Q. What investment opportunities does this industry present to its investors during uncertain times?
Indian furniture market by the commercial segment is expected to grow at a CAGR of 11.97% during 2018-2023. The lockdown and the pandemic have greatly shifted customer preferences as comfort and functionality now rank just as highly as design and aesthetics. With the need to spend extended hours at home, share a home office and study area with family members, and share leisure time together, the home furniture setup has changed significantly.
As this pandemic created a new paradigm shift of activity (from offices/schools to home) – Work from Home (WFH), study from home, etc. The use of technology and digital media both from Go-to-Market strategy and Communication strategy will have a greater emphasis. While we continue to expand our offline stores, we are increasing our penetration through online by increasing the delivery points from 2000 pincodes to 5000 pincodes.Q. Which are the major challenges for Indian furniture manufacturers and retailers?
The furniture industry noticed a gradual decline in revenue from the event management sector due to the complete derailment caused by the lockdowns and the various regulations put in place. It has led to the termination of many bookings and sales have seen a dip.
The challenges in working with new materials include high initial investments and skill-sets required to handle such materials. The upside while working with some of the newer materials is that it helps in improving the sustainability standards and are beneficial to organisations which are today adopting triple bottom-line approach of Planet, People and Profit.
Lastly, we face certain challenges while working with vendors on the components side for Godrej Interio. To bring the furniture manufacturers in India at globally competitive and quality standards, it is critical that the supply chain has a common vision. We have been working with our vendors along with CII. Through the CII – Godrej Vendor Cluster programme we have been able to develop our vendors to approach their business differently and today many of our vendors are thinking of value creation rather than pure, simple profitability from the business.
Q. Residential or Commercial! Which sector contributes to your businesses?
Godrej Interio is India’s leading premium furniture brand in both home and institutional segments with a strong commitment to sustainability and centers of excellence in design, manufacturing and retail. Godrej Interio’s product portfolio comprises of a wide range of solutions. Today, we design and manufacture furniture for office spaces, homes, educational institutes, healthcare facilities, laboratories and more.
Office furniture segment contributes Rs. 1500 Cr while home furniture contributes Rs. 900 Cr to the brand’s overall annual business revenue which is Rs. 2400 Cr. The company closed at Rs. 1850 Cr in 20-21 and is expected to grow at 28-32% in 21-22 where the industry growth is 11-13%.
Led by the largest in-house design team in the country in the furniture category and awarded with 33 India Design Mark Awards till date, GI aims to transform spaces with its thoughtfully designed furniture to create brighter homes and offices with products that have the highest design quotient in aesthetics, functionality and technology.
GI has the widest range of green choices for our customers which not only includes products but also services such as green interiors and recycling. Currently present in over 650 cities with 300 exclusive showrooms and 800 dealers, GI is one of the largest divisions of Godrej and Boyce Mfg. Co. Ltd., part of the Godrej Group, one of India’s largest engineering and customer product groups.
Q. Trends change with times. What new you have to offer to your consumers. Tell us more about the same.
The COVID-19 crisis definitely had a substantial impact on the global economy. Businesses all over the world including the furniture sector will have to evolve to accommodate this fluid situation.
On the customer experience front, prioritizing digital merchandising and online presence will eventually help companies navigate through the ever-changing consumer landscape. The website will play a crucial role but so will new outreach methods like webinars or even podcasts. A truly Omni channel experience will emerge, that will encompass virtual product tours, 360-view showrooms, and online consultancies.
On the product front, eco-friendly, customer friendly, easy to handle, and multifunctional furniture have a promising future. Also, as newer segments of consumers emerge, the ability to target these niche segments in a sustainable, profitable manner will be become increasingly important. Having said that, I believe that good designs that are long lasting, durable, and aesthetically pleasing will never go out of style.
Lastly, there will be an ongoing and significant shift of consumers from the unorganised to organised space in the next five years. As more and more consumers move from the unorganised to the organised space, some of the core needs for the category like well designed, long lasting furniture will continue to exist. At the same time, brands that bring in the right mix of quality and aesthetics in their product range, enhance customer experience through adoption of technology, and continue to innovate in their systems and processes will continue to win.
At Godrej Interio, we’re presently looking at leveraging technology, integration & advanced digitization of the 3 key journeys – Customer Journey, Product Journey, Employee Journey, to create seamless, free-flowing paths for Information & Knowledge. We continue to harness digital tools & technologies to create more captivating experiences for our customers and engage with them in most meaningful, convenient & time-efficient ways. To that effect, some of the tools we are capitalizing on are our 3D Product configurator, 3D Room Planner, Visual Search on our website for direct-to-consumer outreach among others.
Q. International trade, safety, and environmental regulations have an impact, sometimes beneficial, sometimes detrimental, on the industry. Your views.
The growth of the economy induced by trade expansion can have a direct effect on the environment via higher pollution levels or degradation of natural resources. Moreover, liberalization of trade might lead to specialization in pollution-intensive activities in some countries if environmental policy stringency differs between them – the “pollution haven hypothesis.” Trade, however, can contribute to a greater capacity to manage the environment more effectively, by supporting economic growth, development, and social welfare.
As part of its sustainability goals, Godrej Interio aims to have a third of its portfolio revenues comprising good and green products and services. In FY2020-21, 22 products were added to the Good & Green products offerings thus taking the cumulative count to 120. They plan to increase number of Good & Green products from 120 to 130 in FY 21-22. While Godrej Interio has already achieved 45% revenue share from Good & Green products in F.Y. 2020-21, it aims to continue to target 45% revenue share from Good & Green for the foreseeable future. The company plans to invest Rs 60 million in next 3 years in renewable energy projects.