State of the Indian Furnitre & Furnishings Industry

Posted in India on Monday, 02 March 2015. Print
ifj takes a look at the key sectors of the interiors segment in this brief
State of the Indian Furnitre & Furnishings Industry
As the economy recovers from the brief slump of the last couple of years, the Indian interiors sector proves that the consumer is willing and able to spend the big bucks required for the good life. India boasts a rich list of over 100,000 very high net worth individuals (VHNIs) across the country, of which nearly half (46%) is concentrated in the tier-2 cities and semi-urban areas, where new demand is being generated. Once the sole hegemony of the architect, buying behavior is changing, with a better-informed and resourced consumer. The entry of a large number of international brands and the proliferation of several branded showrooms offers consumers a wider spectrum of design and products to choose from, while exhibition initiatives have fuelled the desire for aspirational homes. IFJ takes a quick look at the furniture & furnishings segment of this dynamic industry.

Furniture

Indian furniture retail is valued at being the 14th largest furniture market in the world driven largely by the substantial middle-class population. Estimated at INR 887.50 million in 2014, the industry contributed just 0.5% to India’s GDP. It is expected to reach INR 2,708 billion by 2019 at the compounded annual growth rate (CAGR) of 25 percent [ 2015-2019]. (source: Cushman and Wakefield report)

Despite all this, the Indian furniture industry is still considered an un-organized sector, as the artisan-driven portion accounts for about 85 percent of furniture production, while wooden home furniture tops the list of the organized segment of the industry. The entry of several international brands has boosted furniture retail in the country, pushing growth in this dynamic sector.

Furnishings

The home furnishing market in India is expected to witness a CAGR (compounded annual growth rate) of around 8% by 2018 and to reach revenues of USD 5.29 billion by 2018, driven by the growing retail industry and the high per capita income of the consumer. (source :India Home Furnishing Market Forecast & Opportunities). Industry experts expect robust growth in both tier I and tier II cities, with well-known furnishing brands looking to enhance their presence with local distribution tieups or stand-alone stores across major cities. The growth of this segment is just not restricted to high street retail, as online players have carved a niche for themselves in this segment.

Summation

India’s Planning Commission has projected an investment of USD 1 trillion for the infrastructure sector during the 12th Five-Year Plan (2012-17), a sector that has contributed to the country’s reputation as one of the fastest growing economies in the world.

India’s high rate of urbanization compelled by the mushrooming middle-class has enhanced the need for proper infrastructure. In 2011, there were about 377 million people living in cities; a figure that could touch 590 million by 2030 and have a direct bearing on 70 per cent of the country’s gross domestic product (GDP), according to a McKinsey report. Research from the Economist Intelligence Unit says infrastructure spending and the growth of India’s lower middle class will lift GDP over the coming years, and reach 4.5 percent in 2014 and 5.7 percent by 2017.

According to industry experts the demand for residential spaces is forecasted to hit 4.25 million units while the demand for office spaces is expected to hit 400 million square feet by 2015. The upcoming segment is contract furniture, which is being driven by the increasing hotel developments and tourism across the country. This level of growth and development has clear implications for the growth of the interiors sector with products and services seeing exponential demand and auguring well for the sector in the years ahead.


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The International Alliance of Furnishing Publications (IAFP) is an association of the foremost trade publications from each country, based on quality editorial content and on circulation.
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