The fragmented and unorganized Indian home décor market is rapidly becoming organized as consumers turn to chain stores and the web for purchases. The online industry has the power of the net to reach consumers throughout the country while eliminating the high operational costs of physical stores.
As per Technopak estimates, the Indian Home Décor market which stood at $13 billion in 2010 will touch $20 billion in 2015.
- Customers are shifting from the old ways of shopping to trying new formats and designs.
- Access and exposure of the new generation have increased the buying of premium items in tier II and tier III cities.
- The gifting market is upwards of $25bn and many customers browse home décor shops for gifting.
- The onset of FDI in single brand retail with the entry of giants like Ikea will further catalyze the growth in the market.
This overall churn offers significant opportunity to businesses which can ride the changes. The ecommerce market has been a beneficiary of this action with launches, new products and high online advertising from several players.
Consumer Segments & Characteristics
Urbanization, increasing number of nuclear households, affordability, travel and a nascent design consciousness have all come together to profoundly alter the character of the market comprising of furniture, linen, kitchen-goods, home accessories etc. Limited availability of time, wider options, convenience and increasing affluence in non metro towns are some of the factors fueling the shift to online buying.
But the question is whether every consumer segment will respond the same way?
There is a luxury segment principally in the tier-I towns which looks for exquisite and unique workmanship. This segment prefers bespoke furniture and prefers to shop in high-end stores. Online market for this buyer segment will be limited.
The major potential for the new formats including online is from the bridge-to-luxury and the mid market segments. These consumers exhibit some interesting characteristics:
- Design Consciousness
This consumer is at the initial spectrum in appreciating design. The changing sensitivity to design can be seen in the new cinema, houses and clothes. So they want furniture and other items with a certain amount of design sensibility and aesthetic.
Thus the element of design has emerged as a key driver of sales in addition to functionality. Modern and contemporary looks with integrity in designs will appeal to this consumer set.
- Utility Seeker
This segment also has a large number of entry level customers setting up their homes with a typical Indian value mindset. Hence as counter-intuitive as it might seem, utility is a key purchase driver for the consumers shopping in non-traditional formats. So a sofa-cum bed will always outstrip a regular sofa in appeal to many.
- Large Furniture vs. Smaller Categories
Furniture is the biggest contributor to sales. Earlier large furniture items were purchased once in ten years which has now gone down to once in five years. So this is still a very considered decision and from the consumer’s point of view, the perceived risks of buying large furniture online are higher.
Some categories lend themselves to online selling easily and some do not. Large furniture falls in the second basket. Many buyers also want to customize their products. Hence converting the customer to buying from a distant online entity is challenging.
Light furniture and other categories on the other hand are bought more frequently. Each of these categories, though small in size, can be traffic drivers. They can also build trust and facilitate purchases in other product lines. Since such items are often bought on impulse, it is essential to have a wide range with interesting offers.
In buying large furniture items, even sophisticated buyers are tentative and look for affirmation. Hence, richness of information is essential. So ample details on product-related points, knowledge on materials, overall décor and fashion trends will help in allaying consumer concerns.
The classical strategy of being a one stop shop is the best option provided it is financially viable. Width and depth in a range are very important for buying choices and preferences. Hence being an online megastore can be the first option.
But it is not an easy task both operationally and financially to be one stop shop. So a smarter strategy is to be present in most categories but to be a specialist in a few. The specialization can create the necessary salience and keep pulling customers frequently to the site.
Interestingly, the second largest home décor online company in USA, Wayfair.com started off as a marketplace of 200 specialists with categories ranging from birdhouses, cutlery to outdoor furniture.
The average consumer is still wary about buying large items online and offline experience centres, either stand-alone or SIS, where select items of the company are displayed can accelerate the process of giving solidity to the brand. This will also go a long way in building trust.
As per a recent Mckinsey study, internet usage will triple in India in another three years and broadband speeds are going to be substantially higher. This will open up more opportunities for categories that are dependent on aesthetic appeal and experiential buying. Therefore, this is the right moment to get the business strategy right.
Salil Sahu is responsible for running HSIL, a part of Wadhawan Retail Limited. He began his career as a Management Trainee in Shaw Wallace & Co. Salil has extensive experience in Sales, Marketing, Strategy and General Management and has spent the last 10 years in P&L management. He has worked in Wipro, Heinz, Shaw Wallace and a start-up and has been part of many pioneering initiatives.