Furniture sector in India: Challenges, opportunities and the road ahead
As per industry estimates, the Indian furniture sector is currently worth around US$ 20 billion, and is expected to continue to grow at a CAGR of over 12 per cent till 2024. However, till date, a vast majority of the entire furniture market in India falls under the unorganized category, largely consisting the numerous local mom-and-pop stores and retailers. Although, thanks to the wave of digitalization, technology and high-latency data penetration across the country, more so after the pandemic, the furniture sector is nowadays, by and large, witnessing a major overhaul. Alongside, it is also seeing the rise of so many online furniture portals, marketplaces and emerging brands.
As we move ahead rising above the disruption caused by the pandemic, it makes sense to look at and analyze the challenges and opportunities of the furniture market in India to plan its optimal growth in the times to come.
For decades now, the Indian furniture space has remained very unorganized and fragmented at its core, which has been a major challenge hindering its growth potential. So much so, that even today, up to 70-80 per cent of the Indian furniture market is dominated by small unorganized players. And mainly as an outcome of the same, the furniture sector has noticed a lack of standardization in terms of quality, designs, and other key parameters, unlike other sectors like electronics, automobile, etc. And hence, unsurprisingly, various similar looking furniture items would often bear multiple price points depending on the quality and raw materials used, which automatically raises the eyebrows of the customers and other stakeholders.
In addition to the above, the diminished consumer spends due to the Covid-19-induced economic downturn had also in the recent times forced customers to cut down on discretionary purchases like buying new furniture, which in turn has affected demand negatively. Furthermore, India’s furniture manufacturers and businesses are also at times suffering from other bottlenecks such as longer lead times, unavailability of adequate raw materials, infrastructure, and more importantly, lack of skilled labour/workers. Higher import duties and taxation on furniture as well as the lack of intent or mindset to embrace technology by conventional players in this space have also played a role in slowing down the nation’s furniture sector’s growth story.
However, despite myriad challenges, the Indian furniture sector certainly holds a lot of opportunities to rise above adversities and shine. To begin with, the furniture sector in India is rapidly getting organized off late due after the widening of GST net decision taken by the Indian government. While in the pre-GST era, the rates fluctuated from region to region, the new GST regime has enabled closing the gap of disparity in terms of pricing and procurement of high-quality materials. This in turn is paving the way for today’s furniture brands to push the pedal and chalk out a rapid-yet-sustainable growth trajectory while chartering success and overcoming VUCA situations. And taking note of the same, some of the biggest and most renowned international brand names in furniture are also betting aggressively on the Indian market now, thus increasing its credibility.
At the same time, New Age startups and brands are increasingly coming up with tech and process innovations across production to delivery and logistics, among other touchpoints impacting the furniture value chain in our country. Product innovations are also happening in parallel with ready-made, low-maintenance furniture that are easily installable and/or customizable becoming the preferred choice of today’s users. Also, the rise in prominence of middle and upper-middle class in the recent years has helped this sector to grow optimally as people are now increasingly able to afford better quality and designs in terms of furniture and other home furnishings. A new aspirational class is emerging in India today that is well travelled and more informed, and their pockets being relatively deeper as compared to other segments. Hence they are looking at furniture not just as utility items, but also lifestyle products, thereby helping the concept of ‘subtle premium’ furniture to thrive.
As a matter of fact, aesthetics, quality and comfort have all become equally important today, besides the price when today’s customers are looking at furniture. This paradigm shift has indeed opened up a plethora of opportunities to explore for New Age design-led furniture firms, which were earlier not getting much traction due to local unorganized market dominance.
With ‘Aatmanirbhar Bharat’ gaining momentum, India is in a momentous spot right now globally, despite some ongoing financial uncertainties encountered from the West. Currently, the Indian economy is doing quite well while bouncing back stronger from the pandemic-led disruptions. Alongside, the real estate demand across India has started picking up after nearly a decade, and is also expected to do well for longer period. Given that furniture (or home furniture in particular) is a related industry, this is helping in projecting a major upcoming boost for the furniture industry as well.
The furniture sector in our country is one of the critical markers of the economy that has been actively contributing towards the Indian government’s ‘Make in India’ push in the recent years. The government is doing its part by promoting domestic manufacturing of furniture while on the other hand, the country’s exporters are now able to gain strong foothold across multiple foreign countries, majorly due to ongoing issues in the China-centric supply chain. Going forward, a combination of all these factors will pave way for many more mid-sized furniture firms to turn big and also provide an opportunity for worthy new entrants to make it big in India, once they get the pulse of and tap into the emerging trends of the market.