Home Industry Trends Furniture may become sunrise industry of this decade

Furniture may become sunrise industry of this decade

Global furniture market is valued at $ 610 billion and India is not a key player in this segment despite having cheap labour in abundance. On the other hand, China’s share in furniture exports stands at a mammoth 38%. Presently, Chinese furniture production/consumption accounts for nearly 33%/25% of global market. It should be noted that China accounted for just 3% of the world furniture market in 2003.This shows that given proper support Indian furniture market too can make mark in the world market in the coming years.

Nascent stage of development

Indian furniture market is at nascent stage and is of the size of $20 billion. Further, per capita furniture consumption is hardly $15 as against $111 in China indicating that India has to put in lot of efforts to catch up with rest of the world. At the same time, it also presents lot of opportunities for growth. The industry is highly fragmented with unorganized segment accounting for as much as 80% of the total market. However, things are changing and the entry of Ikea, Pepperfry and UrbanLadder has given a fillip to organized space.

The market has been growing at an impressive 16% CAGR over 2015‐2020 with growing urbanization, nuclearization of families, and digitization. The unorganized industry has witnessed 12% CAGR, while organized market has grown by 43% CAGR.

Emergence of e-commerce

Emergence of e-commerce has given a new dimension to furniture industry and has helped the growth of organised sector. In recent years, furniture, like consumer appliances and groceries, is witnessing a hyper growth phase in the online segment. Though helped by a low base, online furniture sales has grown by 90% CAGR over CY17‐CY20 resulting in significant market share gains for the organized furniture market: from 7% in CY15 to 20% by CY20. Certain factors have contributed to the sharp growth of online sales in furniture. Increasing internet literacy over the years and efficient logistics management by newcomers like Pepperfry and Urban Ladder (taken over by Reliance Industries’ retail arm) have contributed to the growth of e-commerce in furniture. Apart from convenience factor, availability of the whole range of affordable designs, easy price comparisons, emergence of experience stores for touch and feel and efficient delivery and installation services have further contributed to the industry’s growth.

Cluster based approach

By supporting the furniture industry, the government is aiming to kill many birds with single stone. Under the ‘Atmanirbhar Bharat Mission’, the government is working to develop a furniture cluster near a port where common facilities for testing, research, design and packaging can be provided. Such a cluster would help furniture manufacturing on a large scale to meet domestic requirements and push India into the global furniture trade market. In fact, India is following the footsteps of China whose furniture industry has grown manifold in last few years through cluster-based approach.

China has developed major regional industrial clusters for furniture manufacturing like Pearl River Delta, Yangtze River Delta, Bohai Sea Delta Industrial zone and Central furniture industrial zone. Industry’s growth was facilitated by ensuring abundant raw material, labor and technical resources combined with commissioning of plants having automated manufacturing lines. The industry was also aided by boom in residential market and hotel industry. Further, boost in consumption due to rapid pace of urbanization and improvement in purchasing power also helped the industry to grow. Indian furniture industry too is positioned in similar position as Chinese furniture industry was a few decades ago.

Entry of IKEA and RIL

Driven by changing consumer purchasing patterns and preferences towards online shopping, the hyper growth phase of online furniture industry is expected to sustain in the medium term translating into further market share gains for the organized furniture industry. Entry of IKEA and Reliance Industries are the new developments in the furniture industry which is going to change the face of the industry in the coming years.

“Work from Home” culture

Outbreak of Covid-19 and subsequent nationwide lockdown and social distancing norms have led to emergence of “Work from Home” culture in the country as elsewhere in the world. More than a million IT sector employees are expected to continue to work from home even after the COVID‐inflicted lockdown is lifted. As this trend picks up in the long term, it may lead to a surge in spending towards improvising home infrastructure. This may lead to additional spending on house furniture adding to the total demand.

Above all, there are other economic reasons like increased pace of urbanisation, increasing per capita income and increased frequency of furniture replacement are some other factors which may help to keep the growth rate of the industry at healthier level.

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