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.

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

-1-

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:-

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

-2-

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

............ Furniture Industry Value Chain .... 11 E....................................3............................. INDIA – Important Trends in Indian Economy .........2.. Segmentation – Exporting Nations .........1............................... 13 E.............................................................3.........27 3.1........1....................................................... India – a preferred destination for International Business ........................2................................ 20 1................................TABLE OF CONTENTS MODULE 1 – Furniture & Decorative Items Industry of India Executive Summary ................................................................ 18 1.............. Overview ........18 1..................................................................................................................................................................................1.................. SWOT Analysis of Décor and Handicrafts Industry.... 11 E............................ 27 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -4- .....................1...........................5... Furniture and Handicrafts & Décor Industry in India.....................................7......................................... Understanding the Value Chain of Furnishing Industry..2.................2..........................5......1.................................24 3................................................................... Recommendations for Thai Investors .............2.........2... Global Crafts and Decorative Industry .......................................................................2........................................................................ Major Exporting Nations ..2..........5.............. 21 1........ 21 1..................................................................................... Décor and Handicrafts Industry Value Chain ........ 16 1................. 13 E.... 15 E........... Furniture Industry in India............................................... 18 1............ 27 3.............................4............... Furniture Industry . 23 2....4.............................................11 E........................... 21 1.....1.................. Global Furniture Industry .............................1............. Furniture Industry Analysis...........2......................................................................................1......... Global Furniture and Handicrafts & Décor Industry ..... Overview: ..... Major Importing Nations ...................4......... 14 E....................... 14 E..........................1......... 13 E................... 14 E................................................. Overview: ............................................................ The main furniture exporting countries ............................................... Consumer Insights .....4........2.......... 12 E... 22 1.......... Industry Analysis ...............................................................................1...................6.......................................................... Indian Décor and Handicrafts Industry .............................................

.............52 6...........................1....................1.......2... Indian Handicrafts & Décor Industry – SWOT Analysis .......1..................1............................................... 48 5............................ 45 5..... Bargaining power of Customers ......................... 41 4......3.......... Competitive Rivalry .......................1............... Industry Growth Trends and Forecasts .....4................................................................................................ 34 4................................................ Threat of New Entrants...........2..............2......... 35 4....... Distribution Structure .......2...... Information Search ...................................... Consumer Insights .........................4............ 30 3...................................................................................................2........................................... 38 4........................... 29 3... Furniture Industry Value Chain ...........................................2..................................... 43 5........ 32 3............... Handicrafts & Décor Products Value Chain ...................... 47 5...2............................................................................... 57 6.......... Classification / Segmentation of the Industry: ............................................................1.......... 35 4.. Evaluation of Alternatives ..... Purchase Decision Process – An Introduction .....1...........................................3..........4........................................................ Domestically Manufactured Furniture...........1...............2...................................................................................................... Indian Handicrafts and Decorative Industry ............1............1........ Threat of Substitutes ........................ Problem Recognition / Need Awareness Stage ................................................................................................ 31 3........2........................................... 53 6........ Industry Analysis .................................................................................... Understanding the Value Chain ........... 27 3.................................................................... 46 5.. 31 3.................... 47 5.........................................................2......................................1...............3.. 37 4............1.2.... Purchase Decision......35 4... Key Demand Drivers of the Furniture Industry...................................... Bargaining power of Suppliers ........1.... Indian Furniture Industry Analysis – Five Forces Model ..4...........................................1... Handicrafts Clusters in India ....2............................................................................... 60 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -5- ... Imports ....................... 33 3...........2...........3...................................3...........4.... Challenges in the Indian Handicrafts and Décor Industry ............. 52 6.................................45 5.................1...........2.............. 54 6...... 46 5..........1...........1............................. Respondents Profile ..................................................2............................................ Overview ........ Industry Segmentation ...............................................................3.........................................................1........... 50 6.2...........................................1.................... 55 6................................2............. Furniture Industry and Organized Retailing ...........................5...........

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

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

-7-

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

-8-

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

-9-

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

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

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

4. The channel flow across these two categories is summarized in respective charts below. 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. Understanding the Value Chain of Furnishing Industry E. lack of awareness of international and new trends and poor promotional campaigns are a few drawbacks that need to be addressed. The most popular channel for distribution of the more Small Retailers Large Retail Chains  Stock in bulk  Sell to final consumers or small retailers Final Point of Sale traditional. 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.1. 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.2.4.4. internet has emerged as a major distribution channel for décor items handicrafts items INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 13 . 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. E.of infrastructure & technological support.

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

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

Availability. Product Exclusivity. Perceived as a shopping destination of moderately affluent class of the society Office Space in India is growing rapidly. Exclusive designs. attractive and ethnic products in the handicrafts and décor industry Joint Venture / Medium Scale Firms Direct Selling and Marketing Tie ups with Builders and Architects Service Industry (IT and BFSI Sector) . Large Volumes.Mid Size Offices Handicrafts & Décor Products Imports Buying and Selling Agents. Thailand is perceived to be price competitive Thailand  Positioned as a country with delicate. through wholesalers Middle Class Large Product Assortment. Better Packaging. Well – Established Brand Name. Timely Delivery.E. Better packaging. will grow at 20% CAGR in coming four to five years Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation. considered as a price competitive country. Strong Logistics Network.7. Recommendations for Thai Investors The recommendations for the identified four potential market entry segments can be summarized as follows:-. High Quality. After Sales Support. Warehouses in Tier 1 cities. Ethnic / Culture based Positioning INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 16 . Thailand is seen as a country with a status quotient attached with its products. Customization Household Furniture – Low End Segment Imports Tying up with existing Retail Chains – Hypermarket Format Middle – Middle Classes Competitive Prices. Warehouses and connectivity through strong Logistics Network.middle and Upper middle class ready to pay extra to ensure durability However. 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 . 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.

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

12% U.6% 22.S. Canada and France) together produce 50% in value of the world total. The seven major industrial economies (which are.5% 24. Overview: According to the CSIL‘s (Centre for Industrial Studies) ―World Furniture Outlook 2008‖ report. measured as the ratio between This imports increase and is consumption. Furniture production in emerging countries currently amounts to 35% of the world total in value.9% phenomenon of the past decade is the increased degree of openness of the furniture markets. reaching 25% in 2001 and almost 30% in 2006.1. Germany. 3% Emerging Countries World Furniture Production Other Emerging Countries. where production is increasing rapidly. in order of furniture production.1. The opening of furniture markets over the past Ten Years The most important structural Imports/Consumption Ratio 35% 30% 25% 20. China and Poland.. 3% Developed Countries of the world total.3% 24. 4% U. Italy. 15% France.1.. the United Kingdom. 21% India. It is now leveling off and it is estimated that in the next few years it will remain at a level of about 30%. 3% Canada. Japan. providing the most important stimulus to world furniture trade. The furniture production of all developed countries combined covers 65% Other Developed Countries.K.5% 26. particularly important in the United States.7% 30.8% 28. 8% China. 3% Italy. the United States. Global Furniture Industry 1. 7% Japan. Growth of the imports/consumption ratio has been rapid. 3% Poland. 18% Germany. where the trade deficit for furniture was almost US$ 22 billion in 2006.2% 20% 15% 10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 18 .1. world production of furniture is worth about US$ 307 billion. There are two countries.0% 29. Global Furniture and Handicrafts & Décor Industry 1.3% 29.

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

Italy moves from first to second and Poland from eighth to fourth. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 20 . 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%.S. China moves to the first position becoming the leading exporter. 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. however.2.3 billion in 2007 (preliminary) in current dollars. Poland and Canada.6 billion in 1997 to US$ 25. Italy. with imports growing from US$ 8. Vietnam and Malaysia. The U. Other major furniture exporting emerging countries are Poland. are number one furniture importing country on a world scale.1. About 52% of exports come from developed countries. 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. Percentage breakdown by geographic area in 1997 and in 2006 was also studied. Canada and Mexico. Germany.1. The main furniture exporting countries The main furniture exporting countries are China.

2. the market is becoming highly price competitive in the low and medium value market segments. account for 77. which include countries such as USA. which result in shorter product cycles. product requirements and standards. and raw material. United Kingdom.2. Germany. manufacturing processes.5% of the total world imports of crafts and decorative products. Currently. As a result. This has enabled a country like China to leverage its inherent strengths like availability of abundant and quality labor. Hong Kong. The rising levels of consumer disposable incomes together with the tendency to accessorize and re-style homes with unique articles are the major driving factors for the surge in demand for crafts and decorative products. Overview Driven by positive changes in major markets like USA and Europe. which have been doing well on basic factors of production like labor and raw material. However. Japan.1.8% of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 21 . As a result. France. are now exposed to sophisticated designing.4% of the total imports followed by UK which accounts for 7. prone to impulse purchases. these countries. which are usually machine made.2. Global Crafts and Decorative Industry 1.3% of the world imports. Major Importing Nations The top 10 markets. Canada. the market is more oriented toward fashionable products and hence. Another significant change is the surge in contract manufacturing arrangements between EU and Asian countries like China. Despite the fact that it is a highly competitive market. the demand is more for low price products. to become the single largest exporter with a market share of about 30% in the total world exports.1. Exporters are at their best in delivering products low price products that match consumer preferences. Hong Kong and Taiwan. Belgium and Spain. and consumer preferences.2. USA is the largest importer accounting for 32. Increases in population and multi-ethnic composition are other factors that make this market attractive. Germany is the second largest importer and accounts for 8. technology. the world crafts and decorative market has been witnessing a good growth from 2001 onwards. 1. it continues to remain the most attractive market because of the sheer purchasing power and stability of the market.

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

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

Mexico & Germany. Brazil.Given the substantial scope for continued productivity increases in Indian businesses. with a CAGR of 5. To be precise. Considering the fast growing and barely tapped middle class market. India has now become one of the most favored destinations for international businesses to expand. UK. Tripling Indian Incomes . India has undergone tremendous economic development in last few decades. with an exception of China. 3. India will create a sizeable and largely urban middle class.3%.50% 1% 2% 4% 6% 8% 10% between 2012 and 2014 to become the third largest. It will command 60% of the country‘s spending power. Rising India . Average real household income will grow from 113. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 24 .3% can be assumed from 2005 to 2025. China. Following part of this chapter outlines the major trends and changes that India has gone through during past decades. Exploding Middle Class – As Indian incomes rise. 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 2025.744 INR to 318. INDIA – Important Trends in Indian Economy Moving its population out of poverty and generating huge demand. the shape of the country‘s pyramid will also change dramatically. If the same is achieved.20% 8% 6% 3. Important Demographic and Economic Trends 1.2.896 INR. after US. Indian income levels will almost triple in next twenty years. competitiveness of Indian economy and favorable demographic trends a compounded annual growth rate of 7. India today is seventh most attractive destination for foreign direct investments. This is much faster than income growth in other major markets. The emerging middle class will surge tenfold.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. 2.

5 6.1 1.5 8. 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. The aggregate consumption in India will grow from 17 trillion INR today to 34 trillion by 2015 and INR 70 trillion by 2025. Rising consumption Rising income Multiplier effect GDP growth Rising production 5. Young and Home Maker India .Target Segment for Home Furnishing market 6. Above-mentioned four factors combined result in a multiplier effect leading to an accelerated economic growth.0 2.8 1.9 10.8 7. 16% of its population belongs to an age group of 25 to 34. India will be defined as a country with self-confident.2 9.11 Billion % Population 2011 16% between 25 – 34 years . 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 .2 Total Population: 1. India to be the world’s fifth largest consumer market by 2025 – Given the rapidly increasing household incomes and a robustly growing population will lead to a striking increase in overall consumer spending.6 2.5 9.6 8 10 12 0 2 4 6 As can we also see from the above chart.6 4.7 3. assertive and risk takers generation.With 49% of its population below 24 years of age.9 49% below 24 years 9.5 5.5 9.4.

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

to name a few – Featherlite. Furniture and Handicrafts & Décor Industry in India 3. This is divided into two broad categories – Unorganized Sector and Organized Sector. accounting for the remaining 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 27 .1. Dominant players in the organized sector with their respective market shares within the organized sector are listed below (also shown in adjoining chart): 1. Tangent. accounting for about 65 per cent of furniture sales.2. Millennium lifestyles. 20% Contract.3. As low as 10% (INR 35 billion) of the Indian furniture industry is the share of organized sector. the office furniture segment with a 20 per cent share and the contract Office. Renaissance. V3. According to industry experts. 65% segment. Kian. Overview: Size of Indian furniture industry as estimated by the industry experts is approximately worth INR 350 billion.1. This is followed by.1.1. Industry Segmentation Application / Customer Segment Wise – As with the global market. Godrej and Boyce – 23% 2. 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. unorganized sector commands the market with a share of around 90% (INR 315 billion). Style Spa – 5% 3. @Home. 15% Industry Segments Household. home furniture is the largest segment in the Indian furniture market. Furniture Industry 3. 3.

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

which suits his wallet and buy immediately.1. 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.it is bought only when one wants to renovate or wants to do away with old furniture while shifting to a new place. the overall furniture industry is expected to grow at 15% CAGR for next five years.  Convenience . as recession cannot have significant impact on household demands. As such needs can wait. no one has the time to get the furniture made by the carpenter. industry experts have two different viewpoints . In this regard. However. An interesting trend underlying this growth rate is that the organized sector of the industry has shown a better growth falling between 17% . more importantly. select something that they like. which is dominated by household furniture. some level of uncertainty has definitely cropped up after the economic recession has hit the globe. Considering the recent developments in organized retail industry and rapidly changing consumer markets as constant factors. furniture market.Furniture is never seen as an urgent customer need . recession might decline the demand.20%. Now. However.3.Customers no more want to take the pain for deciding designs or raw material for their furniture.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 .  Lack of Time . like earlier days. which goes along with latest trends. the overall furniture industry has grown at 10% since last two three years. changing lifestyles and India‘s overall economic growth.3. Industry Growth Trends and Forecasts Maintaining a decent rate. This can be further attributed to higher disposable incomes. will not be affected much. Especially with the growth in the number of double income families – where both husband and wife are working. they just want to go to a retail store.

leading to easier product availability Key Growth Drivers Tourism and Hospitality Industry growth – Rising number of foreign tourists in India. Key Demand Drivers of the Furniture Industry Consistent growth in the Indian economy and rising living standards are the key factors driving the demand of the Indian furniture industry. factors and sub-factors having significant influence on the industry demand are as follows: Real estate growth – Increasing demand for residential space. Higher Disposable Incomes. rapid increase in number of hotels in India New Affluent Indian Consumer . entry of modern retail formats. Increasing number of double income families Retail Industry Growth – Increase in number of organized retail stores.3. growth in office space – IT/BPO/ BFSI Changing Consumer Demographics .Buying latest style/designs to keep up with the fashion / trend. Other than these two.4.1. significant spends on home décor due to peer pressure INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 30 . home loans at lower interest rates.Rising income levels.

high ratio of value addition. Low capital investment. culturally attached. but it has shown promising growth and evolved as one of the major revenue generator over the years. decorative.2. Defining Handicrafts: Handicrafts can be defined as products. According to one of the study. which needs to be overcome. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 31 . Indian Handicrafts and Decorative Industry 3. 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. diversified product portfolio. The Indian handicrafts industry is highly labor-intensive cottage based industry and decentralized. Overview As it represents rich culture and tradition of the country. Numerous artisans are engaged in crafts work on part-time basis. Lack of awareness of international and new trends and Poor Promotional campaigns are a few drawbacks of industry.1.3. artistic.2. Handicrafts are made from raw materials and can be produced in unlimited numbers. which are produced either completely by hand or with the help of tools. religiously and socially symbolic and significant. It has shown continuous growth at the rate of 15-20% over the years and contributes major role for export and foreign earnings. being spread all over the country in rural and urban areas.3 billion is being exported. In spite of having diversified products. Cheap and skilled labor. aesthetic. Indian Handicraft Industry has the status of cottage industry in India. Mechanical tools may be used as long as the direct manual contribution of the artisan remains the most substantial component of the finished product. Lack of Infrastructure & Technological support. High potential for export and foreign exchange earnings and Flexible Production are few important features of Indian Handicraft and Decorative Industry. India is one of the important suppliers of handicrafts to the world market. functional. some part of Indian market are still untapped and market is price sensitive. Such products can be utilitarian. creative. 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. However. traditional. Indian handicrafts and decorative industry has a unique place among all the industries.

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

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

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

Italy.1. Germany. It can be available at both cheaper and higher prices in comparison to domestic furniture. Furniture Industry Value Chain Given the significant contribution of imports.43 2005-06 2004-05 2003-04 2002-03 2001-02 0. Indonesia. Understanding the Value Chain 4. fuelled by the boom in housing and commercial construction.00 92.00 32.1. Malaysia.00 58. There is a segment of locally manufactured products. China and Malaysia tops this country list by contributing the most to the industry. Furniture Imports in India (in Million USD) 152. furniture imports in India have grown at a CAGR of 64%. Spain.00 120. This increase can be attributed to factors like increasing demand for furniture.00 160. Imports Trend . but it INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 35 . 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.4. Increasing income levels and influence of global lifestyle trends have also influenced many Indians to move towards imported furniture.Over the 5-year period from 2001 to 2006.00 Imported vis-à-vis domestic . However. the entire value chain of the Indian furniture industry can be understood under two broad categories:   Imported furniture Domestically manufactured furniture 4.Imported furniture is India is present in all segments – Low Price to Premium priced furniture. The current furniture imports are mainly from China. Philippines and Japan.1. Korea.93 20.79 CAGR = 64% 80.93 40. which is of the same quality and better designs.

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

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

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

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

There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi. It is also into manufacturing. and Italy.Case 3: Distribution model of Durian Industries Limited Brief Profile . Durian has limited presence in case of office furniture – Office table. Durian has a main/central warehouse (2. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 40 . arrangements are made for the logistics and material is finally sent to the destination showrooms. Project sales – This model is mainly to cater to institutional customers. Material that is imported is stored in warehouses and then distributed to showrooms all across India. Hyderabad and Bangalore. Conference table and Book Shelves. Depending upon the gap of demand and supply (furniture already available in warehouse) import / manufacturing decisions is taken. Durian has project offices in all the major cities like Delhi. part is imported (depending upon demand of the project). PVC doors. Durian currently imports furniture from Malaysia. Durian is present in both categories . 98 percent of Durian‘s Sales is from imported furniture and only 2 % is from domestically manufactured. However. modular workstations. Orders from different showrooms come to the central warehouse through their ERP system. By this route. Orders are generated in these project offices and their demand is communicated to Mumbai head office. and they cannot sell other brands. Then as per the orders. 2. 30 are owned by Durian. Out of 43.2 lakhs sqft area) in palgaon (100 Km from Mumbai).Durian is mainly into manufacturing of plywood. Some of the material is manufactured. 1998 onwards Durian entered in furniture trading. Distribution Channel Structure – Two types of channel 1. Spain. which is importing and distributing in India. Through retail showrooms – 43 retail showrooms of Durian are present across India. China. and decorative veneer.chairs. In case of Home furniture. these dealers are authorized exclusive dealers.Home as well as Office furniture. it is present in almost all types of products. Office chair. Dealers own remaining 12-13. but only for some categories of furniture . Durian mainly caters to the needs of the individual customers. Thailand.

large and small appliances. Furniture Industry and Organized Retailing India has seen a resurgence of Retail sector.4. The latter.000 square feet to 200000 square feet depending on various parameters like store location. such hypermarkets in India are present in the range of 50. 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. Variety and Volume‘ is the latest trend. In terms of space.000 sq ft to 25.1. Through this format. with discounts offered to customers who are willing to carry heavy appliances and furniture out of the stores. Furniture Bazaar along with being present as a furniture-dedicated section under Big Bazaar is also present in two other INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 41 . Emergence of organized retail industry has its impact on the Furniture Industry as well. which is largely dominated by unorganized sector in terms of supply. India has grown from the traditional Mom and Pop stores present here and there in the neighborhood catering to the convenience of the consumers. In this category of retail. clothing and many items.Big Bazaar. mostly follows modern formats as far as retailing to end customers is concerned. 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. which carries an enormous range of products under one roof. Example . a unit of PRIL (Pantaloon Retail India Limited) is one such example. however one product category is restricted to one floor only.4. Furniture Bazaar is the section of Big Bazaar that focuses on furniture.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 . space that is allotted to furniture as a category may vary between 15.Value. demand etc. The result is a very large retail facility. Its product assortment goes beyond routinely purchased goods and includes furniture. These hypermarkets are typically multi storied.

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

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

they cater to the higher-end market with special up-market ranges. 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. ethnic products of the decorative type is the large number of small and independent retail stores. that are functional and not purely decorative. Direct import retailers that work with more than one supplier in a given country often opt to work with an independent agent or an overseas export consolidator who is responsible for coordinating orders and shipments. However. department stores and hypermarkets are becoming the more prominent distribution mode. This is mainly because the large retail chains prefer to import directly from the producers and thus eliminate the role of the importers/wholesaler.accelerated the flattening of the distribution channels. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 44 . The most popular channel for distribution of the more traditional. with respect to products. Since the large department stores cannot compete on the terms of price.

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

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

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

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

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

small cities.5. diversified and potential market It has strong.2. 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 . diversified and supportive retail infrastructure Diversified product range that service different market Low barriers of new entry Abundant and cheap labor hence can compete on price Low capital investment and high ratio of value addition Aesthetic and functional qualities Variety of products categories Exporters willing to handle small orders Increasing emphasis on product development and design up gradation Strengths SWOT Analysis Indian Handicrafts & Decorative Industry Weaknesses            Lack of infrastructure and communication facilities Unawareness about international requirements and market Lack of co-ordination between government bodies and private players Inadequate information of new technology Inadequate information of current market trends Less interest of young people in craft industry Lack of skilled labor Still confined to rural areas. Indian Handicrafts & Décor Industry – SWOT Analysis           Large.

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

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

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

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

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

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

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

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

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

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

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 62 . Such post purchase effects can be reduced by taking appropriate steps like warranties. support provided by the seller. Based on the experiences of using the product. Shortly after a purchase customers develops Cognitive Dissonance. after sales communication.6. etc.Satisfaction or Dissatisfaction. This is the buyer‘s doubts about whether it was the right decision or not.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.

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

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

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

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

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

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

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

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. such as:       Industry Growth Stage Growth of Customer Segments Growth in Allied Sectors Competitive Scenario Potential Entry Barriers Scale of Investments required etc. There is no need for macro-investment. Household Furniture – High End Segment  Given higher disposable income. 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 70 . Limited number of sector strong players in the industry. This ranking has been done based on the various criteria. an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these.7. The findings of the above analysis are as follows: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base. Office Furniture  growing at a fast pace (20% CAGR). providing an opportunity to make good margins Increasing Affluence of Indian upper middle class. Minimum efforts and investments Household Furniture – Low End Segment  required for market development (entry through JV and distribution through existing hypermarkets) and promotion. Products Handicrafts & Décor Products  are present throughout the low value to high value added band.2.

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

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

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

arrangements are made for the logistics and material is finally sent to the destination showrooms.upper middle class .of the material is manufactured. There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi. Then as per the orders. Orders from different showrooms come to the central warehouse through their ERP system.Families with at least Rs 40. anything related to home décor INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 74 . part is imported (depending upon demand of the project). Accessories like table lamps.   Durian‘s target market .2 lakhs sqft area) in palgaon (100 Km from Mumbai).  Durian has a main/central warehouse (2.000 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. table stands.

This makes India one of the chief exporters of wooden handicrafts in the world market. sericulture. It employs about six million artisans. Women constitute a large section of the handicrafts industry.2. The wooden handicraft sector provides a high ratio of value addition. 8.2. Although India's handicraft exports show a consistent increase of sixteen per cent every year. coir. Traditional industries like handlooms. Wooden handicrafts fall in the category of small-scale traditional industries. The term 'wooden handicrafts' refers to a wide range of wooden items carrying utilitarian and artistic value that are made by hand. Indian wooden handicrafts reflect unmatched workmanship. Indian wooden handicrafts are much sought after the world over. 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. including people belonging to the weaker sections of society. and form an important export commodity of India. and handicrafts. According to the classification of Indian industries. fine designs. khadi.8. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 75 . or with the use of simple tools. Wooden Handicrafts Industry – Overview Wooden handicrafts are specialized skills passed on from one generation to the next. The Indian wooden handicraft sector is the second largest employment provider (after agriculture). and has emerged as one of the major sources of foreign exchange earnings for India. its share in the international market is not more than two per cent.1. Role of Wooden Handicrafts Industry in Indian Economy The wooden handicrafts industry plays an important role in the Indian economy.60 lakhs Small-scale industries are classified into two categories:   Modern small industries like power looms etc. and subtle elegance. This industry requires low capital investment and other resources.

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

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

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

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

3.e. Value Chain for Manufacturers – The tableware & plastic container industry in India follows a similar value chain model. it is very important for the manufacturers to source raw material from a supplier who provided them at low cost and from a near-by source. 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 . E. they should optimally utilize all the available channels for distributing their product i. Value Chain – Tableware & Plastic Container Industry E. thereby enabling the growth of this industry. In case of institutional players. through company‘s own stores.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.1. reach to maximum number of customers possible and to save on cost. The major set of customers for plastic container industry is domestic consumers & institutional consumers (hotel/ catering & corporate players) with domestic consumers occupying a larger share of the pie. In order to minimize expenditure at each level of the value chain. Also. through multi-brand outlets & retailers with minimum number of intermediaries in between to ensure presence across all geographies. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion.3.

However.1. who are posing threat to an investor in this industry to varying extents. the major target segment i. it can be inferred that there are small number of players in the organized tableware market. Customer Imports Importers / Super Distributor Retailer Distributor / Dealer Customer Retailers Customer 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. Thus. through retail outlets or directly sell to customers. whereas the unorganized market is highly fragmented. after analyzing the tableware industry in India. Existing competition & substitute products pose medium threat to the tableware industry.3. Tableware Industry The tableware industry is affected by existing competition.4.4. Thus. supplier & buyer bargaining power. 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.2. They may sell the products through various channels like through a distributor/ dealer. for a new brand to establish its name in the Indian market. However. middle & upper middle class prefer to purchase products from the organized market due to better quality. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 81 . Value Chain for Importers – Importers or Super distributors in Indian tableware & plastic container industry can be exclusive distributors or multi-brand distributors. The major threat posed to tableware industry is from new entrants due to the attractiveness of this industry. new entrants who would be entering this industry and substitute products.e. Industry Analysis E. variety & changing preference for purchase of lifestyle goods.E.

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

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

83

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

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

84

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

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

85

Targeted outsourcing for manufacturers in high-wage countries is very much a part of this strategy and thereby introduces Asian manufacturers into the process. etc. distribution channel (department stores.). barracks. restaurants. 9. manufactured domestically). place of origin (imported vs. the market for ceramic and porcelain tableware is different to that of Europe. USA is one of the biggest market for ceramic and porcelain tableware. drinking glass sets.9. egg cup etc. However. According to the use of tableware in USA. price segment (high-end. it can be divided into three categories i. sales of tableware have been trending ever lower in the traditional western European markets. Technology has to keep pace with these changes. stoneware.2 The Changing Consumers Tableware can be classified in six basic ways: style (formal or casual. salad bowls. Dinner sets. And they prefer to spend their precious disposable income on leisure products rather than fine china. soup tresses. End consumers now want a more personalized service in all areas. the western European tableware manufacturers have to pursue clever brand and price policies. hotels. but also innovations in design. material (fine china. glass). It is the large market very competitive with high professional importers/ distributors placing large orders. traditional or contemporary). mass merchants. In addition. or low-end). tea and coffee pots. Cooperation between the suppliers of machinery and raw materials has become much closer. Ceramic and porcelain table ware are used by household. and these table ware mainly comprise of coffee-tea sets. cups and source boats. sugar bowls. therefore. specialty stores. tea and breakfast sets.1. in particular because optimizing process quality is a challenge that can only be mastered by working together. In the last ten years. Global Scenario 9. The market leaders among the tableware manufacturers are pointing to the fact that it‘s not just technological innovations that count.1 Global Tableware Industry: 9.1.1 Overview: Tableware is marketed these days as a lifestyle product. and retail category (the INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 86 . mid-range. plates.e. positioning themselves not only in the up-market segment. dishes.

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

Western Europe contributes to around 21 percent of the entire capacity. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 88 . At present. the global capacity for polymer production is around 170 MMTA and is growing at a rate of 10.The estimated demand from the US alone (for plastic food containers) has been estimated to touch as much as $21 billion by 2009. Plastic Industry The global plastics industry is marked by dynamic growth with both quantity and quality aspects helping boost the upswing.6 percent per year. The demand for the major polymers is growing at a rate of 5. These three regions form the major polymer production regions of the world.2.8 percent of the chemical output.5 percent per annum. There are tremendous capacity expansions that are happening for polymers all over the world. This gives us an idea of the size plastic industry and the significance that it holds in the global scenario. a good global economic climate and ongoing substitution processes in favor of plastic have combined to foster steady expansion in the sector. The global demand for polymers is 139. overall population growth.04 MMTA. more than 35 percent of the capacity is in Asia – pacific region and around 28 percent of the capacity is in the North America. Currently.1.2. Based on Frost & Sullivan‘s Report -2003.9.2 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. Out of this. This becomes even more significant when the global polymer industry is growing by almost twice the rate of the global GDP. The demand for Polyolefin is growing at an even faster rate of 5.6 percent of the entire chemical output and polyolefin output is US $ 61 billion that is 3. the firm predicts. five HPL supported FIBC units exported 7 KTA worth goods annually. Commodity plastics contribute US $ 90 billion that is 5. For many years now.2 percent annually and polyolefin alone make up for the 63 percent of the entire polymer industry.3 MMTA out of which polyolefin form 89. Global Plastic Products Industry 9.2. 9. Plastic has occupied a major role in the lifestyle of the 21st century.

Art d‘Inox as well as multinationals like Corelle. Overview . In the organized market. around INR 2.1. Tableware Industry 10.1.1. Magppie. who are a part of this large chunk of market size.1. there are both domestic players like La Opala RG Ltd.10.e.4 Billion including domestic manufacturers & brands imported from abroad which are sold through organized retail channels. Bharat Bone China Ltd. Industry Segmentation The tableware market is classified according to their application & raw material being used for their manufacturing. *The Financial Express – June 2007 10. 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. Tableware & Plastic storage containers Industry in India 10. 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.The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 89 .. Luminarc etc. the organized market is growing at a much faster rate than the unorganized market.2.. RAK Glass.

This category is growing after beverage range because of the growth in hospitality industry. This is the fastest growing category in tableware especially among glassware. lemon sets. the products are:  Dinnerware range – This includes plates (quarter / full). Around 62% of the total organized tableware market (INR 2. cocktail shakers.1. etc. the tableware is broadly classified as: Tableware Market Dinnerware Beverage Barware Within each product categories. Rs. The growth in this category is fast with the changing lifestyle & increasing income of people.2. saucer. Barware range – This includes ice buckets.e. wine sets. dinner set. trays etc.5 Billion. Category wise market share for organized tableware 38% Dining ware Beverage & Bar ware 62% INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 90 .4 Billion) comprises of Dinner ware i. pudding set.   Beverage range – This includes glasses. cutlery. 1. Segmentation Based on application Based on their application. cups. fruit bowls. salad bowls. jugs etc.10.1.

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 . it is difficult to predict the share of stainless steel tableware in the total table ware market.10. Segmentation Based on Raw Material The material used for their manufacturing may differ from manufacturer to manufacturer.2.2.Based on the responses of a senior manager in the organized steel tableware with matte finish . 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. 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 2.1. Based on the responses of players in the organized tableware market. Hence. market size of each category in India based on the material used can be predicted.

opal ware which is unbreakable in nature is preferred by most of the consumers for domestic purposes as well in hotels / catering. the corporate customers include a majority of Pharmaceutical companies. This is because glass wares are available in variety of designs. Also. Customer classification According to the usage of tableware. can be used in microwave as well as for serving and are used by most of the domestic as well as institutional players.4 Billion INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 92 . Ceramic ware comprising of crockery and tableware is produced both in organized and unorganized sectors.3. Apart from these two categories. 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. the customers can be classified in two groups. exports also form a major proportion of the total sales for all the manufacturers. Domestic customers Vs. There are 16 units in the organized sector in India with a total installed capacity of 43.1.Glassware has the largest market size in terms of value in the Indian tableware market. 10. 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. Bone China crockery ware is being imported from Bangladesh and Sri Lanka in view of the better availability of raw material there.000 tones per annum.

The fastest growing category is beverage range. Thus.5.4. 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. 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 . Major manufacturers in India The major domestic manufacturers in India for Tableware according to the material used for manufacturing are:      La Opala RG Ltd.Presently. there is a huge market for new players to enter this industry through proper marketing & sales network.1. where tumblers are the most fast selling items. in Opal ware Yera in Glass ware Bharat Pottery Ltd. 10. in ceramics & stone ware Art d‘inox in steel with matte finish Magppie in steel with matte finish 10.1.

980 hotels approved and classified by the Ministry of Tourism.000 hotel rooms o The hospitality industry is poised to grow at around 25-30% p. with a total capacity of about 110.76 billion by 2010 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 94 . ITES. according to KSA Technopak  Increase in Hotel & Catering industry o There are some 1. which really adds to excessive expenditure*  Increase in the number of middle class & upper middle class o The middle class currently numbers some 50 million people.T.a. and is expected to reach INR 826. Increase in per capita income with the growth in I. o The current market size of luxury-very premium goods and services is INR 840 Billion which is rising at 16% p.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. 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.5 trillion rupees ($1.. Government of India.1 billion)—11 times the level of today and 58 percent of total Indian income**  Increase in the ownership of luxury products.

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

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

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

Critical Success Factors for Tableware Industry A well connected distribution network Targeting domestic as well as institutional customers Focus on easy to handle & low maintenance tableware CSF Creating a Brand Image Knowledge of needs & expectations of target customers Proper marketing activities in various media Based on the above-mentioned critical success factors. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 98 . 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.1. In addition.7. 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. They need to adopt various marketing initiatives to promote their brand and sell their products through various channels rather than just one source.10.

Plastic is one of the fastest growing industry segments in India. Writing instruments and travel ware are other promising segments having a potential to generate export revenues. The total imports of household articles.2. Within this market.6 14.0 9.1 Overview Based on Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003. Table ware & Household products Total Source: Frost & Sullivan . and the respective growth rates for 2002 Categories Molded Luggage Molded Furniture Writing instruments Kitchenware. The Indian plastic processing industry possesses strong capacities and capabilities in these segments. etc.0 13. The plastic industry has been witnessing tremendous growth due to the widening of its application spectrum and penetration of new generation polymers in all the key sectors of Indian economy.000 plastic processing units in the country.10.7 49.3 Growth Rates 10 25 20 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 99 . Almost 50 percent of the plastic manufacturers have some operations in this particular category. revenues. there are 25. Consumer goods include Household ware. Toys. Consumer plastic goods account for approximately 15 % of the market. and personal care products.2003 KTA 150 140 40 190 520 Size in revenues in Billions 12. 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. Writing instruments. At present. gift articles and novelties. molded furniture. personal care products. tailoring materials.2. Given below is the break up of the following consumer goods in polymer consumption. Kitchen ware. household ware and kitchen ware is the largest segment both in terms of domestic demand and the export potential from India.000 to 30. Plastic Containers Industry in India 10. and kitchen ware by US totaled $ 1000 million in 2002. molded luggage.

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

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

they are already importing plastic storage containers from Thailand for last 4-5 years.The level of imports for these storage boxes used in kitchen is increasing at a fast pace. As per the views expressed by a retail giant in household product category in India. Also.5 years that the volume of import has grown from Thailand within the plastic container category. it is during the last 1. Ltd.3.1. Major manufacturers in India The major domestic manufacturers in India for Plastic containers are:      Cello Hamilton Housewares Pvt.2. 10.4. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion. the customers can be classified in two groups. However. Customer classification According to the usage of tableware.2. Tupperware Pearl Pet Eagle Thermoware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 102 . 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.

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 .2.10.5.

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

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

Indian products find it difficult to compete in the price-sensitive markets. 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. Strengths and the weaknesses of the industry Strengths    There are access capacities available in the market. Imports from the Chinese manufacturers are hampering the growth of the industry.  Most of the companies are privately owned entities and are lacking in managerial aspects. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 106 . which can help to boost the production in the future Many players in the medium scale industry are also selling branded products. both at the domestic and the export level. 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.2.7.10.

They should target working women for this product category. 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 . they should create a brand image in the minds of consumer about the benefits being offered by their products over other similar products. They should have a trained sales team to promote their products rather than spending much on advertising.10. Critical Success Factors for Plastic storage containers A well-connected distribution network Focus on ―Leakage proof.8.2. Also. it is very important for a new entrant that their products are different from the ones offered by existing players.

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

their channel structure may differ in terms of distribution of the products in this category. Players like Cello have tie-ups with Italian brands like ENJOY manufacturing the products in India under Cello‘s brand name through licensing agreement. similar items can be co-branded and sold. through licensing agreement with Indian manufacturers. import products from Italy. 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). Channel Structure for Importers The channel structure for manufacturers importing tableware & plastic containers from other countries is: Multi brand outlets Exporter Manufacturers Distributors Own Stores es Dealers (in some cases) Retailers / Customers In case of manufacturers in tableware category. Thailand. they might also import products from countries like Europe. 11. 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. 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. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 109 . & sell them under their own brand like Milton sells glass ware imported from other countries with the brand name ‗Milton Treo‘.4.5. however. Manufacturers in plastic products category like Cello & Hamilton. In addition.11. Manufacturers & importers follow the same import procedures. China etc.

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

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

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

. Nepal. G. 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. Pankaj Rathod. at a small factory in Goregaon. Pardeep Rathod. U. 1986. Investment of more than USD 50 million in ultramodern plastic processing machines from BATTENFIELD. 12. having wide range of plastic moulded products Annual sales turn over of more than USD 100 million and exports of USD 28 million 2100 employees.A.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 %. Bombay. Managing Director and Mr.Founded by Mr. Sri Lanka. spearheaded the growth & diversification into new products and markets First & Largest Manufacturer of Branded household products in India.Plastic containers.Germany.A. Discussed below is the value chain of one of the leading tableware industry player. About the Company  Cello Thermoware ltd. value chain of manufacturers should be such that products are available across all geographies. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 113 .S.2.D. as they were later positioned. Deputy Managing Director. Case study for Plastic containers: Value chain of Cello Thermoware Ltd. Kenya & U. Chairman. or Hot Pots. in May 10. that the Indian market had ever seen     Mr. Rathod.1. with just 60 workers and 7 machines engaged in the manufacture of the finest range of Casserole.E. WIMPLAST -Italy & SUMMITOMO – Japan Strong in house R&D base.

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

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

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

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

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

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.

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

119

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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

120

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

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

Market Segment

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

TablewareBeverage Range



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

TablewareDinnerware



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

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

121

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

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

exclusive boutiques. 15..4. the target customers are domestic users who use these products for their personal usage or for gifting.15. number of working women is increasing who need plastic storage containers for themselves & their kids which are air-tight. the target customers should be Corporate & Hotel/ Catering segment for gifting or as freebies for promoting their product and for personal usage. For beverage and barware. Distribution In order to sell the products in tableware & plastic storage containers category to institutional customers. This approach expands distribution and allows the marketer to reach a wider market i. shop -n-shop model where dedicated space in an outlet is provided to Magppie. For selling to domestic consumers at large. there is a need for direct distribution system where there are no other parties involved in the distribution process that take ownership of the product. there is a considerable increase in the disposable income and people are purchasing more number of lifestyle goods because of the rising income levels. Also. but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population.5. Multi channel or hybrid distribution network should be used where a marketer is following a multi-channel or hybrid distribution system. the marketer must be careful with this approach due to the potential for channel conflict. Target Customers Based on the analysis of the Indian Tableware & Plastic storage container market. generally by persuading the buyer to place an order. However. salesperson) is involved in the distribution process. They can also target companies & hotels due to the increase in the gifting levels of companies & rising hotel & catering industry due to the next commonwealth games which are going to take place in India. Also. Personal Selling Systems should be employed where a person whose main responsibility involves creating and managing sales (e. In case of dinnerware & plastic storage containers. 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. leakage proof and safe. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 124 .e. selling through company stores as well as multi brand outlets like Magppie sell their products through Multi brand outlets.g. In the direct distribution system.

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

 Marketing & Sales . on channels emphasizing on family shows and through web-sites like ebay. promotion schemes to attract customers during festive season can be incorporated and institutional players can be offered discounts based on bulk purchases.com  Service – The products if offered with some guarantee or replacement warranty for a fixed period of time. Also. 16. Direct Selling & Exclusive Outlets and expand the distribution channel based on the demand of people across various regions in India. 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. Also. advertising on T.600 tones per annum of crystal ware under the brand name ‗Solitaire‘ INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 126 . they can utilize multiple channels of distribution – Retail.1.1.500 tones per annum of opal glass tableware and 1. Profile of major players in tableware category 16.1 La Opala Company Profile  The Jharkhand plant of La Opala has a capacity to manufacture 3. Outbound Logistics – The new entrant can utilize the warehousing facility and distribution network of the existing player in the tableware & plastic storage containers market. they need to educate the customers about the differentiating features of their products and benefits they offer to the customers.V. unbreakable & maintenance is easy and inexpensive. Annexure 16. Thus.They can utilize the existing network along with the establishment of new methods of marketing like direct marketing as employed by Tupperware. Thus.

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

The company is No. They are utilizing their production capacity fully. exhibitions and advertising in print media They are importing Bar ware from China & Iran worth INR 200 million 16. 1 in glass ware market. bowls etc. Tumblers are the fastest growing category amongst the products being manufactured by Yera (Shreno Pvt. 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 . lemon sets. Platters. 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.1. dinner sets. has a market share of 40% ( i. they have a direct sales team They promote their products through trade fair.e. 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. INR 850 million) in this market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 128 . They are into dinnerware & beverage range.3.4% They manufacture plates. Bharat Pottery Ltd. cups & saucer. dinner sets etc.) 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. Ltd. Their market share in total glassware market of INR 12 Billion is 5. glasses. mugs.             The company has a manufacturing facility in Baroda. Gujarat with total production capacity of 165 tones per day. tumblers.

000 units per month They are into the manufacturing of tableware . For institutional sales.. serving ware .1. where 55% are domestic customers . they have a sales team They also have tie-ups with multi brand outlets like Shoppers Stop. glass . Art d’ inox Company Profile          Their manufacturing facility is located at Rohad . 85% consist of dinner ware & 15% consist of beverage range . INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 129 . home accessories & office accessories They use steel with ceramics. 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. magazines and introduce promotional schemes to attract customers 16.4. Haryana They manufacture around 4.00. 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). They give advertisements in newspaper. Big Bazzar . Pantaloons etc.   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.

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

Thermi Guard. with latest molding machines and excellent infrastructure Cello has developed the unique. They give extra benefit to dealers if the sales are more They are importing steel flasks from China & have tie-up with Italian brand & Thai brand ‗ENJOY‘ to manufacture the same with their name in India for 10 years 16. They tend to avoid intermediaries & are planning to increase the number of distributors by adding on 100 distributors in next 1 . which is innovative.Lunch boxes. They have a distributor after every 100 kms. 70%. Tupperware Company Profile    They have their manufacturing facility in Hyderabad They offer products in plastic kitchenware which are classified as. Polypropylene & High tensile strength plastic as raw material The present sales turnover of CELLO has reached INR 3. breakthrough product .) and one in Pune. 000 – INR 0.         Cello has seven up-to-date manufacturing units in Daman (U.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. food preparation items & serving items They use Polypropylene ( cloudy view plastic) & Polycarbonate ( clear view plastic) as raw materials in the manufacturing of their products INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 131 . Dry storage boxes .2.T. but in metro's they have 2-3 distributors /city.2.plastic .1 million per month Their products percentage break-up is 30% .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. protective shield.5 billion They are targeting middle & upper middle class to high income group having income class of above INR 25. giving Cello an edge over rival products They use Polycarbonate .

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

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

has give detailed definition of a few standard terms popularly known as 'INCO TERMS'. Paris. A large number of Consumer goods are freely importable without license. Principal Law & Import Export Policy Principal Law Imports in India are governed by the Foreign Trade (Development & Regulation) Act 1992. For import of items appearing in the restricted list you. 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. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 134 . Mode of Pricing and INCO TERMS While finalizing the terms of import contract. the Importer. should be fully conversant with the mode of pricing and the manner of payment for the imports. The importer for his benefits should know the meaning of the technical terminology. the Government of India has liberalized the Import Policy and practically all Controls on imports have been lifted. Under this Act. In exercise of the powers conferred by the Foreign Trade (Development & Regulation) Act 1992 items. As regards mode of pricing. coffee and cocoa. It is mostly used for sale of plantation commodities such as tea.1. the overseas suppliers normally quote the terms prevailing in international trade.3. imports of all goods are Free except for the items regulated by the policy or any other law for the time being in force. 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. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer.16. International Chamber of Commerce.3.3. To avoid ambiguity in interpretation of such terms. Importers need an Importers/Exporters Code Number from the Directorate General of Trade in order to be able to import 16. need to secure an import license. not appearing in Prohibited list or restricted list can be imported freely without any import license. 16.2. These terms thus represents the minimum obligation for the seller. Import Legislation in India With the globalization of the Indian economy and consequent upon comfortable balance of payments position.

but they are also used for road transport. Customs Duty Customs duty is levied under the Customs Act. Cost Insurance Freight (CIF) The term is the same as C & F but with the addition that the seller has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage. The buyer has to bear all costs and risks of loss or damage to the goods hereafter. 1962 on the import of goods into India. 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 on Rail (FOR)/Free on Truck (FOT) These terms are used when the goods are to be carried by rail. 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 . the risk is already transferred to the buyer at the port of shipment itself. Free on Board (FOB) The sellers‘ responsibility ends the moment the contracted goods are placed on board the ship. 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'. contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight.3. Cost and Freight (C & F) The seller must on his own risk and not as an agent of the buyer. The rates of customs duty are laid down in the Customs Tariff Act. The seller's obligations are fulfilled when the goods are delivered to the carrier. free of cost to the buyer at a port of shipment named in the sales contract. 'On board' means that a Received for Shipment' Bill of Lading is not sufficient. This being a shipment contract. Free Alongside Ship (FAS) Once the goods have been placed alongside the ship. The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. 16.3. the seller's obligations are fulfilled and the buyer notified. As will be seen though the seller bears the cost of carriage to the named destination. 1975.

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

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

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

Sign up to vote on this title
UsefulNot useful