1................................................ 30 3.......52 6...........2........1....................................................................................................... Challenges in the Indian Handicrafts and Décor Industry ... Consumer Insights ....................... Classification / Segmentation of the Industry: ............ Domestically Manufactured Furniture.. Furniture Industry Value Chain .3.................. Problem Recognition / Need Awareness Stage ...................2..........4...................1...2.............2..................................... Distribution Structure .... 31 3........................................................ Indian Handicrafts & Décor Industry – SWOT Analysis ................... 34 4.................................. Imports .....45 5........ Respondents Profile ........................................................................................................................................................... Industry Analysis .....1...............................................................4........2..2............................. 32 3...........................1...........................2........................2.........................3..........3.........2.............................1.......... Furniture Industry and Organized Retailing ..................................... 35 4................................ 46 5............................ Evaluation of Alternatives .................................... 37 4...........................3.....................1...................................................2................1............................4.............. 50 6....... 47 5.2.......... Key Demand Drivers of the Furniture Industry.... 45 5...........1.1.....1............2......... Bargaining power of Suppliers ....3.....1............................. Threat of Substitutes ........ Purchase Decision..............1. Overview ..................................

..... 81 E.......... 65 7.......................................2..4..... Style Spa .. Plastic Container Industry in India ..............6........................ 83 E......................................................78 E...1.1....2.....................3...3.................. Factors That Affect Growth ............... Recommendations for Thai Investors ............. How to Enter the Four Market Segments ..............1..........................................................2........................................................................1...................................... 80 E.......... Market Attractiveness ........................1................... 71 8...................................1................................................................................................................. 70 8.............................5 Post-Purchase Evaluation ...........................2.................... Consumer Insights ....5.......................................................2..................................6................. Role of Wooden Handicrafts Industry in Indian Economy .........................2..................................2........................................... 82 E............... 62 6.......................................4.............7...................................2............................................ Annexure ..............................1..... 76 Executive Summary ..................... Market Attractiveness of Tableware & Plastic Container Industry.............................................................4..................................................................................... Plastic Container Industry ... 68 7............. Durian ............................. 81 E..... 81 E............. 84 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -6- ..3..........................................71 8.........................................................................................................3...........................................................2......3.2................. Value Chain for Importers – ................................................... Customers‘ Perceptions about Thailand ......................65 7............ 82 E.. Godrej Interio ................1..................1......... Recommendations ....................................... Tableware Industry in India................. Entry Options .......1................ Value Chain – Tableware & Plastic Container Industry .................................. 75 8....................................... Brand Building & Promotion ...................2................. 78 E.............. 80 E................................................................. Tableware Industry..... Wooden Handicrafts Industry – Overview ................................................................................................. Distribution ......................................................... 66 7.. 64 7...... 69 7............................. Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 71 8........ 79 E............. Industry Analysis ..........................................1..........................................3........................................................................ Value Chain for Manufacturers – ..........1................................................................................ 72 8............................... 73 8....................................1................... 75 8..............................1................

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 most popular channel for distribution of the more Small Retailers Large Retail Chains  Stock in bulk  Sell to final consumers or small retailers Final Point of Sale traditional.4.2.1. 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. E.4.of infrastructure & technological support. 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. lack of awareness of international and new trends and poor promotional campaigns are a few drawbacks that need to be addressed.4. The channel flow across these two categories is summarized in respective charts below. 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. internet has emerged as a major distribution channel for décor items handicrafts items INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 13 . Understanding the Value Chain of Furnishing Industry E.

Furniture Industry Analysis The Porters Five Forces model has been used to analyze the industry. lack of co-ordination between government bodies and private players.number of small and independent retail stores.low costs. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 14 . less interest of young people in craft industry are some of the industry weaknesses. SWOT Analysis of Décor and Handicrafts Industry The strength factors like low barriers of new entry. due to growing demand and initial stage of organized sector growth.5. variety of products categories provide an advantage to the décor and handicrafts industry. customers are not able to experience a wide variety and new range of products. ignorance / lack of information availability.2.5. comprising of many small and unorganized players. In view of this market scenario. E. To sum up. inadequate information of current market trends. there is an increasing demand but limited number of dominant players. abundant and cheap labor to compete on price. available opportunities and potential threats and respective impacts of each of these. the internal competitive rivalry is not significant. growing demand.1. 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. This provides an attractive opportunity for Thai companies to enter the organized sector of Indian furniture industry. it can be said that any investor who wants to enter India as an industry player can take great advantage from following factors . Although 90% share of the industry remains with the unorganized sector. However. industry has witnesses a rapid growth in the organized segment. The summary of the analysis is as follows: The furniture industry is fragmented in nature. low competitive rivalry. factors like lack of infrastructure and communication facilities. comparatively low capital investments and easier imports. E.5. weaknesses. inadequate information of new technology. Industry Analysis E. low capital investment. Comparing the strengths. The industry is vulnerable to new players with factors like increasing demand.

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

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

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

5% 24... The seven major industrial economies (which are. Japan.7% 30.1. 12% U. 18% Germany. the United Kingdom. The opening of furniture markets over the past Ten Years The most important structural Imports/Consumption Ratio 35% 30% 25% 20.3% 24. Global Furniture Industry 1. providing the most important stimulus to world furniture trade.1. The furniture production of all developed countries combined covers 65% Other Developed Countries. measured as the ratio between This imports increase and is consumption.0% 29. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 18 .1. the United States. 15% France. It is now leveling off and it is estimated that in the next few years it will remain at a level of about 30%. Canada and France) together produce 50% in value of the world total. Germany. Overview: According to the CSIL‘s (Centre for Industrial Studies) ―World Furniture Outlook 2008‖ report. reaching 25% in 2001 and almost 30% in 2006.S. 7% Japan. in order of furniture production.5% 26.2% 20% 15% 10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21. 3% Developed Countries of the world total. 4% U. 21% India. Growth of the imports/consumption ratio has been rapid. 3% Italy.1. where production is increasing rapidly. Italy.3% 29. There are two countries. 8% China. 3% Emerging Countries World Furniture Production Other Emerging Countries.6% 22. particularly important in the United States.8% 28. where the trade deficit for furniture was almost US$ 22 billion in 2006. 3% Canada.K.9% phenomenon of the past decade is the increased degree of openness of the furniture markets. Furniture production in emerging countries currently amounts to 35% of the world total in value. world production of furniture is worth about US$ 307 billion. Global Furniture and Handicrafts & Décor Industry 1. China and Poland. 3% Poland.

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

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 2007.1.6 billion in 1997 to US$ 25. Percentage breakdown by geographic area in 1997 and in 2006 was also studied. Vietnam and Malaysia.S. 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. are number one furniture importing country on a world scale. Italy moves from first to second and Poland from eighth to fourth. Other major furniture exporting emerging countries are Poland. Poland and Canada.3 billion in 2007 (preliminary) in current dollars. China moves to the first position becoming the leading exporter. Germany. Italy. About 52% of exports come from developed countries. The U.1.2. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 20 . however. 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%. The main furniture exporting countries The main furniture exporting countries are China. Canada and Mexico. with imports growing from US$ 8.

United Kingdom. prone to impulse purchases. Germany. 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. Germany is the second largest importer and accounts for 8. which are usually machine made. which include countries such as USA. 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. the market is more oriented toward fashionable products and hence. manufacturing processes. the world crafts and decorative market has been witnessing a good growth from 2001 onwards.1. Global Crafts and Decorative Industry 1. and raw material. Major Importing Nations The top 10 markets.2. product requirements and standards. Belgium and Spain.3% of the world imports. account for 77. France. However. Hong Kong. Despite the fact that it is a highly competitive market.8% of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 21 .1.2. Overview Driven by positive changes in major markets like USA and Europe. the demand is more for low price products. it continues to remain the most attractive market because of the sheer purchasing power and stability of the market. Another significant change is the surge in contract manufacturing arrangements between EU and Asian countries like China. Currently. Canada.4% of the total imports followed by UK which accounts for 7. Increases in population and multi-ethnic composition are other factors that make this market attractive.2. USA is the largest importer accounting for 32. Hong Kong and Taiwan. 1. these countries. are now exposed to sophisticated designing.2. and consumer preferences. technology. Japan.5% of the total world imports of crafts and decorative products. As a result. As a result. which have been doing well on basic factors of production like labor and raw material. which result in shorter product cycles. This has enabled a country like China to leverage its inherent strengths like availability of abundant and quality labor. to become the single largest exporter with a market share of about 30% in the total world exports.

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

Indonesia. Vietnam. Thailand.Countries like Italy. Apparently. Low – End Market Segment . furniture. glassware. Korea are major players in the medium value products. These are mostly machine made. Barring Hong Kong and Taiwan. and supply high value crafts and decorative products. USA. 2.4. products categories such as basketwork. 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. These countries occupy leadership positions in categories like ceramics.In the low and medium value products. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 23 . Hong Kong. Germany. Turkey.2. 3. Taiwan. China and India are the two leading competitors Low –End Market Segment VALUE among Asian countries. High-End Market Segment . V O L U M E Middle Market Segment High – End Market Segment furniture and lighting articles. Belgium. leather goods. a large proportion of produce from Hong Kong and Taiwan are machine made.1. Hungary and Romania and Asian countries like Hong Kong. Spain and UK dominate the high-end market Italy Germany France Turkey USA Spain UK Poland Taiwan Hong Kong Belgium Korea India China China India Thailand Vietnam Malaysia Indonesia segments. whereas Indian products are mostly handcrafted and exemplify a high degree of craftsmanship. France.Eastern European countries like Poland. Taiwan. Czech Republic. ceramics. About 90% of products of Chinese origin are completely or partly machine-made. Middle Market Segment . woodwork and some varieties of textile from other Asian countries are mostly handcrafted. They also re-export product imported from other neighboring Asian countries. 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. toys and dolls.

Average real household income will grow from 113. with an exception of China. UK. 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. Brazil. India today is seventh most attractive destination for foreign direct investments. India will create a sizeable and largely urban middle class. after US. India has undergone tremendous economic development in last few decades. Exploding Middle Class – As Indian incomes rise. The emerging middle class will surge tenfold. Indian income levels will almost triple in next twenty years. This is much faster than income growth in other major markets. India has now become one of the most favored destinations for international businesses to expand. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 24 .20% 8% 6% 3.3%. Important Demographic and Economic Trends 1. 3.744 INR to 318.50% 1% 2% 4% 6% 8% 10% between 2012 and 2014 to become the third largest. Considering the fast growing and barely tapped middle class market. Tripling Indian Incomes . To be precise. Rising India . with a CAGR of 5.3% can be assumed from 2005 to 2025. If the same is achieved. competitiveness of Indian economy and favorable demographic trends a compounded annual growth rate of 7. Mexico & Germany.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 9.896 INR. China. INDIA – Important Trends in Indian Economy Moving its population out of poverty and generating huge demand.Given the substantial scope for continued productivity increases in Indian businesses. 2. 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.2. It will command 60% of the country‘s spending power.

5 9. 80+ 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 0. 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. assertive and risk takers generation. India will be defined as a country with self-confident.9 10.6 2.4.8 7.0 2.With 49% of its population below 24 years of age.6 4. The aggregate consumption in India will grow from 17 trillion INR today to 34 trillion by 2015 and INR 70 trillion by 2025.5 8. Rising consumption Rising income Multiplier effect GDP growth Rising production 5. Above-mentioned four factors combined result in a multiplier effect leading to an accelerated economic growth.11 Billion % Population 2011 16% between 25 – 34 years .9 49% below 24 years 9. 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 .8 1.1 1.5 5.5 6. Young and Home Maker India .Target Segment for Home Furnishing market 6.5 9. 16% of its population belongs to an age group of 25 to 34.2 9.2 Total Population: 1.6 8 10 12 0 2 4 6 As can we also see from the above chart.7 3.

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. decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction. Housing Market set for strong growth – a) The size of the overall real estate industry in India is estimated by FICCI. rising incomes. Almost 80 % of real estate developed in India. 2.lifecycle – Married Life. hotels and hospitals b) India possesses the elements of very strong demand growth on the housing market in the coming decades. following variables also have significant impact on Furnishing industry in India: 1.7% of the total household expenditures of India) INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 26 . Considering the needs of this age group that is to make new homes. Rapid population growth. this segment will be maximally responsible for the Home Furnishing product purchases. shopping malls. is residential space and the rest comprise office. to be around US$ 12 billion. 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. Other than the above-mentioned general economic and demographic trends.

V3. home furniture is the largest segment in the Indian furniture market. Millennium lifestyles.2. Industry Segmentation Application / Customer Segment Wise – As with the global market. Furniture and Handicrafts & Décor Industry in India 3. 20% Contract. accounting for about 65 per cent of furniture sales.1. Kian. Tangent. Renaissance. to name a few – Featherlite. 3. 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). According to industry experts. accounting for the remaining 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 27 . 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. Godrej and Boyce – 23% 2.1.3. the office furniture segment with a 20 per cent share and the contract Office. Furniture Industry 3. Dominant players in the organized sector with their respective market shares within the organized sector are listed below (also shown in adjoining chart): 1. Style Spa – 5% 3. As low as 10% (INR 35 billion) of the Indian furniture industry is the share of organized sector.1. This is followed by.1. 15% Industry Segments Household. Overview: Size of Indian furniture industry as estimated by the industry experts is approximately worth INR 350 billion. 65% segment. @Home.

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

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

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

India is one of the important suppliers of handicrafts to the world market. artistic. However. 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. Cheap and skilled labor. 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. culturally attached. Defining Handicrafts: Handicrafts can be defined as products. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 31 . The Indian handicrafts industry is highly labor-intensive cottage based industry and decentralized. creative. Lack of awareness of international and new trends and Poor Promotional campaigns are a few drawbacks of industry. Lack of Infrastructure & Technological support. Indian Handicrafts and Decorative Industry 3.3 billion is being exported. Such products can be utilitarian. Overview As it represents rich culture and tradition of the country. being spread all over the country in rural and urban areas. Indian Handicraft Industry has the status of cottage industry in India. functional. which needs to be overcome. According to one of the study. aesthetic. Numerous artisans are engaged in crafts work on part-time basis.2. Mechanical tools may be used as long as the direct manual contribution of the artisan remains the most substantial component of the finished product. Indian handicrafts and decorative industry has a unique place among all the industries. religiously and socially symbolic and significant. high ratio of value addition. some part of Indian market are still untapped and market is price sensitive. High potential for export and foreign exchange earnings and Flexible Production are few important features of Indian Handicraft and Decorative Industry. It has shown continuous growth at the rate of 15-20% over the years and contributes major role for export and foreign earnings. Handicrafts are made from raw materials and can be produced in unlimited numbers.3. Low capital investment.2.1. decorative. traditional. In spite of having diversified products. diversified product portfolio. but it has shown promising growth and evolved as one of the major revenue generator over the years. which are produced either completely by hand or with the help of tools.

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

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

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

1.00 92. Furniture Industry Value Chain Given the significant contribution of imports. Korea.00 160.79 CAGR = 64% 80. However. There is a segment of locally manufactured products. This increase can be attributed to factors like increasing demand for furniture. Germany.Over the 5-year period from 2001 to 2006. It can be available at both cheaper and higher prices in comparison to domestic furniture. Italy.00 Imported vis-à-vis domestic . furniture imports in India have grown at a CAGR of 64%.93 40. China and Malaysia tops this country list by contributing the most to the industry. Understanding the Value Chain 4.43 2005-06 2004-05 2003-04 2002-03 2001-02 0. 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.93 20.1.00 120. Furniture Imports in India (in Million USD) 152. Increasing income levels and influence of global lifestyle trends have also influenced many Indians to move towards imported furniture. Imports Trend .Imported furniture is India is present in all segments – Low Price to Premium priced furniture. the entire value chain of the Indian furniture industry can be understood under two broad categories:   Imported furniture Domestically manufactured furniture 4. Indonesia. which is of the same quality and better designs. fuelled by the boom in housing and commercial construction.00 58. Malaysia. Spain.4. The current furniture imports are mainly from China.1. Philippines and Japan. but it INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 35 .00 32.

At the same time. there are also some drawbacks associated with imported goods.the product life is quite short. 2. there has been decline in import duties on wood and wood products. In case of organized sector. The figure below summarizes the entire value chain of imported furniture industry in India. Franchisee Manufacturers Own Stores Distributors Retailers Importers Distributors Imports INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 36 . most of the manufacturers in the current scenario have some strength areas or competency in some specific product segments. Whereas in terms of availability. This category can also be termed as Traders. Value Chain for Imported furniture – In the current scenario. For furniture. there are market players who are solely into importing and selling furniture in India. There is a good demand for mass produced imported furniture as they could be purchased ―off the shelf‖ and. lack of reliability and responsibility in terms of after sales services. (for e. Because. could be used instantly. furniture is being imported by both sectors of the industry – Unorganized and Organized. these are 1. this rate ranges between 31 and 36 percent based on the type of furniture imported. Within the sector. Style Spa‘s focus is on bedroom furniture) therefore. Actually.g. for rest of the categories. Government does not allow FDI in single brand retailing for imported products in India whereas for the local products there are no such restrictions. the Indian government continues to reduce tariff rates from a peak rate of 300 percent in 1991 down to current rate of 31.is available at significantly higher prices. Importers – In addition to the above category. Current Import Duty Structure . there are two categories of suppliers who are responsible for furniture imports in India. Manufacturers – Some players are importing furniture along with their own manufacturing set-ups. imports are preferred.Wood product imports were liberated in India in 1995.70 percent on standard value of goods. Example . the local product is good in comparison to the imported products. Style Spa and Godrej are good examples. Since then.

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

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

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

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

000 square feet to 200000 square feet depending on various parameters like store location.4.000 sq ft to 25. In this category of retail. Furniture Industry and Organized Retailing India has seen a resurgence of Retail sector.Value. Example . 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 .4. large and small appliances.000 sq ft. 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 . however one product category is restricted to one floor only. clothing and many items. demand etc. Variety and Volume‘ is the latest trend. In terms of space. a unit of PRIL (Pantaloon Retail India Limited) is one such example. which carries an enormous range of products under one roof. space that is allotted to furniture as a category may vary between 15. 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. India has grown from the traditional Mom and Pop stores present here and there in the neighborhood catering to the convenience of the consumers. Through this format.Big Bazaar. These hypermarkets are typically multi storied. Emergence of organized retail industry has its impact on the Furniture Industry as well. The latter. with discounts offered to customers who are willing to carry heavy appliances and furniture out of the stores. Furniture Bazaar is the section of Big Bazaar that focuses on furniture. such hypermarkets in India are present in the range of 50. The result is a very large retail facility.1. The basic approach is bulk display and minimum handling by stores personnel. the customer segment that is targeted is the middle class of the country. Its product assortment goes beyond routinely purchased goods and includes furniture. which is largely dominated by unorganized sector in terms of supply. mostly follows modern formats as far as retailing to end customers is concerned.

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

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

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

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

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

Competitive Rivalry Today also. Factors like lightweight. Style Spa in bedroom furniture. who do not have a permanent residence and keep shifting their locations. That too. 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.5. Therefore. will prefer such options. plastic furniture has grown and taken a share in living rooms of most of the Indian households. each of these players still have a scope to expand to serve to the wide spread needs of the country  Growing Demand: Given the higher disposable incomes and other lifestyle related changes mentioned in the earlier sections. there has been a recent. Nevertheless. the proportion of Indian population that wants to buy branded furniture is increasing day by day.4. convenience. On the other hand. Threat of Substitutes There is no significant threat of furniture being replaced by other products as such. rapid and day-by-day increasing growth of the organized sector. a handful of players have mushroomed in the latter segment of the industry. 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. easy to maintain etc. the industry might also think of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 47 . These changes / new concepts can be:  Plastic Furniture: With time. 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. Durian in living room furniture. Especially those. However. to sum up. 5. can motivate the new and young homemakers of India to buy plastic furniture.1.1. Godrej in office furniture. For e. with 90% share. Considering this.g. Given this. unorganized sector takes away the major proportion of the overall Indian furniture industry.3.

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

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

small cities.5. 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. 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 . Indian Handicrafts & Décor Industry – SWOT Analysis           Large.2.

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

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

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

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

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

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

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

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

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

Ahmedabad INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 60 . it was a joint decision between me and my husband. SEC A2. purchase decision is made.4. 38. considering that furniture is a high value and long-term investment. sofa cum bed etc. type of wood – Husbands Decisions related to price / budget – Joint decision. in either case – be it homemakers or workers.Where to buy and What to Buy. husbands are the influencers and their influence matters to such an extent that the decisions can be termed as joint decisions. In addition. but in case of joint families.2. color. Finally. Based on the various factor considered and evaluation of alternatives. all three of us who went and bought it” – Housewife. functionality (bed with or without drawers/storage boxes. it is of critical importance to market it to the right person and from the right place. fabric (in case of upholstered).6. Depending upon the family composition. Purchase Decision This stage mainly includes following decisions . women of the younger generation take the decisions. if imported – which country. imported vs. Objectives of these focus group discussions also included identification of the decision makers. furniture purchase decision is mainly in the hands of the woman in the house. influencers and most preferred points of purchase. The roles can be divided as follows: Decisions related to design. These findings are as follows: Furniture – Given the fact that Indian homes are still a place to be managed under females. 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. For marketing any product successfully. 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. this role shifts accordingly. while elder women (mother in law) also plays a major role. the role is clear. In case of nuclear families. domestic.) – Wives Decisions related to point of purchase. equal role of both husband and wife “Last time I bought furniture. However.

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

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

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

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

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. So. Warehouses in Tier 1 cities. Perceived as a shopping destination of moderately affluent class of the society INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 65 . Better packaging. High Quality. following are the key recommendations with respect to the four potential market entry segments. Availability.7. 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 . Market Segments Key Take Out from the Market Study Middle class and Upper middle class are expanding. Customization Entry Strategy Distribution Route Target Segment Critical Success Factors However.1. How to Enter the Four Market Segments Based on above analysis of the Indian furniture and Decorative items industry. Recommendations for Thai Investors 7. Well – Established Brand Name. Either India is a complex country Household Furniture – High End Segment with cultural variations after every 500 Kms. After Sales Support. Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation. Thailand is seen as a country with a status quotient attached with its products. Exclusive designs. Strong Logistics Network. considered as a Household Furniture – Low End Segment price competitive country.

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

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

if any company wants to expand. which includes both office and hotels. the aim should be to cut on huge investments of establishing own infrastructure and enter India through imports route. Last but not the least. which at the back end is supported by its mother warehouses and twenty other small warehouses across India. logistics also play a very important role. For the home segment. There are some players. Indian furniture industry has now become a part of the fashion industry. 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. it is very important to make the right thing available at the right time. but logistically it is not possible for them to reach in all the parts of the country.(c) Office Furniture Segment – As mentioned earlier. Therefore. The challenge would be to do the same without adding to inventory or costs. In case of the commercial segment. the most critical factor will be availability . Thailand has a better option to play on volumes rather than value. In case of high value products as well. 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. Thus. this route of entry shall be more beneficial.to cater to India’s diverse customer needs and a spread-out market. For example. company needs to have its own warehouses at least in all the top six cities of India otherwise timely distribution becomes difficult. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 68 . Distribution Distribution or supply chain management is critical for furniture manufacturers for catering to both. Therefore.2. (d) Décor and Handicrafts Products Segments – Based on its positioning as a country with reasonable priced handicrafts and decorative products. where the affluent and high-income middle class of India resides. it should have a strong logistics network to expand. which have a strong regional presence and have good furniture designs. 7.1. The critical success factor in this case would be to make the product easily available in at least the top 20 cities of India. Such requirements can be taken care off by having appropriate and required investments in the infrastructure as well. Style Spa‘s one of the strength areas is availability of its furniture stores throughout India. the key requirement would be to ensure timely deliveries and satisfaction in terms of value for money. the home and commercial segments. Thus.

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

There is no need for macro-investment.7.2. Minimum efforts and investments Household Furniture – Low End Segment  required for market development (entry through JV and distribution through existing hypermarkets) and promotion. providing an opportunity to make good margins Increasing Affluence of Indian upper middle class. This ranking has been done based on the various criteria. Office Furniture  growing at a fast pace (20% CAGR). Market Attractiveness Along with the above-mentioned entry suggestions in the four product segments. customers are ready to pay an extra buck for better quality and designs. advantage in terms of volume. Huge demand but limited supply from organized sector Office Segment of India is in a booming stage. such as:       Industry Growth Stage Growth of Customer Segments Growth in Allied Sectors Competitive Scenario Potential Entry Barriers Scale of Investments required etc. Limited number of sector strong players in the industry. The findings of the above analysis are as follows: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base. Products Handicrafts & Décor Products  are present throughout the low value to high value added band. Household Furniture – High End Segment  Given higher disposable income. an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these. No strong industry player in this segment INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 70 .

8. which are not their exclusive stores. dining table and centre table with glass and metal we are again importing from China only o From Malaysia. Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 8.middle and upper .1. present in 145 cities across India   Style Spa and Zuari‘s combined last year (07-08) sales – 120 Crores Only manufactures bedroom furniture. dining tables) are imported – o Imports from Malaysia and China o Rough break up of sales – 65% manufactures. Annexure 8. present in all states of India o Similarly in case of Zuari.middle class of customers 71 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY . Similarly. style spa is importing chairs and dining table made from rubber wood. 65% of their business comes from Bedroom furniture Strength of Style Spa – its nation wide presence o With 90 style spa showrooms. Style Spa Company Profile        Indian furniture products limited is manufacturing company and Style Spa limited is the marketing company Is one of the largest manufacturer and pioneer in panel based furniture Manufacturing facility is 14 kms from Chennai Company owns 90 exclusive stores which makes it the largest chain of furniture showrooms in India Also sells furniture under the brand name of Zuari through dealers.  Style Spa as a company targets middle . living room furniture (sofas. Style Spa positions itself as Bedroom Furniture Company. 35% imported o Half leather and full leather sofas we are importing solely from China.1.1.

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

Little bit from Taiwan.3.1. Office chair. Durian offers different customized options depending upon the regional preferences. Conference table and Book Shelves Household category – Almost all types of household furniture. decorative veneer 1998 onwards Durian is in furniture trading Import furniture from Malaysia.chairs. 3+2+2 for Delhi. Italy Also into manufacturing – only for some categories of furniture . However. China. By this route. Depending upon the gap of demand and supply (furniture already available in warehouse) import / manufacturing decisions is taken. modular workstations Last year (2007 – 08) – Approximately 100 Crores In case of office furniture. mainly Thailand and Malaysia. Out of 43. For e. Material that is imported is stored in warehouses and then distributed to showrooms all across India. most of the players have a set pattern of selling 3+1+1 sofa sets. Durian has project offices in all the major cities like Delhi. Hyderabad and Bangalore. 30 are owned by Durian. Durian mainly caters to the needs of the individual customers. these dealers are authorized exclusive dealers. Durian         Durian is mainly into manufacturing of plywood.g. Spain. Some INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 73 . Orders are generated in these project offices and their demand is communicated to Mumbai head office. Dealers own remaining 12-13.8. PVC doors. and they cannot sell other brands. Spain and Italy Two types of Distribution Channel o Through retail showrooms – 43 retail showrooms of Durian are present across India. o Project sales – This model is mainly to cater to institutional customers. Thailand. strong in leather sofa category Actually in case of sofa sets. Durian has limited presence – Office table. 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.

2 lakhs sqft area) in palgaon (100 Km from Mumbai). There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi. Orders from different showrooms come to the central warehouse through their ERP system. part is imported (depending upon demand of the project). Then as per the orders.   Durian‘s target market .of the material is manufactured. anything related to home décor INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 74 .upper middle class . Accessories like table lamps.Families with at least Rs 40.000 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.  Durian has a main/central warehouse (2. table stands.

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

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

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

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

Eagle Thermoware etc. kitchenware. Tupperware. The organized plastic container market has few major players who are Hamilton Housewares Pvt. They want quality products. Plastic Container Industry in India The consumer plastic goods industry includes household ware. The kitchenware. tableware and household products contribute around INR 15 billion to the revenues of the total consumer plastic goods industry (according to Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003). However.2. E.. which are leakage proof. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of consumer plastic goods. The changing preference of people for using plastic containers for storage purpose in turn is promoting the growth of this industry. 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. airtight and aesthetically appealing. with the increase in gifting trend amongst Indian consumers & growing number of hotels / restaurants.The major sets of customers in tableware are domestic consumers & institutional consumers (hotel/ catering & corporate players). purchase of products in these categories is expected to rise in future. Cello. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 79 . and molded furniture. writing instruments. Ltd. The domestic consumers at present occupy the largest consumer base for products in this category. Pearl Pet. molded luggage.

they should optimally utilize all the available channels for distributing their product i. through company‘s own stores. thereby enabling the growth of this industry. 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 . through multi-brand outlets & retailers with minimum number of intermediaries in between to ensure presence across all geographies. Also.Plastic Container Industry can be segmented as Storage Boxes  Thermoware  Dine ware The plastic container industry is growing at the rate of 12-15% with the increasing storage requirement of people and preference for more aesthetically appealing containers rather than stainless steel containers due to modular kitchen concept coming in place. reach to maximum number of customers possible and to save on cost.e. In case of institutional players. 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. 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. Value Chain for Manufacturers – The tableware & plastic container industry in India follows a similar value chain model.3.3. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion. In order to minimize expenditure at each level of the value chain. E.1. Value Chain – Tableware & Plastic Container Industry E.

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. after analyzing the tableware industry in India. through retail outlets or directly sell to customers. Existing competition & substitute products pose medium threat to the tableware industry. Tableware Industry The tableware industry is affected by existing competition.1. Customer Imports Importers / Super Distributor Retailer Distributor / Dealer Customer Retailers Customer E. variety & changing preference for purchase of lifestyle goods. However. it can be inferred that there are small number of players in the organized tableware market. They may sell the products through various channels like through a distributor/ dealer. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 81 .2.3.e. the major target segment i.4. Thus.4. whereas the unorganized market is highly fragmented. Thus. new entrants who would be entering this industry and substitute products. Industry Analysis E. for a new brand to establish its name in the Indian market. 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. However. The major threat posed to tableware industry is from new entrants due to the attractiveness of this industry.E. who are posing threat to an investor in this industry to varying extents. Value Chain for Importers – Importers or Super distributors in Indian tableware & plastic container industry can be exclusive distributors or multi-brand distributors. middle & upper middle class prefer to purchase products from the organized market due to better quality. supplier & buyer bargaining power.

Functionality. which can help to boost the production in the future. with the increase in number of family members and when they need to replace the old tableware. newspapers. there are access capacities available in the Indian market.This is because of the rise in number of working women. o In plastic storage containers. most of the purchases are impulse in nature and also depends upon the increasing storage requirement. word of mouth from family or friends are the most common sources of gaining Alternative Evaluation o In tableware. the products are evaluated based on the following parameters. 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. Aesthetic Appeal. the amount of investment required to start the business in this segment is low. E. Aesthetics INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 82 .. Also. the products are evaluated based on the following parameters . increasing disposable income of people & preference of people for branded & good quality plastic products which attracts new entrants. It can also be purchased for gifting purpose. which will be good for the future prospects of the industry.5. Maintenance o In plastic storage containers.Quality. Information Sources o For both these product categories. Variety. magazines. Also. 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.2.4. Many players in the medium scale industry are also selling branded products. These factors attract foreign investors to venture in this industry. Brand. Variety. Consumer Insights Key consumer insights. trade fairs/ exhibitions.E. Quality. Hygienic. They may also purchase for gifting on occasions like Diwali or Marriage in the family. Price.

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

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

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

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

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

overall population growth. more than 35 percent of the capacity is in Asia – pacific region and around 28 percent of the capacity is in the North America. a good global economic climate and ongoing substitution processes in favor of plastic have combined to foster steady expansion in the sector. Out of this. Western Europe contributes to around 21 percent of the entire capacity.2. Currently.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. five HPL supported FIBC units exported 7 KTA worth goods annually.8 percent of the chemical output. 9.5 percent per annum. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 88 . the global capacity for polymer production is around 170 MMTA and is growing at a rate of 10. For many years now. Based on Frost & Sullivan‘s Report -2003.9.3 MMTA out of which polyolefin form 89.2. There are tremendous capacity expansions that are happening for polymers all over the world. The demand for Polyolefin is growing at an even faster rate of 5.6 percent per year. At present. Plastic has occupied a major role in the lifestyle of the 21st century.04 MMTA. The demand for the major polymers is growing at a rate of 5.2. Global Plastic Products Industry 9. The global demand for polymers is 139.The estimated demand from the US alone (for plastic food containers) has been estimated to touch as much as $21 billion by 2009. These three regions form the major polymer production regions of the world.6 percent of the entire chemical output and polyolefin output is US $ 61 billion that is 3. This gives us an idea of the size plastic industry and the significance that it holds in the global scenario.1. This becomes even more significant when the global polymer industry is growing by almost twice the rate of the global GDP. the firm predicts. Commodity plastics contribute US $ 90 billion that is 5. Plastic Industry The global plastics industry is marked by dynamic growth with both quantity and quality aspects helping boost the upswing.2 percent annually and polyolefin alone make up for the 63 percent of the entire polymer industry.

In the organized market.1.1. there are both domestic players like La Opala RG Ltd.10.2. Art d‘Inox as well as multinationals like Corelle. Magppie.1. the organized market is growing at a much faster rate than the unorganized market.The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market... *The Financial Express – June 2007 10. Industry Segmentation The tableware market is classified according to their application & raw material being used for their manufacturing. 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. who are a part of this large chunk of market size. Overview . Graph: Percentage share of the organized and unorganized tableware market in terms of value The organized market is 8% of the total tableware market in India i.1. Tableware & Plastic storage containers Industry in India 10. Luminarc etc. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 89 .4 Billion including domestic manufacturers & brands imported from abroad which are sold through organized retail channels. around INR 2. Bharat Bone China Ltd.e. Tableware Industry 10. RAK Glass.

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

Based on the responses of a senior manager in the organized steel tableware with matte finish . it is difficult to predict the share of stainless steel tableware in the total table ware market.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 .15 billion in the overall tableware market  Total market for opal ware is INR 6 billion in the overall tableware market .2.1.10. 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. 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. Hence. 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. market size of each category in India based on the material used can be predicted.

Also.Glassware has the largest market size in terms of value in the Indian tableware market. the customers can be classified in two groups. 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.1. Domestic customers Vs. This is because glass wares are available in variety of designs. Ceramic ware comprising of crockery and tableware is produced both in organized and unorganized sectors.3. opal ware which is unbreakable in nature is preferred by most of the consumers for domestic purposes as well in hotels / catering. Bone China crockery ware is being imported from Bangladesh and Sri Lanka in view of the better availability of raw material there. There are 16 units in the organized sector in India with a total installed capacity of 43. Apart from these two categories. the corporate customers include a majority of Pharmaceutical companies.4 Billion INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 92 . 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. 10. exports also form a major proportion of the total sales for all the manufacturers. can be used in microwave as well as for serving and are used by most of the domestic as well as institutional players. Customer classification According to the usage of tableware.000 tones per annum.

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.5. The fastest growing category is beverage range.4. there is a huge market for new players to enter this industry through proper marketing & sales network.Presently. in Opal ware Yera in Glass ware Bharat Pottery Ltd.1. where tumblers are the most fast selling items.1. Thus. Major manufacturers in India The major domestic manufacturers in India for Tableware according to the material used for manufacturing are:      La Opala RG Ltd. in ceramics & stone ware Art d‘inox in steel with matte finish Magppie in steel with matte finish 10. 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.

T.980 hotels approved and classified by the Ministry of Tourism. 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. ITES.76 billion by 2010 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 94 . Increase in per capita income with the growth in I.a. 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. Government of India. with a total capacity of about 110.000 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. o The current market size of luxury-very premium goods and services is INR 840 Billion which is rising at 16% p.a. according to KSA Technopak  Increase in Hotel & Catering industry o There are some 1.. 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. and is expected to reach INR 826.5 trillion rupees ($1.

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

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

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

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

molded furniture.7 49. molded luggage.2. Kitchen ware.3 Growth Rates 10 25 20 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 99 . 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. Within this market. and kitchen ware by US totaled $ 1000 million in 2002. Almost 50 percent of the plastic manufacturers have some operations in this particular category. Plastic Containers Industry in India 10. tailoring materials.0 9.10. personal care products. Table ware & Household products Total Source: Frost & Sullivan . Toys. revenues. household ware and kitchen ware is the largest segment both in terms of domestic demand and the export potential from India.1 Overview Based on Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003. At present.0 13.000 to 30. The Indian plastic processing industry possesses strong capacities and capabilities in these segments. gift articles and novelties.2003 KTA 150 140 40 190 520 Size in revenues in Billions 12. and the respective growth rates for 2002 Categories Molded Luggage Molded Furniture Writing instruments Kitchenware. Writing instruments.2. 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. Consumer goods include Household ware. Consumer plastic goods account for approximately 15 % of the market. Writing instruments and travel ware are other promising segments having a potential to generate export revenues.000 plastic processing units in the country.6 14. Plastic is one of the fastest growing industry segments in India. and personal care products. etc. The total imports of household articles. Given below is the break up of the following consumer goods in polymer consumption. there are 25.

They want quality products which are leakage proof. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of Consumer Plastic goods. With changing preference of people for using plastic containers for storage purpose is promoting the growth of this industry.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. Organized Vs. Unorganized tableware market in India 42% Organized 58% Unorganized *Based on the responses of a senior manager of an organized player in plastic container market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 100 . The plastic products industry comprises of storage boxes & thermoware containers. air-tight and aesthetically appealing. 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.

water storage jugs etc. 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. jugs. flasks. They are multipurpose boxes and hence used for cooking. Mugs STORAGE BOXES used in kitchen.  Refrigerator & freezer boxes – These are air tight & liquid tight boxes. Rice.  Storage Canisters. hot pots. salads. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 101 . Wheat.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. Dry Fruits etc. Pulses.10.2.  Microwavable boxes – They can be used for heating and cooking food items in microwave.These are large sized boxes. jugs.. used for stocking dry food items like pulses etc. which are primarily used for storage of fruits. juices etc.  Food Preparation boxes – They can be used for preparing food items like shakes. which are perishable in nature. mixing bowls etc. Dine ware – This includes bowls. For e. bottles.g. vegetables. storage and serving purposes.

3.2. Also. it is during the last 1.2. Tupperware Pearl Pet Eagle Thermoware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 102 . Major manufacturers in India The major domestic manufacturers in India for Plastic containers are:      Cello Hamilton Housewares Pvt.5 years that the volume of import has grown from Thailand within the plastic container category. However. 10. the customers can be classified in two groups.1.The level of imports for these storage boxes used in kitchen is increasing at a fast pace. Ltd. As per the views expressed by a retail giant in household product category in India. Customer classification According to the usage of tableware. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion.4. 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. exports also form a major proportion of the total sales for all the manufacturers 10. 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. they are already importing plastic storage containers from Thailand for last 4-5 years.

10. 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 .2.5.

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

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

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

they should create a brand image in the minds of consumer about the benefits being offered by their products over other similar products. Critical Success Factors for Plastic storage containers A well-connected distribution network Focus on ―Leakage proof. They should have a large presence across all the regions in India. air tight & aesthetically appealing‖ products Targeting domestic as well as institutional customers for freebies CSF Creating a Brand Image Knowledge of needs & expectations of target customers Trained sales team to create awareness amongst customers Based on the above-mentioned critical success factors. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 107 . Also. They should have a trained sales team to promote their products rather than spending much on advertising. They should target working women for this product category. it is very important for a new entrant that their products are different from the ones offered by existing players.2.8.10.

1. They are importing brands like Luminarc. the duty paid is half of what is paid in case of imports from other countries. Crystal D‘Arques. Paris. RAK Porcelain etc. In case of SAARC countries like Pakistan. Thailand and many others. Corelle. Major brands being imported in Indian tableware market        Corelle in Opal ware Milton Treo in glassware & opal ware RAK Porcelain in ceramics & porcelain Luminarc in opal ware Noritake in ceramics & porcelain Crysal D‘Arques Paris Other Chinese brands INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 108 . state local taxes are charged at 12 % based on the states where it‘s sold.. either single brand or multiple brands from several countries like China. Tupperware etc. Iran. In order to import products in this category importers have to pay import duty 11. the major players which are importing consist of Lock n Lock. In both these categories. they have to pay custom duty for importing the tableware & plastic products (containers & storage boxes) from abroad. In case of plastic containers & storage boxes. Overview In case of tableware category.11. 11. For products that do not fall in the FTA. there are players like Shubhda Impex. Sri Lanka. World Kitchen. Apart from custom duty.2 Current Import Duty Structure Players importing products in India from other countries. Sri Lanka. Imports structure in Indian Tableware & Plastic containers market 11.3. are not facing any barriers at present. total duty paid by importer is 30% (Basic Duty + Additional Duty + Educational Cess) of the purchase price. who are importing products in tableware category. total custom duty can be as high as 50 % of purchase price. RAK Glass etc.

Manufacturers & importers follow the same import procedures. China etc. 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. In addition. 11. & 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. similar items can be co-branded and sold. 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. import products from Italy.11. however. they might also import products from countries like Europe.4. Players like Cello have tie-ups with Italian brands like ENJOY manufacturing the products in India under Cello‘s brand name through licensing agreement. 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. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 109 . Manufacturers in plastic products category like Cello & Hamilton.5. Thailand. 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).

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

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

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

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

S. those dealers who achieve higher sales target. summer season etc.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. Italy. U. Regularly export to more than 60 countries including U.. Thus. Germany..e. 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 . 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.A. Japan etc Outbound Logistics –     They sell it through distributor network who then sell it to the retailer For organized retailers. they directly sell through the factory They have 90 exclusive distributors in this product category throughout India. Services –  Availability is a major concern in this business.

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

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

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

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

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

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

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

it is very important that the new entrant specifies & communicates about the quality they are offering. should be employed on occasions like Diwali etc.15. exhibitions etc. in order to successfully position the brand in consumer‘s mind it is important that proper mix of brand name. service standards. Also.  Inbound Logistics & Operations – After having tie-ups with the existing players in India who are manufacturing products similar to the positioning of the products manufactured by a new entrant. in order to reinforce this image in the mind of customers. it is easy to utilize the technical know-how of the existing manufacture as well as their patent/ trademarks. in order to establish the brand image of its product. packaging and the way in which it is delivered is employed. schemes like scratch card. Also. raw material acquisition would be easier from the existing suppliers in the Indian market. Also. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 125 . Thus. product guarantees. image.6. 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.7.V.. proper mix of advertisement through print media. should be employed. T. Brand building & Promotion In order to build a brand in a new market. discounts etc. For an investor in the tableware & plastic storage containers market in India. how it is different from others & establish an image of credibility in the minds of consumer. 15. 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.

Annexure 16. Also. they can utilize multiple channels of distribution – Retail.1 La Opala Company Profile  The Jharkhand plant of La Opala has a capacity to manufacture 3. Thus.1. Profile of major players in tableware category 16.1. Outbound Logistics – The new entrant can utilize the warehousing facility and distribution network of the existing player in the tableware & plastic storage containers market. Direct Selling & Exclusive Outlets and expand the distribution channel based on the demand of people across various regions in India.com  Service – The products if offered with some guarantee or replacement warranty for a fixed period of time. 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.V.500 tones per annum of opal glass tableware and 1. they need to educate the customers about the differentiating features of their products and benefits they offer to the customers.They can utilize the existing network along with the establishment of new methods of marketing like direct marketing as employed by Tupperware. Also. on channels emphasizing on family shows and through web-sites like ebay. Thus. 16.  Marketing & Sales .600 tones per annum of crystal ware under the brand name ‗Solitaire‘ INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 126 . advertising on T. 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.

For institutional sales.3000 o For upper middle class. From distributors.V. the product goes to dealers / retailers. Beverage range is the most fastest growing category amongst dinnerware. discounts etc.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. they directly pitch in for customers.a. 16. 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 .       Another plant at Uttaranchal has production capacity of 4. They also have consumer schemes like scratch card.2 Yera Company Profile INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 127 .e. INR 400 million are into dinnerware & INR 200 million into beverage & bar range They are growing at an average of 20-25% p.INR 2000 – 4000 o For higher class –INR 1000 for six glasses ( crystal ware)   For selling their products in institutional segment . their last year sales were INR 600 million in the domestic market & exports worth INR 1.      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.4 Billion Out of total sales worth INR 600 million. they target pharmaceutical companies & five star hotels They have a total of 85 distributors (multi brand) in the country.1.

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

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. Haryana They manufacture around 4.000 units per month They are into the manufacturing of tableware . serving ware . home accessories & office accessories They use steel with ceramics.4. they have a sales team They also have tie-ups with multi brand outlets like Shoppers Stop.   They are growing at the rate of 15-20% per annum where ceramic tableware industry is growing at the rate of 5-10% Out of the total sales of Bharat Pottery Ltd. 85% is sales in domestic market where as 15% sales come from exports In the domestic sales. where 55% are domestic customers . 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).. magazines and introduce promotional schemes to attract customers 16. They give advertisements in newspaper. Pantaloons etc. For institutional sales.00. glass . Big Bazzar . Art d’ inox Company Profile          Their manufacturing facility is located at Rohad . INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 129 .1. 85% consist of dinner ware & 15% consist of beverage range .

Magppie Company Profile    Their manufacturing facility is located at Kundli .a. Dining & Barware are the fast growing categories whereas Décor is a slow growing category          They are presently growing at the rate of 35% p. Nonstick Cookware items and Toothbrushes INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 130 . they initiate special offers for customers 16. Writing Instruments. shop -n-shop model where dedicated space in an outlet is provided to Magppie For channel sales i. to multi brand outlets . barware.a. they sell through distributors They promote their products through advertisements in print media.1 Cello Company Profile  CELLO Group are the manufacturers of Thermoware.5. Also. Haryana They have a turnover of more than INR 1250 million They are into the manufacturing of dining.e.2. Profile of major players in Plastic storage container category 16. 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.. through PR activities & CRM. décor.1. 60% comes from exports & 40% from domestic sales Presently. Plastic Moulded Furniture.2. For institutional sales. they have a sales team to directly pitch in for corporate who purchase their products for gifting & five star hotels 16. They are targeting upper middle class & institutional players Price range for their products start from INR 700 – INR 75000 Out of their total sales. Vacuumware. whereas industry is growing at 15% 20% p. exclusive boutiques. beverage range. tabletop accessories. Household Plastic Items.

Lunch boxes.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. they directly sell through company warehouses They have 90 distributors who are exclusive distributor in this product category through out India. which is innovative.2.plastic . breakthrough product .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. 000 – INR 0.Thermi Guard. 70%. Polypropylene & High tensile strength plastic as raw material The present sales turnover of CELLO has reached INR 3. giving Cello an edge over rival products They use Polycarbonate . with latest molding machines and excellent infrastructure Cello has developed the unique.2. 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 . protective shield. They tend to avoid intermediaries & are planning to increase the number of distributors by adding on 100 distributors in next 1 . 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. Dry storage boxes . Tupperware Company Profile    They have their manufacturing facility in Hyderabad They offer products in plastic kitchenware which are classified as. but in metro's they have 2-3 distributors /city.) and one in Pune.         Cello has seven up-to-date manufacturing units in Daman (U.T.5 billion They are targeting middle & upper middle class to high income group having income class of above INR 25. They have a distributor after every 100 kms.1 million per month Their products percentage break-up is 30% .

school activities for students who use lunch boxes most often. 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. They source their products from distributors.   For institutional sales . they have a direct selling team in the company For promoting their products. insulated and non . Vacuum flask. tubs etc.      Milton's world-class plants in Pune.    Clear plastic products are more expensive. women who join as a consultant and after appointing six more consultants in their team. Water Jugs. loyalty club for consumers who want to keep in touch with what is going on in Tupperware 16. Water Bottle. containers.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 . They are already using F.insulated Tiffin. they become managers. & 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. upper middle class & higher income group of annual income of INR 0.M and undertake several below the line activities like kiosks in malls.2.e. Whereas cloudy plastic products are less expensive and fast growing category Their products are priced in the range of INR 145 for a container to INR 2500 for a dinner set They are targeting SEC A & SEC B women in the age group of 25 year onwards They have a direct selling team i. they do advertising in women magazines and are venturing into TV. hence they are slow growing category. buckets. Soft thermoware items & regular household items like trays. they target another segment of people i.3.e.

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

Mode of Pricing and INCO TERMS While finalizing the terms of import contract. Under this Act.16. To avoid ambiguity in interpretation of such terms. 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. These terms thus represents the minimum obligation for the seller. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer.2. the Government of India has liberalized the Import Policy and practically all Controls on imports have been lifted. 16. coffee and cocoa. Import Legislation in India With the globalization of the Indian economy and consequent upon comfortable balance of payments position. For import of items appearing in the restricted list you.3. Paris. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 134 .3. 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. need to secure an import license. As regards mode of pricing. has give detailed definition of a few standard terms popularly known as 'INCO TERMS'.3.1. It is mostly used for sale of plantation commodities such as tea. A large number of Consumer goods are freely importable without license. The importer for his benefits should know the meaning of the technical terminology. not appearing in Prohibited list or restricted list can be imported freely without any import license. the overseas suppliers normally quote the terms prevailing in international trade. Principal Law & Import Export Policy Principal Law Imports in India are governed by the Foreign Trade (Development & Regulation) Act 1992. the Importer. Importers need an Importers/Exporters Code Number from the Directorate General of Trade in order to be able to import 16. In exercise of the powers conferred by the Foreign Trade (Development & Regulation) Act 1992 items. International Chamber of Commerce. imports of all goods are Free except for the items regulated by the policy or any other law for the time being in force. should be fully conversant with the mode of pricing and the manner of payment for the imports.

3. 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 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 . contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight. 1975. 16. The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. Cost and Freight (C & F) The seller must on his own risk and not as an agent of the buyer. 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'.3. 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. 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. free of cost to the buyer at a port of shipment named in the sales contract.Free on Rail (FOR)/Free on Truck (FOT) These terms are used when the goods are to be carried by rail. but they are also used for road transport. the risk is already transferred to the buyer at the port of shipment itself. Customs Duty Customs duty is levied under the Customs Act. The rates of customs duty are laid down in the Customs Tariff Act. '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. 1962 on the import of goods into India. The seller's obligations are fulfilled when the goods are delivered to the carrier. the seller's obligations are fulfilled and the buyer notified. This being a shipment contract. The buyer has to bear all costs and risks of loss or damage to the goods hereafter.

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

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

Report on Furniture Industry in India. Industry Associations a) EPCH – Exports Promotion Council for Handicrafts. IBEF Report 3. Chennai 6. EPCH Country Study. Frost & Sullivan Report INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 138 . Indo Italian Chamber of Commerce. Bangalore Secondary Research Sources 1. USA. Delhi (2) 2.Imports 3. The World Furniture Outlook. These were conducted across following cities 1. 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. Mumbai (2) 3. Ahmedabad 5. Furniture Market and Opportunities. CSIL Report 4. Hyderabad 7. Frost & Sullivan Report 5. D&B Report 6. Market feasibility study and Business development plan for the Handicrafts sector. India 2. Kolkata 4.

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