Rohan Ganatra Rohan Ganatra

Home Furnishings, Ranchi

The category of items occupying the home and make it fit to live in. Due to a recent boom in the residential realty sector, there has been an increased demand for home furnishing and home décor market. Due to an overall increase in purchasing power, there’s been an increased consciousness amongst buyers for stylish indoors and beautiful interiors.

With the rapid urbanization and the newly announced Affordable Housing Scheme, there’d be a further rise in the demand for household furnishing. The demand in the future is estimated from two types of consumers – New home owners and redecorating/renovating owners.

The total retail market is estimated to be worth Rs.144323 crores. Household retail market is estimated to be approximately 19% of this market and the total market grew at 24-27%. Retail store expansion took place at an approximate 16-21%.

The segment consists of three main categories:

1. Furniture

2.  Home Décor

3. Furnishing

Amongst the above mentioned three categories, Furnishing contributes about 26%. As mentioned above, Furnishings consists of bed linens, towels, curtains, blankets, upholstery, rugs, carpets and kitchen linens. Bed linens is almost 50% contributor in the Furnishing category and is the most selling item. Curtains, upholsteries, rugs, carpets and blankets have also witnessed a sudden surge in demand because of the recent renovation spree of the home owners in India. The frequency of purchase and re-purchase has been increasing because of the self-actualization needs of the Indian consumers coming to the fore.

The sector, as a whole is still largely un-organized and lacks the presence of two or three dominant market players. It’s because of the market being largely scattered, that not a lot of companies have been able to realize economies of scale to reduce the cost of products further.  Also, the sector has until recently, lacked real impetus for innovation in terms of designs and willingness for experimentation.

A recent announcement by Swedish Furniture power house – IKEA has raised the expectations for availability of good quality furniture and furnishing products at further lower prices. IKEA has announced 49 cities it’d be opening its typical size stores at. Further, it’d be experimenting with smaller size stores at different locations. It also plans to sell some proportion of its products online.

Another major area of demand for furnishings is the Hospitality sector where there have been consolidations recently. Demand continues to be strong in this sector and will continue to grow on similar lines as mentioned above. 

Why Bed linens?

 Of all the products in this category, bed linens is the highest selling product in terms of volume. This is due to a variety of reasons such as the requirement of a few sets in every household throughout the year, easy replacement and direct demand proportionality with the number of beds in every home.

Types of Sellers

For Home Furnishings and Home Décor, there are three major categories of retailers:

Retailers-In Ranchi, some of the largest retail sellers in Home Furnishings terms of business are Future Retail, Reliance Mart etc.

Future Retail Ltd.

Future Retail has the following brands Big Bazaar, Easyday, E-zone, FBB, Food Bazaar, Foodhall and Home Town etc. Future Retail has about 738 stores across all categories with annual customer footfall of around 295 million and more than 30000 employees. Big Bazaar was ranked the 3rd most trusted brand in the country and the most trusted retailer in the country.
In Ranchi, Big Bazaar operates 3 major retail stores:

·         Nucleus Mall

·         JC Tower

·         BG Tower

Target: The target customers of Big Bazaar are middle class and upper middle class segment family customers.

Brands: In the Home Furnishings category, Big Bazaar retail outlets across the country have the following brands –

·         Bombay Dyeing

·         Trident

·         Raymonds

·         Dreamline

Distribution Channel:

·         Big Bazaar’s parent company Future Retail Ltd. procures all its inventory in Home Furnishings from its Central Distribution Centre in Nagpur.

·         The consignment is a monthly delivery system and on special occasions could be a special order consignment. Orders are placed on the basis of previous year demand patterns by predicting an estimated growth for the current year.

·         All the logistics for Future Retail Ltd is handled by Future Supply Chain Solutions Ltd.

 

Promotion: Every product shelf has a Merchandise Presentation Manual which strategically places the products in an organized manner to represent clarity of view and stimulate sales of complementary products.

·         Regular Discounts in the form of percentage of the Retail price and Buy One Get One are usually used for Home Furnishing items.

·         Additional bulk discounts are also offered for the bulk orders up to 5% since the normal margins are high.

Pricing:

·         Bed Linens contribute to almost 50% sales of the Home Furnishing category for Big Bazaar retail outlets. The average Retail price for Bed Linen ranges from Rs.349-Rs.2600.

·         Total sales in Ranchi on an average amount to Rs.2800000 for Home Furnishings. Thus, on an average, Bed Linens amount to almost Rs.1400000 sales per month.

·         Profit margin on an average on any product type is 35%.

Wholesalers- Some of the largest wholesalers in terms of Furniture and Home Furnishings and Home Decors in Ranchi are Saboo Rickshaw Traders, Dhanuka Creations etc.

Saboo Rickshaw Traders

Saboo Rickshaw Creations was started in 1977. So far, Saboo Rickshaw Creations operates a single store in Ranchi and intends to open a high end showroom in the coming two years. The company currently has 30 employs and positions itself as both a retailer as well as a wholesaler. It also sells to State government along with Municipal Corporations on immediate as well as tender orders. Sales are also plenty to Industry such as Jindal Steel, Palriwal Hydrocarbons and Chemicals Private Limited etc. The company operates through one store in Upper Bazaar.

Target: Saboo Rickshaw Traders target customers are small retailers, organizations, state government and few retail customers in Ranchi.

Brands: Major brands of Bed Linens include:

·         D Décor

·         Homes

·         KC Fabrics

·         DC Dex

Distribution Channel: Saboo Rickshaw Traders doesn’t have a tie up with any distributor. Being a large and reliable seller, it directly places orders with the Manufacturers. For delivery of consignment, two major methods are followed –

1.       Courier Delivery- In case of smaller volume orders, Courier route of delivery is preferred. Saboo Rickshaw Traders has a tie up with SM Courier service. Depending on the immediacy of the order specification, two methods of courier are chosen

·         Flight – This type of delivery service is preferred in case of specific immediate orders not large in quantity.

·         Surface – This type of delivery service is preferred when order is larger in volume but and the delivery schedule is within 3-4 days. The mode of transport is via train.

2.       Truck Consignment – In case of bulk orders and to cater to the demands of its selective retail customers, Saboo Rickshaw Traders hires the service of one of a few transport companies to get his consignment from different manufacturers. The volume of order depends on the sales of the month in the previous year and by estimation.

Promotion: The only means of promotions for Saboo Rickshaw Traders is by offering a 5-10% discount to its retained customers.

Pricing:

·         The average Retail price for Bed Linen ranges from Rs.349-Rs.2600.

·         Total sales in Ranchi on an average amount to Rs.1500000. On an average, bed linens contribute to about 20%. Thus, on an average Bed Linen sales are almost Rs.500000.

·         Profit margins reported are approximately 20% on Home Furnishings on an average.

Franchisee – The Home Furnishing sector is largely unorganised and operates in a manner similar to the FMCG sector in terms of retailing. There’s complete absence in the Indsutry of a large firm distrbribution system and there exist multiple types of channels. The only store in Ranchi operating on a Franchisee based system is Skipper Furnishings. Other stores are operations in other Eastern regions such as Kolkata, Dhanbad etc.

Skipper Furnishings

Skipper Furnishings is a relaitvely new Furnishings store which operates on a Franchisee based model. The store in Ranchi opened up 5 years back. The company operates from Kolkata and doesn’t manufacture products. The textile are imported from countires such as China, European countries etc. After branding of prodcucts, it’s then shipped to the franchisee stores.

Target: Skipper Furnitures targets high end luxury home owners. It gets 60% of its business from retained customers. It also services a lot of customers from other cities in Jharkhand such as Dhanbad, Jamshedpur, Bokaro etc.

Brands: Operating under a franchisee system, Skipper Furnishings has the following brands:

·         The Home Studio

·         Plush

Distribution Channel:

·         Stores operating under Skipper Furnishings don’t have the risk or financial obligation of the product until the sales are made

·         The company bears the risk of products. Orders are placed on a customized basis in very small volumes as they’re received.

·         The transportation is arranged by the company and the cost is included in the product.

Promotion:

Promotional activities to boost sales are minimal from Skipper Furnishings. Stores are operated with maximum viewing space in consideration. Stores usually have a lot of walking area and product choices are large.

Basic discounts are offered to retained customers as a part of goodwill.

Pricing:

·         Product is available on a length basis and stitched to customer demands by offering tailoring services.

·         The usual range of 4 meter length on clothe varies from Rs.1300-Rs.1600.

·         Profit margins for retail stores are pegged at 10% since the Franchisor margins are also included into the cost.

Rohan Ganatra

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