PROJECT REPORT

ON
RECENT TRENDS IN FURNITURE INDUSTRY

SUBMITTED BY

Pahuldeep Singh Tuteja

A2000
MA(A&MM)- 3RD SEM

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 CONTENTS

Introduction to Furniture Industry................................... 3

Global Furniture Industry...................................................... 4
India - a preferred destination for IB..................................... 7
Introduction to Furniture Industry in India........................... 8
Furniture Industry Value Chain............................................. 12
Industry Growth, Trends & Forecasts................................... 13
Key Demand Drivers of Furniture Industry........................... 15
Major Players in India............................................................ 16
Industry Analysis.................................................................... 18
Drivers & Challenges faced by Indian Market........................ 20

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 INTRODUCTION TO FURNITURE INDUSTRY
The furniture business has a long history. From the old Greeks, Romans, and Egyptians
through the Middle Ages, the specialty of furniture making has advanced with innovation.
Where once furniture was essentially made by hand. The twentieth century has seen
mechanical headways that enable all way of furniture things to be computerized and mass-
created. In the United States, the furniture business started with the conventional techniques
for hand creating. As the division of work (undertaking specialization) strategy was
connected in the nineteenth century, furniture generation started to increment, and the
division between furniture assembling and deals created.

Furniture dealers built up the act of purchasing furniture at discount costs from producers and
offering them in showrooms, which picked up ubiquity in the mid-1800s. Expansive stores
kept their own particular workshops for claim to fame things. With the fast improvement of
retail exchange the immediate connection between the client and the furniture producer
started to vanish. By the mid 1900s large scale manufacturing of furniture was settled in the
United States, with primary assembling focuses at Jamestown, New York; High Point, North
Carolina; and Grand Rapids, Michigan.

In endeavors to create more deals numerous makers entered concurrences with retailers to
grandstand their items. The idea demonstrated fruitful as the producer approached a devoted
retail outlet, and the retailer got exclusive rights on the merchandise. A seller send program
was likewise made, enabling buyers to pick the furniture in a showroom and after that having
the maker deliver these things straightforwardly to their family unit; this enabled the
showroom to convey less inventories. Discount dispersion of furniture wound up plainly
partitioned into two classes: family unit/garden and office/business.

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Global Furniture Industry:

World generation of furniture is worth about US$ 376 billion in current US$.
This gauge depends on CSIL preparing of information from official sources,
both national and worldwide, that cover the 60 most imperative nations.

The seven noteworthy modern economies (which are, arranged by furniture

generation, the United States, Italy, Germany, Japan, France, Canada and the
United Kingdom) together deliver about US$ 159 billion. The furniture
generation of all high salary nations joined spreads 58% of the world aggregate.

Furniture generation in center and low salary nations as of now adds up to 42%
of the world aggregate in esteem. There are three nations (China, Poland and
Vietnam) where creation is expanding quickly on account of interests in new
plants particularly planned and worked for sends out.

World furniture exchange essentially includes 60 nations. The main merchants

are the United States, Germany, France and the United Kingdom. The real
exporters are China, Italy, Germany and Poland.

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Percentage breakdown of world furniture production:

25%

20%

15%

10%

5%
Furniture Production

0%

WORLD TRADE OF FURNITURE (US$ BILLION)

WORLD TRADE
120

100

80

60
WORLD TRADE
40

20

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 In 2009 the world economy was in recession and furniture demand has
decreased in all large furniture markets (i.e. those selling more than US$ 10
billion of furniture at retail prices), with the exception of China and India.
Conditions are expected to stabilize in 2010 and substantial growth is expected
in China, India and Russia.

Other major markets (the US, Canada, Australia, South Korea) will grow
moderately. In all other large markets demand will be either stagnant or
decreasing.

FURNITURE CONSUMPTION IN LARGE MARKETS, 2016 &

2017. FORECAST OF YEARLY CHANGES IN REAL TERMS:

Real change forecasts

2016 2017
UNITED STATES -10% 1%
CHINA 6% 6%
GERMANY -5% 0%
ITALY -11% -1%
UNITED KINGDOM -10% -5%
FRANCE -4% 0%
JAPAN -10% 0%
CANADA -3% 1%
SPAIN -10% -5%
INDIA 5% 6%
AUSTRALIA -1% 1%
SOUTH KOREA -5% 1%
RUSSIA -10% 3%

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 INDIA A PREFERRED DESTINATION FOR
INTERNATIONAL BUSINESS

India has undergone tremendous economic development in last few

decades. Considering the fast growing and barely tapped middle class market,
India has now become one of the most favoured destinations for international
businesses to expand. Some of the major changes and recent trends that have
given strength to Indian economy include India joining the trillion-dollar GDP
club, fast growing middle class with rising income levels and majority of Indian
population falling in below 34 years of age. These trends along with the growth
in sectors like real estate have a significant positive impact on the Furnishing
Industry in India.
Moving its population out of poverty and generating huge demand, India
has undergone tremendous economic development in last few decades.
Considering the fast growing and barely tapped middle class market,. To be
precise, India today is seventh most attractive destination for foreign direct
investments, after US, China, Brazil, UK, Mexico & Germany. Following part
of this chapter outlines the major trends and changes that India has gone
through during past decades.

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 INTRODUCTION TO FURNITURE INDUSTRY IN
INDIA

The Indian furniture industry is divided in nature with numerous little players. As far
as esteem, this industry is worth INR 350 billion keeping up a development rate of 10
percent. The composed segment, which records to 10 percent of the aggregate market, has
contributed altogether to the general business development by seeing fundamentally higher
development rate in the vicinity of 17 and 20 percent. Be that as it may, the chaotic part, as
specialists opine, is becoming just at a rate of 5 to 6 percent.

The furniture division in India just makes a negligible commitment to the

development of GDP, speaking to only a little percent (around 0.5%), which demonstrates an
enormous potential for development. It is assessed that the furniture business contains 25% of
the development business and equipment includes 40% of aggregate furniture industry, out of
this 20% is substitution and 20% is new. Wood and wooden items, furniture and apparatuses
convey a weight of 27.01% in the aggregate assembling segment.

The furniture business utilizes a sum of around 30,000 specialists. The future on the
furniture area in India appears to be certain. Discussing generation, a few assentions have
been marked between neighborhood makers searching for innovation and European and
Asian organizations attempting to achieve a potential open door in costs.

From the business perspective, India demonstrates great point of view to offer
furniture in the next years. As a matter of first importance, since its size and besides because
of the recently procured taste because of introduction to western furniture style.

India is one of the biggest buyers of wood in South East Asia. Until a couple of years
back the area had extensive amounts of accessible tropical woods. The most widely
recognized species in Indian woodlands are teak, rosewood, black, shrub, pine, cedar and
elastic trees. Supply of these "prepared to utilizes" species wound up plainly scarcer because
of unequivocal and wrong abuse and furthermore because of developing worry about nature.

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 In India, common elastic manors covers 520,000 hectares with another 6,000 hectares
replanted practically consistently since 1994. Kerala state (South India) produces 95% of the
aggregate supply of elastic wood in India

India imports wood (logs) particularly from Malaysia, Indonesia, Myanmar, Ivory
Cost, Cameroon, Nigeria, Ghana, South Africa and New Zealand and to some reach out from
South America. Most delicate and hard woods are foreign made from Russia, Scandinavia
and other South East Asian provinces. MDF is transported in from Europe, and there is
additionally a little neighborhood generation. Veneered board are winding up more prominent
in India and are foreign made from the European Union and the USA. The aggregate size of
Indian furniture industry is assessed at Rs. 350 thousand million yet very nearly 85% of this
is disorderly. The staying 15% is sorted out and is accepted to be developing at an enduring
pace of 12% to 15% for each annum.

The offer of the wooden furniture advertise is assessed at Rs. 600 million. Carpentry
industry of India is one of the quickest developing in the district's economy. A lot of this
development has been fuelled by the expanding access to present day hardware and
innovation through less demanding import approaches because of India's entrance into the
WTO in the year 1990s. There is a recognizable move in the inclination towards motorized
large scale manufacturing and the up degree of innovation.

FURNITURE INDUSTRY COMPOSITION:

As with the global market, home furniture is the largest segment in the
Indian furniture market, accounting for about 65 per cent of furniture sales. This
is followed by, the office furniture segment with a 20 per cent share and the
contract segment, accounting for the remaining 15 per cent.

HOME FURNITURE:

The size of the overall real estate industry in India is estimated to be

around US$ 12 billion. Home Furniture is growing at 30% for the last few

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years. Almost 80% of real estate developed in India is residential space and the
rest comprise of office, shopping malls, hotels and hospitals. Within the
household segment, major share is the middle class population of India. About
25 per cent of the urban middle class populations live in homes with five rooms
or more, while 45 per cent live in houses with three rooms or less.

OFFICE FURNITURE:

In line with the growth in the Indian economy and subsequent demand for
office space, this segment has witnessed good growth at a compounded annual
growth rate of 20%. The thrust on real estate and office construction is expected
to sustain in the near future, indicating continued growth for the furniture
industry

CONTRACT FURNITURE:

It primarily caters to hotels and its growth is consequently linked to

growth in tourism and development of new hotels. As per the World Travel
Markets Global Report 2008, scope for new tourism development could be
seen notably in emerging economic giants India and China, which are likely to
remain a strategic priority as growth is predicted to be robust, albeit slow down
in global economy. The growth of hotel industry in India can be attributed to the
recent growth in the service industry and economy as a whole.

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 FURNITURE INDUSTRY VALUE CHAIN

IMPORTERS

RAW
WHOLESALERS RETAILER
MATERIAL MANUFACTURERS
SUPPLIER

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 INDUSTRY GROWTH TRENDS AND FORECASTS

Maintaining a decent rate, the overall furniture industry has grown at 10%
since last two three years. An interesting trend underlying this growth rate is
that the organized sector of the industry has shown a better growth falling
between 17% - 20%.

This faster growth of organized sector can be attributed to certain factors

like:
Growth of overall organized retail industry is the most important reason
for faster growth of organized players in furniture industry. This can be
further attributed to higher disposable incomes, changing lifestyles and
Indias overall economic growth.

Lack of Time - Now days nobody has the time to employ a carpenter to
get his or her furniture made in home, like earlier days. Especially with
the growth in the number of double income families where both
husband and wife are working, no one has the time to get the furniture
made by the carpenter.

Convenience - Customers no more want to take the pain for deciding

designs or raw material for their furniture. Now, they just want to go to a
retail store, select something that they like, which goes along with latest
trends, which suits his wallet and buy immediately.

Considering the recent developments in organized retail industry and

rapidly changing consumer markets as constant factors, the overall furniture
industry is expected to grow at 15% CAGR for next five years.

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 KEY DEMAND DRIVERS OF FURNITURE
INDUSTRY

Consistent growth in the Indian economy and rising living standards are
the key factors driving the demand of the Indian furniture industry. Other than
these two, factors and sub-factors having significant influence on the industry
demand are as follows:

REAL ESTATE
GROWTH

RETAIL
INDUSTRY
CHANGE IN GROWTH
CONSUMER
DEMOGRAPHIC
S
MAJOR

KEY GROWTH

NEW AFFLUENT
INDIAN
TOURISM & CONSUMER
HOSPITALITY
INDUSTRY

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 PLAYERS OF BRANDED FURNITURE IN INDIA

Godrej Interio:
Godrej Interio is a unit of Godrej - One of the largest engineering and
consumer products companies in the country having varied interests from
engineering to personal care products. Godrej Interio, the leading player in
organized furniture industry of India, is present in both office and home
furniture, with more focus on office segment. Along with this, Godrej Interio
also specializes in providing customized solutions to some specific institutional
segments like labs, navy etc.

1. Style Spa Ltd:

Zuari Chambal Group of K. K. Birla conglomerate promotes Style Spa
Furniture Limited as a company. The company is pioneer and one of the largest
manufacturer in panel based furniture made from particleboard. Indian Furniture
Products Limited is the manufacturing company; furniture manufactured in this
company is sold under the brand name of Zuari. Style Spa is only into home
furniture, except for less than one percent of their customized services to some
special institutional segments. Further, in home furniture category, Style Spa
has positioned itself as specialist in Bedroom Furniture. Bedroom furniture
accounts for 65% of the total sales. Remaining 35% is from living room and
miscellaneous categories.

2. Durian Industries Ltd:

Durian is mainly into manufacturing of plywood, PVC doors, and
decorative veneer. 1998 onwards Durian entered in furniture trading, which is
importing and distributing in India. Durian currently imports furniture from
Malaysia, China, Thailand, Spain, and Italy. It is also into manufacturing, but

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only for some categories of furniture - chairs, modular workstations. 98 percent
of Durians Sales is from imported furniture and only 2 % is from domestically
manufactured. Durian is present in both categories - Home as well as Office
furniture. In case of Home furniture, it is present in almost all types of products.
However, Durian has limited presence in case of office furniture Office table,
Office chair, Conference table and Book Shelves.
3. Tangent:
Tangent is a chain of sprawling showrooms that put together everything
an office or a home needs. The furniture is gathered from all over the world.
Spain, Italy, Malaysia, France, Hong Kong with a firm grip on the international
furniture pulse, when we feel that you might like some furnishing, we bring it
down for you. Furniture designs at Tangent are renowned for their elegance,
international appeal, durability and affordability

Bedrooms and living rooms, cosy nooks and comfortable dens- our
furniture will fit right into your lifestyle. Set for bedrooms and living rooms.
Recliners, couches, sofas and settees, loveseats, beds, dressers, dining tables
the list is endless.
For your office needs, Tangent offers ergonomically designed contemporary
seating, spacious desks, open plan office systems, and much more. All of these
are designed to utilize space in an optimum manner and promote productivity.
Comfort and durability are the trademarks of our business furniture line. At
Tangent your every space requirement will be met. We invite you to help us
make your dreams come true.

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 INDUSTRY ANALYSIS
FIVE FORCES MODEL:

1. BARGAINING 2. BARGAINING POWER

POWER OF THE OF THE CUSTOMERS
SUPPLIER

3. COMPETITIVE RIVALRY

4. THREATS OF SUBSTITUTE 5. THREAT OF NEW

PRODUCTS ENTRANTS

Low High

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 1. Bargaining Power of the Supplier:

Low, as raw material is not only available from local abundant supplies
but can be imported as well, with imports getting easier day by day Till date,
Supply side is largely dominated by the unorganized sector.

2. Bargaining Power of the Customer:

With fast growing middle class and changing lifestyle, huge demand is
there. Only a limited number of dominant players are present in the organized
sector. However, in absence of the latter there is a possibility switching to
unorganized.

3. Competitive Rivalry:
Industry shifting from highly unorganized towards organized sector
Moderate competition among handful of players existing in organized sector.

4. Threat of Substitute Product:

No significant threat except for the possibility of new concepts like

plastic furniture, virtual office space, traditional furniture, small homes. Such
concepts might take years to come, but can have significant impacts.

5. Threat of New Entrants:

Because of growing domestic market, large business conglomerates are
planning to enter the industry in organized sector. (E.g. Reliance, Aditya Birla
Group). At the same time, industry entry does not require very huge
investments. No other significant barriers.

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 DRIVERS AND CHALLENGES FACED BY
INDIAN FURNITURE MARKET

India is the fourth largest economy in the world and its the largest
democracy with second largest GDP among emerging economies. World
Banks President James D. Wolfensohn confirmed that India is not the worlds
4th largest economy after USA, China and Japan in PPP (Purchasing Power
Parity). It is also one of the ten fastest growing economies in the world. With 1
billion populations, India remains on the fastest growing economies and even in
the present worldwide economic slowdown, has maintained GDP Growth rate
of nearly 6%. India today is 7th most attractive destination for foreign direct
investments, after US, China, Brazil, Mexico and Germany. Besides, India
offers higher rate of returns and profitability than anywhere else in the world.
Out of 1 billion population the upper and middle class constitutes 20% or 200
million people (or 30 to 40 million houses). By rent per capita:

2 percent of Indian has a per capita income in excess of 14,500 Euros,

which means 20 million people.

8 percent of Indians have a per capita income of more than 3,900 Euros,
which means 80 million people.

10 percent of Indians have a per capita income in excess of 3,200 Euros,

this is about 100 million people.

The Indian market has been enormous with a large base.

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 Levels of affluence are high- with the number of individuals in the high:
income demographic group doubling each year, according to NCAER
statistics.

The actual disposable income at the disposal of the affluent Indian is as

high as three to five times higher as the official statistics, on account of
the very large proportion of unaccounted (black) money income.

The market has, due to exposure to overseas products and lifestyles,

displayed the willingness and ability to purchase overseas brands and
products at high prices.

Customs duties and tariffs have been drastically reduced, in keeping with
government policy to open up the economy a policy which has stayed
constant despite changes in government. All the products in the INDEX
product range are now permitted for import into India under OGL or the
Open General License, which implies that no special import license is
required for import.

Despite the cut in duties, the rate of customs duties is fairly substantial
which makes the prices of products higher in India. There is a huge
demand for furniture, hardware and fittings, DIY equipment, lighting and
consumer non-durable and appliances.

While the Indian middle class still does not have as high a rate of
obsolescence as the US, and tend to use their furniture for several years
before changing or upgrading, the actual size of this segment makes

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 investment in this market more than worthwhile. The affluent classes
however, do have high rate of obsolescence of interior decoration
products and redecorate constantly.

All the above factors put together make manufacturers and retailers of a wide
range of consumer durables. Several overseas companies have already entered
the market and have been extremely well received by the market.

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