Report Home Utility Furnishing Products

INVESTMENT POTENTIAL STUDY
INDIAN HOME UTILITY & FURNISHING INDUSTRY
Prepared For:
January 1, 2008
Prepared By: ,
IMRB International
February 2009
Preface
Thai-Indian business relations have improved considerably over the past decade. Thailand and
India are close to concluding a Free Trade Agreement (FTA) covering trade in goods by 2010.
The Free Trade Agreement between Thailand and India is expected to improve trade relations
between the two countries further. The FTA covering trade in goods would lead to long term
mutual benefits in trade and investment and the partnership would be expanded further to cover
technology knowledge and expertise
India's primary imports from Thailand are machinery, electronic appliances, textiles, plastic
material, transport equipment, vegetable oil and latex. The major items of imports under FTA are
polycarbonate, cathode-ray tubes, color-TVs, air conditioners and Aluminum products.
Thailand‘s main imports from India are jewelry, gemstones, steel, pharmaceuticals and ferrous
metal ores.
India's trade with Thailand could touch USD 7 billion by 2010-11 propelled by a doubling in
transaction under Free Trade Agreement (FTA). The EHS was implemented on September 1,
2004, under which tariffs on 82 items were to be phased out by September 1, 2006 by both the
sides.
The trade between Thailand and India is estimated to be US $ 7 billion by 2010-11 from US $
2.2 billion in 2005-06.
The total trade of 82 items under Early Harvest Scheme (EHS) of the FTA was increased by over
140 percent to about US $ 358.63 million in 2005-06 from US $ 149 million in 2003-04. The
share of these 82 items in India-Thailand trade increased from 10.34 percent in 2003-04 to 15.68
percent in 2005-06.
Thailand‘s export to India of the identified 82 EHS items was increased from US $ 84.64 million
to US $ 275 million during the period from 2003 – 04 to 2005 – 06. During the same time,
India‘s export to Thailand of these items increased from US $ 64.28 million to US $ 83.03
million during the same period.
INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -1-

In 2007, Thailand‘s export for these 82 items was US $ 406.31 million. Due the FTA between
two countries, Thailand is able to manage the trade surplus of US $ 598 in 2007 in bilateral trade
between Thailand and India.
With significant potential for growth of business between the two countries, the Ministry of
Commerce, Thailand and Royal Thai Embassy would like to understand the investment potential
across the following identified product categories:-
1. Home Utility and Furnishing: This would broadly include three product categories:-
a. Furniture – Largely focusing on house hold furniture e.g. Sofa-set, Dining

table, Corner / corner table etc. Also covering office furniture e.g. office
chairs, cubicles, tables etc and open-air furniture i.e. the furniture used in the
garden, near pools etc
b. Interior Decoration items – This would include Showpieces, Wooden

handicraft, photo frames, and artificial flowers.
c. Utensils – Household (kitchen), HoReCa (Hotel Restaurant Catering)

Segment, Institutional / Office
d. Plastic Products - Food containers, plastic storage boxes etc e.g. Cello,
Tupperware, Milton, Nyasa etc
2. Construction Material: This would include Bathroom Fittings, Tiles/Floorings

(including wooden), Roof Tiles (used in the costal areas), Metal (Al, Tin etc) /
Gypsum boards used for partition
3. Hospitality Services: This would be understood with the objective of tie-up with
existing hotels – spas, specialty restaurant (e.g. Thai cuisine restaurant), health
wellness services etc. The client would be interested in management control and
running the property. The stand-alone spas e.g. Kaya clinic is also covered in the
purview of the study.
4. Auto parts and accessories: It would cover both types of auto parts:-

a. Essential auto parts (low volume high value items e.g. gear box, clutch
plates etc and high volume low value items like break pads etc). These parts
would be for 2-wheelers (e.g. moulding etc) and 4-wheelers – both cars and
commercial vehicles.
b. Accessories / decorative items e.g. music systems, alloy wheels etc
In order to understand the trade potential across the above categories, the Ministry of Commerce,
Thailand and Royal Thai Embassy has commissioned Business and Industrial Research Division
(BIRD) of IMRB International to avail its research based consultancy services.
Report for each of the above-mentioned product categories shall be submitted separately in four
different modules.
This report is for Home utility and furnishing segment that includes Furniture, Interior
Decoration items, Utensils and Plastic Products. Given the similarity and overlap in couple of
these product categories, this report is divided and presented in two parts as follows:
1. Module 1 – Home Furnishing (Furniture & Interior Decoration)
2. Module 2 – Home Utility (Utensils and Plastic Products)

TABLE OF CONTENTS
MODULE 1 – Furniture & Decorative Items Industry of India
Executive Summary ...............................................................................................11

E.1. India – a preferred destination for International Business ..................................................... 11
E.2. Furniture Industry in India..................................................................................................... 11
E.3. Indian Décor and Handicrafts Industry ................................................................................. 12
E.4. Understanding the Value Chain of Furnishing Industry........................................................ 13
E.4.1. Furniture Industry Value Chain .................................................................................. 13

E.4.2. Décor and Handicrafts Industry Value Chain ............................................................. 13
E.5. Industry Analysis ................................................................................................................... 14
E.5.1. Furniture Industry Analysis......................................................................................... 14

E.5.2. SWOT Analysis of Décor and Handicrafts Industry................................................... 14
E.6. Consumer Insights ................................................................................................................. 15
E.7. Recommendations for Thai Investors .................................................................................... 16
1. Global Furniture and Handicrafts & Décor Industry ...................................18

1.1. Global Furniture Industry ...................................................................................................... 18
1.1.1. Overview: .................................................................................................................... 18

1.1.2. The main furniture exporting countries ....................................................................... 20
1.2. Global Crafts and Decorative Industry .................................................................................. 21
1.2.1. Overview ..................................................................................................................... 21

1.2.2. Major Importing Nations ............................................................................................. 21
1.2.3. Major Exporting Nations ............................................................................................. 22
1.2.4. Segmentation – Exporting Nations .............................................................................. 23
2. INDIA – Important Trends in Indian Economy .............................................24
3. Furniture and Handicrafts & Décor Industry in India..................................27

3.1. Furniture Industry .................................................................................................................. 27
3.1.1. Overview: .................................................................................................................... 27

3.1.2. Industry Segmentation ................................................................................................. 27
3.1.3. Industry Growth Trends and Forecasts ........................................................................ 29
3.1.4. Key Demand Drivers of the Furniture Industry........................................................... 30
3.2. Indian Handicrafts and Decorative Industry .......................................................................... 31
3.2.1. Overview ..................................................................................................................... 31

3.2.2. Classification / Segmentation of the Industry: ............................................................ 32
3.2.3. Handicrafts Clusters in India ....................................................................................... 33
3.2.4. Challenges in the Indian Handicrafts and Décor Industry ........................................... 34
4. Understanding the Value Chain .......................................................................35
4.1. Furniture Industry Value Chain ............................................................................................. 35
4.1.1. Imports ......................................................................................................................... 35

4.1.2. Domestically Manufactured Furniture......................................................................... 37
4.1.3. Distribution Structure .................................................................................................. 38
4.1.4. Furniture Industry and Organized Retailing ................................................................ 41
4.2. Handicrafts & Décor Products Value Chain .......................................................................... 43
5. Industry Analysis ...............................................................................................45

5.1. Indian Furniture Industry Analysis – Five Forces Model ...................................................... 45
5.1.1. Bargaining power of Suppliers .................................................................................... 46

5.1.2. Bargaining power of Customers .................................................................................. 46
5.1.3. Competitive Rivalry .................................................................................................... 47
5.1.4. Threat of Substitutes .................................................................................................... 47
5.1.5. Threat of New Entrants................................................................................................ 48
5.2. Indian Handicrafts & Décor Industry – SWOT Analysis ...................................................... 50
6. Consumer Insights .............................................................................................52

6.1. Respondents Profile ............................................................................................................... 52
6.2. Purchase Decision Process – An Introduction ....................................................................... 53
6.2.1. Problem Recognition / Need Awareness Stage ........................................................... 54

6.2.2. Information Search ...................................................................................................... 55
6.2.3. Evaluation of Alternatives ........................................................................................... 57
6.2.4. Purchase Decision........................................................................................................ 60

6.2.5 Post-Purchase Evaluation ............................................................................................. 62
6.3. Customers‘ Perceptions about Thailand ................................................................................ 64
7. Recommendations for Thai Investors ..............................................................65

7.1. How to Enter the Four Market Segments .............................................................................. 65
7.1.1. Entry Options ............................................................................................................... 66

7.1.2. Distribution .................................................................................................................. 68
7.1.3. Brand Building & Promotion ...................................................................................... 69
7.2. Market Attractiveness ............................................................................................................ 70
8. Annexure .............................................................................................................71
8.1. Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 71
8.1.1. Style Spa ...................................................................................................................... 71

8.1.2. Godrej Interio .............................................................................................................. 72
8.1.3. Durian .......................................................................................................................... 73
8.2. Wooden Handicrafts Industry – Overview ............................................................................ 75
8.2.1. Role of Wooden Handicrafts Industry in Indian Economy ......................................... 75

8.2.2. Factors That Affect Growth ......................................................................................... 76
Executive Summary ...............................................................................................78
E.1. Tableware Industry in India................................................................................................... 78
E.2. Plastic Container Industry in India ........................................................................................ 79
E.3. Value Chain – Tableware & Plastic Container Industry ....................................................... 80
E.3.1. Value Chain for Manufacturers – ................................................................................ 80

E.3.2. Value Chain for Importers – ....................................................................................... 81
E.4. Industry Analysis ................................................................................................................... 81
E.4.1. Tableware Industry...................................................................................................... 81

E.4.2. Plastic Container Industry ........................................................................................... 82
E.5. Consumer Insights ................................................................................................................. 82
E.6. Market Attractiveness of Tableware & Plastic Container Industry....................................... 83
E.7. Recommendations ................................................................................................................. 84

9. Global Scenario ..................................................................................................86
9.1 Global Tableware Industry: .................................................................................................... 86
9.1.1 Overview: ..................................................................................................................... 86

9.1.2 The Changing Consumers ............................................................................................ 86
9.2. Global Plastic Products Industry............................................................................................ 88
9.2.1. Plastic Industry ............................................................................................................ 88

9.2.2 Plastic containers .......................................................................................................... 88
10. Tableware & Plastic storage containers Industry in India ..........................89
10.1. Tableware Industry .............................................................................................................. 89
10.1.2. Industry Segmentation ............................................................................................... 89

10.1.3. Customer classification.............................................................................................. 92
10.1.4. Major manufacturers in India .................................................................................... 93
10.1.5. Growth Drivers for Tableware Industry .................................................................... 93
10.1.6. Analysis of Tableware Industry in India ................................................................... 96
10.1.7. Critical Success Factors for Tableware Industry ....................................................... 98
10.2. Plastic Containers Industry in India ..................................................................................... 99
10.2.1 Overview .................................................................................................................... 99

10.2.2 Industry Segmentation .............................................................................................. 101
10.2.3. Customer classification............................................................................................ 102
10.2.4. Major manufacturers in India .................................................................................. 102
10.2.5. Growth Drivers for Plastic storage containers Industry .......................................... 103
10.2.6. Analysis of Plastic storage containers market in India ............................................ 103
10.2.6. Analysis of Plastic storage containers market in India ............................................ 104
10.2.7. Strengths and the weaknesses of the industry ......................................................... 106
10.2.8. Critical Success Factors for Plastic storage containers ........................................... 107
11. Imports structure in Indian Tableware & Plastic containers market ......108
11.1. Overview ............................................................................................................................ 108
11.2 Current Import Duty Structure ............................................................................................ 108
11.3. Major brands being imported in Indian tableware market ................................................. 108
11.4. Major brands being imported in Indian Plastic containers market .................................... 109

11.5. Channel Structure for Importers ........................................................................................ 109
12. Understanding the Value Chain ...................................................................111

12.1. Value Chain of Tableware Industry ................................................................................... 111
12.1.1.Case study for Tableware: Value chain of La Opala RG Ltd. .................................. 111
12.2. Value Chain of Plastic Containers Industry ....................................................................... 112
12.2.1. Case study for Plastic containers: Value chain of Cello Thermoware Ltd. ............. 113
13. Consumer Insights .........................................................................................115
13.1. Overview ............................................................................................................................ 115
13.2. Customer Purchase process................................................................................................ 115
14. Conclusion ......................................................................................................121

14.1. Market Attractiveness ........................................................................................................ 121
15. Recommendations ..........................................................................................122

15.1. Entry Strategy .................................................................................................................... 122
15.2. Positioning of Tableware & Plastic storage containers ..................................................... 123
15.3. Target Product Categories.................................................................................................. 123
15.4. Target Customers ............................................................................................................... 124
15.5. Distribution ........................................................................................................................ 124
15.6. Brand building & Promotion ............................................................................................. 125
15.7. Value Chain ....................................................................................................................... 125
16. Annexure .........................................................................................................126

16.1. Profile of major players in tableware category .................................................................. 126
16.1.1 La Opala ................................................................................................................... 126

16.1.2 Yera .......................................................................................................................... 127
16.1.3. Bharat Pottery Ltd. .................................................................................................. 128
16.1.4. Art d‘ inox ............................................................................................................... 129
16.1.5. Magppie ................................................................................................................... 130

16.2. Profile of major players in Plastic storage container category .......................................... 130
16.2.1 Cello.......................................................................................................................... 130

16.2.2. Tupperware .............................................................................................................. 131
16.2.3. Hamilton .................................................................................................................. 132
16.3. Import Legislation in India ................................................................................................ 134
16.3.1. Principal Law & Import Export Policy.................................................................... 134

16.3.2. Mode of Pricing and INCO TERMS ....................................................................... 134
16.3.3. Customs Duty .......................................................................................................... 135
17. References .......................................................................................................137

MODULE 1 - INVESTMENT POTENTIAL STUDY
FURNITURE AND DECORATIVE ITEMS INDUSTRY OF INDIA
INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY - 10 -

Executive Summary
E.1. India – a preferred destination for International Business

India has undergone tremendous economic
Rising consumption
development in last few decades. Considering
Rising income Multiplier effect Rising production
the fast growing and barely tapped middle class
GDP growth
market, India has now become one of the most
favored 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.
E.2. Furniture Industry in India

The Indian furniture industry is fragmented in nature with many small players. In terms of value,
this industry is worth INR 350 billion (2007-08) maintaining a growth rate of 10 percent. The
organized sector, which accounts to 10 percent of the total market, has contributed significantly
to the overall industry growth by witnessing significantly higher growth rate between 17 and 20
percent. However, the unorganized sector, as experts opine, is growing only at a rate of 5 to 6
percent.
Industry Segmentation – The furniture

industry can be segmented into the following Industry Segments
Contract, Household,
three categories:- 15% 65%
1. Household segment – The size of the

overall real estate industry in India is
estimated to be around US$ 12 billion
Office, 20%
(Source: FICCI). This figure is growing
at 30% for the last few years. Almost
80% of real estate developed in India is residential space and the rest comprise of
INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 11

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.
2. Office segment – 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.
3. Contract segment – 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 Market‘s
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.
The 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 factors, growth in the
organized retail industry, real estate growth, increasing affluence of Indian consumers and
growth in hospitality and tourism industry of India have significant influence on the industry
demand.
E.3. Indian Décor and Handicrafts Industry

The handicraft industry employs seventy million people in India. The industry production is
estimated to be worth INR 210 billion (2007-08), out of which a significant proportion (close to
INR 90 billion) is exported. The Indian handicrafts industry, which has a status of cottage
industry, has grown at a promising rate of 15 to 20 percent in the last few years.
The few important features of Indian handicraft and decorative industry are low capital
investment, cheap and skilled labor, diversified product portfolio, high ratio of value addition,
high potential for export and foreign exchange earnings and flexible production. However, lack

of infrastructure & technological support, lack of awareness of international and new trends and
poor promotional campaigns are a few drawbacks that need to be addressed.
E.4. Understanding the Value Chain of Furnishing Industry
E.4.1. Furniture Industry Value Chain

The value chain of the Indian furniture industry can be divided under two broad categories –
imported furniture and domestically manufactured furniture. The channel flow across these two
categories is summarized in respective charts below.
Franchisee
Manufacturers
Own Stores
Imported Furniture
Imports Distributor Value Chain
s Retailers
Importers Distributor
s
Franchisee
Domestically Raw Material

Manufacturers
Suppliers Own Stores
Manufactured Furniture
Value Chain Distributor
Raw s
Material
Imports
E.4.2. Décor and Handicrafts Industry Value Chain

The handicraft industry supply Producers
chain of India (shown in the

adjoining figure) largely consists
Importers / Wholesalers
of importers and wholesalers
who supply goods to retailers
and small chains. Final Point of Sale
The most popular channel for

distribution of the more
traditional, ethnic products of the
Small Retailers Large Retail Chains E – Retailers
decorative type is the large  Stock in bulk  In recent times, internet
 Most common channel
has emerged as a major
 Carry variety of product  Sell to final consumers or distribution channel for
categories under one small retailers décor items handicrafts
shop items

number of small and independent retail stores.
E.5. Industry Analysis
E.5.1. Furniture Industry Analysis

The Porters Five Forces model has been used to analyze the industry. The summary of the
analysis is as follows:
The furniture industry is fragmented in nature, comprising of many small and unorganized
players. In view of this market scenario, customers are not able to experience a wide variety and
new range of products. The suppliers are also not in a position to bargain much with the
manufacturers due to the domestic availability and easier imports of raw material,
Although 90% share of the industry remains with the unorganized sector, industry has witnesses
a rapid growth in the organized segment. However, due to growing demand and initial stage of
organized sector growth, the internal competitive rivalry is not significant.
The industry is vulnerable to new players with factors like increasing demand, comparatively
low capital investments and easier imports.
To sum up, there is an increasing demand but limited number of dominant players. This
provides an attractive opportunity for Thai companies to enter the organized sector of
Indian furniture industry.
E.5.2. SWOT Analysis of Décor and Handicrafts Industry

The strength factors like low barriers of new entry, abundant and cheap labor to compete on
price. low capital investment, variety of products categories provide an advantage to the décor
and handicrafts industry. However, factors like lack of infrastructure and communication
facilities; lack of co-ordination between government bodies and private players; inadequate
information of new technology; inadequate information of current market trends; less interest of
young people in craft industry are some of the industry weaknesses.
Comparing the strengths, weaknesses, available opportunities and potential threats and respective
impacts of each of these, it can be said that any investor who wants to enter India as an industry
player can take great advantage from following factors - low costs, growing demand, low
competitive rivalry, ignorance / lack of information availability.

E.6. Consumer Insights
Key consumer insights, important from the point of view of foreign entrants are as follows:
 The major reasons identified for home furnishing purchases are related to home
remodeling, renovation and new home purchases. Other than these occasions, furniture
and decorative products are also purchased during celebrations around Diwali or
marriage seasons.
 The most preferred information sources for furniture purchases are internet, Word of
Mouth, print media and exhibitions. In case of interior decoration items, there is no such
information search phase. Sometimes, visiting exhibitions become the source of
information and point of purchase as well.
 As expected, it was observed that home furnishing purchase decisions are mainly taken
by women in the household. However, in case of furniture it is a joint decision between
husband and wife (also influenced by the children in some cases), because of high money
outlay involved in it.
 After sales services / warranty period is an important consideration in the purchase

process of furniture goods. The other factors that are considered are aesthetics, quality,
purpose and price. It is recommended that a new player who wants to enter in the Indian
market is should have multiple point of presence and established brand name in addition
to meeting consumers‘ expectations for basic looks and quality. The company can set up
its own showrooms across the country, with exclusive product designs and position itself
as a brand that will be always there to provide after sales support. .
 Perception about Thai companies – In terms of product design and quality, Indian
customers see Thailand as a country with more innovative, attractive and varied designs.
There is association of fragility with Thai products in the consumer mindsets, which can
have a positive impact for decoration related product categories but can have a negative
impact in case of furniture and utensils. In terms of price range, consumers perceive
Thailand as a country that will offer most of the products at affordable prices. On a
comparative scale, Thai price range will fall somewhere close to China and India.

E.7. Recommendations for Thai Investors
The recommendations for the identified four potential market entry segments can be summarized
as follows:-.
Market Key Take Out from the Entry Distribution Target Critical Success
Segments Market Study Strategy Route Segment Factors
Expanding Middle class and
Either
Upper middle class
through
Establishing
Joint Product Innovation,
Household India is a complex country with own retail
Venture or Exclusive designs,
cultural variation  important to chains –
Furniture – step by step Upper Middle Well – Established
gather information first Specialty
High End entry by Class Brand Name, Better
Store/Home
Segment establishing packaging,
Middle - middle and Upper middle Improvement
only a Customization
class ready to pay extra to ensure store format
liaison office
durability
first
However, considered as a price Competitive Prices,
competitive country, Thailand is Tying up with Availability,
Household seen as a country with a status existing Retail Middle – Warehouses in Tier
Furniture – quotient attached with its products. Imports Chains – Middle 1 cities, Strong
Low End Perceived as a shopping Hypermarket Classes Logistics Network,
Segment destination of moderately Format High Quality, After
affluent class of the society Sales Support,
Office Space in India is growing
Timely Delivery,
rapidly, will grow at 20% CAGR
Direct Selling Service Warehouses and
in coming four to five years Joint
and Marketing Industry (IT connectivity
Office Venture /
Tie ups with and BFSI through strong
Furniture Institutional Customers look for Medium
Builders and Sector) - Mid Logistics Network,
brand names that can Scale Firms
Architects Size Offices Brand Name and
compliment with their own brand
After Sales Support
name
Indian customers are now spending
more on Home Furnishing
Large Product
Among Indian customers, Assortment, Large
Buying and
Handicrafts Thailand is perceived to be price Volumes, Better
Selling Agents,
& Décor competitive Imports
through
Middle Class Packaging, Product
Products Exclusivity, Ethnic
wholesalers
Thailand  Positioned as a / Culture based
country with delicate, attractive Positioning
and ethnic products in the
handicrafts and décor industry

The market attractiveness analysis of the above-mentioned four segments has been done based
on factors like Industry Growth Stage, Growth of Customer Segments, Growth in Allied Sectors,
Competitive Scenario, Potential Entry Barriers Scale of Investments required etc. The findings
from this analysis can be summarized in the table below:
Market Segment Market Attractiveness Main Criteria / Advantages

Huge target customer base, advantage in terms of
volume; Minimum efforts and investments required for
Household Furniture –
 market development (entry through JV and distribution
Low End Segment
through existing hypermarkets) and promotion; Huge
demand but limited supply from organized sector
Office Segment of India is in a booming stage,
Office Furniture  growing at a fast pace (20% CAGR), Limited number
of sector strong players in the industry,
There is no need for macro-investment; Products are
Handicrafts & Décor
 present throughout the low value to high value added
Products
band, providing an opportunity to make good margins
Increasing Affluence of Indian upper middle class;
Household Furniture – Given higher disposable income, customers are ready

High End Segment to pay an extra buck for better quality and designs; No
strong industry player in this segment

1. Global Furniture and Handicrafts & Décor Industry
1.1. Global Furniture Industry
1.1.1. Overview:
According to the CSIL‘s (Centre for World Furniture Production
Industrial Studies) ―World Furniture Other
Emerging
Outlook 2008‖ report, world production of Countries,
U.S., 21%
12%
furniture is worth about US$ 307 billion. India, 3%
The seven major industrial economies Poland, 3%

Italy, 8%
(which are, in order of furniture production,
the United States, Italy, Germany, Japan, China, 18% Germany, 7%
the United Kingdom, Canada and France) Japan, 4%

Other
together produce 50% in value of the world Developed U.K., 3%
Countries,
France, 3% Canada, 3%
total. The furniture production of all 15%
developed countries combined covers 65% Emerging Countries Developed Countries
of the world total. Furniture production in emerging countries currently amounts to 35% of the
world total in value. There are two countries, China and Poland, where production is increasing
rapidly.
The opening of furniture markets over the past Ten Years
The most important structural
phenomenon of the past decade is the Imports/Consumption Ratio
35%
increased degree of openness of the 29.7% 30.0% 29.9%
30% 28.3%
26.5%
furniture markets, measured as the 24.3% 24.8%
25% 22.5%
21.6%
ratio between imports and 20.2%
20%
consumption. This increase is 15%
particularly important in the United 10%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
States, where the trade deficit for
furniture was almost US$ 22 billion in 2006, providing the most important stimulus to world
furniture trade. Growth of the imports/consumption ratio has been rapid, reaching 25% in 2001
and almost 30% in 2006. It is now leveling off and it is estimated that in the next few years it
will remain at a level of about 30%.

International trade of furniture has grown faster than furniture production because of the opening
of the main furniture markets in the last ten years.
World trade of furniture grew by 7% in 2007 and was equal to US$ 97 billion. It is expected that
this figure will grow by 5% in 2008, in which case, it would be equal to US$ 102 billion.
World Trade of Furniture (In US$ Billion)

120
102
100
97
84 91
80 77
65
55
60
48 52 51
45
40
20
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
A sizeable percentage of international furniture trade is carried out within the economic regions
into which the world economy can be divided:
 In the European Union (15) and Norway and Switzerland about 57% of foreign furniture
trade takes place within the same countries
 In the NAFTA area (US, Canada and Mexico) about 33% of foreign furniture trade is
within the three countries
 In the Asia and Pacific countries, more than 40% of total foreign furniture trade is within
the region.
On balance, trade within regions amounts to about 47% of total world furniture trade. Therefore,
only one-half of world furniture trade can be considered "global" in the sense that it takes place
between countries in geographically distant regions. The most important of these flows are:
 From the emerging countries of Asia to the United States (67% of outgoing flows from
this area) and to Europe
 From Europe to the United States, mostly from Italy
 From the new EU members to Western Europe, especially to Germany

1.1.2. The main furniture exporting countries
The main furniture exporting countries are China, Italy, Germany, Poland and Canada. The
evolution of exports by the main exporting countries between 1997 and 2007 was as follows:
The relative positions of the main exporting countries have changed considerably between 1997
and 2007. China moves to the first position becoming the leading exporter, Italy moves from first
to second and Poland from eighth to fourth.
About 52% of exports come from developed countries; however, the share of developed
countries decreased by 23% to the advantage of some emerging countries: From 1997 to 2006
China's share increased from 4% to 19%. Other major furniture exporting emerging countries are
Poland, Vietnam and Malaysia.
Percentage breakdown by geographic area in 1997 and in 2006 was also studied. Several
interesting changes that emerged from this study are as follows:
 The European Union lost about 15 percentage points
 The new EU members gained about 6 percentage points
 The Asia and Pacific area gained 13 percentage points
The surge of imports into the United States was accompanied by an increase in exports from
China, Canada and Mexico. The U.S. are number one furniture importing country on a
world scale, with imports growing from US$ 8.6 billion in 1997 to US$ 25.3 billion in 2007
(preliminary) in current dollars.

1.2. Global Crafts and Decorative Industry
1.2.1. Overview
Driven by positive changes in major markets like USA and Europe, the world crafts and
decorative market has been witnessing a good growth from 2001 onwards.
The rising levels of consumer disposable incomes together with the tendency to accessorize and
re-style homes with unique articles are the major driving factors for the surge in demand for
crafts and decorative products. However, the demand is more for low price products, which are
usually machine made. Exporters are at their best in delivering products low price products that
match consumer preferences. As a result, the market is becoming highly price competitive in the
low and medium value market segments.
Currently, the market is more oriented toward fashionable products and hence, prone to impulse
purchases, which result in shorter product cycles. Another significant change is the surge in
contract manufacturing arrangements between EU and Asian countries like China, Hong Kong
and Taiwan. As a result, these countries, which have been doing well on basic factors of
production like labor and raw material, are now exposed to sophisticated designing,
manufacturing processes, technology, product requirements and standards, and consumer
preferences. This has enabled a country like China to leverage its inherent strengths like
availability of abundant and quality labor, and raw material, to become the single largest exporter
with a market share of about 30% in the total world exports.
1.2.2. Major Importing Nations

The top 10 markets, which include countries such as USA, Germany, United Kingdom, Japan,
Hong Kong, France, Canada, Belgium and Spain, account for 77.5% of the total world imports of
crafts and decorative products.
USA is the largest importer accounting for 32.3% of the world imports. Despite the fact that it
is a highly competitive market, it continues to remain the most attractive market because of the
sheer purchasing power and stability of the market. Increases in population and multi-ethnic
composition are other factors that make this market attractive. Germany is the second largest
importer and accounts for 8.4% of the total imports followed by UK which accounts for 7.8% of

the world imports. Hong Kong is also a large importer of crafts and decorative especially from
China. However, 85% of these imports are for the purpose of re-exports.
1.2.3. Major Exporting Nations

China, Italy, Germany, France, Turkey, USA, India, Hong Kong, Spain and Mexico are the top
ten exporters of crafts and decorative products in 2003. China is the largest exporter of craft and
decorative products. China‘s ability to supply large volume and wide range of low-cost products
has pushed in the forefront of competition.

1.2.4. Segmentation – Exporting Nations
The exporting nations can be classified in different leagues based on the value of products they
export and the markets they address:
1. High-End Market Segment - Countries like Italy, Germany, France, Turkey, USA, Spain and
UK dominate the high-end market
segments, and supply high value crafts and
decorative products. These are mostly Italy
Germany
machine made. These countries occupy France
V Turkey
leadership positions in categories like USA
O High – End Spain
ceramics, glassware, leather goods, UK
L Market Segment
furniture and lighting articles. Poland
U Taiwan
2. Middle Market Segment - Eastern
M Hong Kong
European countries like Poland, Belgium, Belgium
E Middle Market Korea
Czech Republic, Hungary and Romania Segment India
China
and Asian countries like Hong Kong,
Taiwan, Korea are major players in the China
India
medium value products. Low –End
Thailand
Market Segment Vietnam
3. Low – End Market Segment - In the Malaysia
low and medium value products, China Indonesia
VALUE
and India are the two leading competitors
among Asian countries. The main factor that distinguishes product from these countries is the
level of mechanization. About 90% of products of Chinese origin are completely or partly
machine-made, whereas Indian products are mostly handcrafted and exemplify a high degree of
craftsmanship.
Thailand, Hong Kong, Indonesia, Taiwan, Vietnam, Malaysia and Philippines are the other
leading Asian suppliers of low to medium value products. Barring Hong Kong and Taiwan,
products categories such as basketwork, furniture, ceramics, toys and dolls, woodwork and some
varieties of textile from other Asian countries are mostly handcrafted. Apparently, a large
proportion of produce from Hong Kong and Taiwan are machine made. They also re-export
product imported from other neighboring Asian countries.

2. INDIA – Important Trends in Indian Economy
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, India has now become one of the most favored destinations for
international businesses to expand. 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.
Important Demographic and Economic Trends -

1. Rising India - Recently
%age Average Annual GDP Growth
joined the trillion-dollar GDP 2007
9.20%
club India economy is now 2002-2006 8%

1980-2002 6%
fourth largest in the world and is 1950-1980 3.50%
estimated to cross Japan 1900-1950 1%
0% 2% 4% 6% 8% 10%
between 2012 and 2014 to
become the third largest.
2. Tripling Indian Incomes - Given the substantial scope for continued productivity increases in
Indian businesses, competitiveness of Indian economy and favorable demographic trends a
compounded annual growth rate of 7.3% can be assumed from 2005 to 2025. If the same is
achieved, Indian income levels will almost triple in next twenty years. Average real household
income will grow from 113,744 INR to 318,896 INR, with a CAGR of 5.3%. This is much faster
than income growth in other major markets, with an exception of China.
3. Exploding Middle Class – As Indian

Growing Middle Class
incomes rise, the shape of the country‘s 80% 600
500
60% 368
pyramid will also change dramatically. 400
40% 220
India will create a sizeable and largely 65 60% 200
20%
8% 22% 32%
0% 0
urban middle class. The emerging middle 1980 2000 2010 2025
%age Population Million People
class will surge tenfold, exceeding 500
million by 2025. It will command 60% of the country‘s spending power.

4. India to be the world’s fifth largest consumer market by 2025 – Given the rapidly
increasing household incomes and a robustly growing population will lead to a striking increase
in overall consumer spending. The aggregate consumption in India will grow from 17 trillion
INR today to 34 trillion by 2015 and INR 70 trillion by 2025.
Above-mentioned four factors combined result in a multiplier effect leading to an accelerated

economic growth.
Rising consumption
Rising income Multiplier effect Rising production
GDP growth
5. Young and Home Maker India - With 49% of its population below 24 years of age, India
will be defined as a country with self-confident, assertive and risk takers generation.
80+ 0.8 Total Population: 1.11 Billion

75-79 1.1 % Population 2011
70-74 1.6
65-69 2.0
60-64 2.7
55-59 3.6
50-54 4.5
45-49 5.5
40-44 6.2 16% between 25 – 34 years - Target
35-39 6.8 Segment for Home Furnishing market
30-34 7.5
25-29 8.5
20-24 9.9
15-19 10.2
10-14 9.9 49% below 24
5-9 9.5 years
0-4 9.6
0 2 4 6 8 10 12
As can we also see from the above chart, 16% of its population belongs to an age group of 25 to
34, a generation that is either ready to step or has recently stepped into next stage of their

lifecycle – Married Life. Considering the needs of this age group that is to make new homes, this
segment will be maximally responsible for the Home Furnishing product purchases.
Other than the above-mentioned general economic and demographic trends, following variables
also have significant impact on Furnishing industry in India:
1. Housing Market set for strong growth –
a) The size of the overall real estate industry in India is estimated by FICCI, to be
around US$ 12 billion. This figure is growing at a pace of 30% for the last few
years. Almost 80 % of real estate developed in India, is residential space and
the rest comprise office, shopping malls, hotels and hospitals
b) India possesses the elements of very strong demand growth on the housing market
in the coming decades. By 2030 India will need up to 10 million new housing
units per year. Rapid population growth, rising incomes, decreasing household
sizes and a housing shortage of currently 20 million units will call for extensive
residential construction.
2. Changing Indian Families – Some of the recent trends in the Indian households which
will have a significant impact on the furnishing industry are:
a) Sudden and accelerating growth in number of nuclear families  Requirement for

setting up new Homes
b) More working women  Increasing number of double income families  Higher

disposable income  Higher spends across all categories of purchases
c) Consumers becoming status / class conscious  Higher expenditure on Home

Furnishing and Decor products (Wallet share of home furniture and furnishing has
already touched 2.7% of the total household expenditures of India)

3. Furniture and Handicrafts & Décor Industry in India
3.1. Furniture Industry
3.1.1. Overview:
Size of Indian furniture industry as estimated by the industry experts is approximately worth INR
350 billion. This is divided into two broad categories – Unorganized Sector and Organized
Sector. According to industry experts, unorganized sector commands the market with a share of
around 90% (INR 315 billion). As low as 10% (INR 35 billion) of the Indian furniture industry is
the share of organized sector.
Dominant players in the organized sector with

their respective market shares within the
organized sector are listed below (also shown in
adjoining chart):
1. Godrej and Boyce – 23%
2. Style Spa – 5%
3. Durian – 3%
Remaining 70% share of the organized furniture industry can be attributed to some of the region
wise or product segment wise strong players; to name a few – Featherlite, V3, Renaissance,
Millennium lifestyles, Kian, Tangent, @Home.
3.1.2. Industry Segmentation

Application / Customer Segment Wise – As
Industry Segments
with the global market, home furniture is the Contract, Household,
15% 65%
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
Office, 20%
segment, accounting for the remaining 15

percent. Brief description of each of these three segments is provided below.
Home furniture (Sixty Five Percent Share)
Home furniture in India is available in a wide range, to cater to different customer needs. A
typical middle class urban Indian home has five rooms (including kitchen and bathroom). About
25 per cent of the urban populations live in homes with five rooms or more, while 45 per cent
live in houses with three rooms or less. About 16 per cent is estimated to live in single-room
homes. The type of furniture used depends on the customer‘s affluence and taste. The rich and
upper middle class is typically very attentive to design and quality, so price is rarely a
determining factor. In general, European style furniture is only found in homes of the urban
upper class. Demand for furniture of international standards is limited to the larger cities. It is
also estimated that the wealthier classes do not change furniture very frequently; the average life
of a piece of furniture is about 20 years and some artisans‘ pieces are used for as long as 50-70
years. Colonial furniture is still very common in India, but the trend seems to be declining
slowly.
Office Furniture (Twenty Percent Share)
The office furniture segment caters to the commercial and office space. This segment has
witnessed rapid growth in recent years, in line with the growth in the Indian economy and
subsequent demand for office space. The thrust on real estate and office construction is expected
to sustain in the near future, indicating continued growth for the furniture industry.
Contract segment (Fifteen Percent Share)
The contract segment caters primarily to hotels and its growth is consequently linked to growth
in tourism and development of new hotels.
According to the World Travel Market‘s 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.

3.1.3. 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 India‘s 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.
However, some level of uncertainty has definitely cropped up after the economic recession has
hit the globe. In this regard, industry experts have two different viewpoints - Furniture is never
seen as an urgent customer need - it is bought only when one wants to renovate or wants to do
away with old furniture while shifting to a new place. As such needs can wait, recession might
decline the demand. However, more importantly, as recession cannot have significant impact on
household demands, furniture market, which is dominated by household furniture, will not be
affected much.

3.1.4. Key Demand Drivers of the 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 –

Increasing demand for
residential space, home
loans at lower interest
rates, growth in office
space – IT/BPO/ BFSI
Retail Industry
Changing Consumer
Growth – Increase in
Demographics - Rising
number of organized
income levels, Higher
retail stores, entry of
Disposable Incomes,
modern retail formats,
Increasing number of
leading to easier product
double income families
availability
Key Growth
Drivers
Tourism and New Affluent Indian

Hospitality Industry Consumer - Buying
growth – Rising number latest style/designs to
of foreign tourists in keep up with the fashion /
India, rapid increase in trend, significant spends
number of hotels in India on home décor due to
peer pressure

3.2. Indian Handicrafts and Decorative Industry
3.2.1. Overview
As it represents rich culture and tradition of the country, Indian handicrafts and decorative
industry has a unique place among all the industries. India is one of the important suppliers of
handicrafts to the world market. The Indian handicrafts industry is highly labor-intensive cottage
based industry and decentralized, being spread all over the country in rural and urban areas.
Numerous artisans are engaged in crafts work on part-time basis. According to one of the study,
about 70 million people are engaged in handicrafts sector all over the country and their annual
production is around INR 210 billion out of which products worth of about INR 90.3 billion
is being exported. Indian Handicraft Industry has the status of cottage industry in India, but it
has shown promising growth and evolved as one of the major revenue generator over the years.
It has shown continuous growth at the rate of 15-20% over the years and contributes major role
for export and foreign earnings.
Low capital investment, Cheap and skilled labor, diversified product portfolio, high ratio of
value addition, High potential for export and foreign exchange earnings and Flexible Production
are few important features of Indian Handicraft and Decorative Industry. However, Lack of
Infrastructure & Technological support, Lack of awareness of international and new trends and
Poor Promotional campaigns are a few drawbacks of industry, which needs to be overcome.
In spite of having diversified products, some part of Indian market are still untapped and market
is price sensitive. This gives rise to an opportunity for new entrants to tap some price sensitive
customers who cannot afford the highly expensive products made available in the metros and tier
1 cities of the country.
Defining Handicrafts: Handicrafts can be defined as products, which are produced either
completely by hand or with the help of tools. Mechanical tools may be used as long as the direct
manual contribution of the artisan remains the most substantial component of the finished
product. Handicrafts are made from raw materials and can be produced in unlimited numbers.
Such products can be utilitarian, aesthetic, artistic, creative, culturally attached, decorative,
functional, traditional, religiously and socially symbolic and significant.

The Cultural and Economic Importance of Handicrafts:
The Cultural Importance: Handicrafts play very important role in representing the culture and
traditions of any country or region. Handicrafts are a substantial medium to preserve of rich
traditional art, heritage and culture, traditional skills and talents that are associated with people‘s
lifestyle and history.
The Economic Importance: Handicrafts are hugely important in terms of economic

development. They provide many opportunities for employment even with low capital
investments and become a prominent medium for foreign earnings.
3.2.2. Classification / Segmentation of the Industry:

Handicrafts and Decorative industry comprises of diversified products portfolio and there is large
variety available in market. Products served by this industry can be distinguished as follows:
 Metal ware
 Wood ware
 Hand printed textiles
 Embroidered and crocheted goods
 Shawls
 Carpets
 Bamboo products
 Zari goods
 Imitation jewellery
 Paintings
 Earthenware
 Jute products
 Marble Sculpture
 Bronze Sculpture
 Leather Products
 Other miscellaneous handicrafts

3.2.3. Handicrafts Clusters in India
Handicrafts industry is widely dispersed across different states of India, each one specializing in
one or other type of handicraft activity. The rich craft heritage of India is unique and as diverse
as its customs and traditions. Indian handicraft traditions are influenced by the local topography,
climate, and socio-religious factors. The following table lists the major clusters for the
production of different handicrafts items in India.
Although artisans and artisans are found in most parts of the country, only a few states and
regional clusters contribute maximum to the exports. These are Gujarat, Rajasthan and Uttar
Pradesh. These regions are the major source of exports and have better infrastructure, market
development and innovative activity in comparison to the eastern states of the country. Jaipur is a
classic example of effective synergies between tourism, craft traditions, private enterprise and
strong NGO movement.
Product Category Regional Clusters
Moradabad, Sambhal, Aligarh, Jodhpur, Jaipur, Delhi, Rewari,

Artmetalware
Thanjavur, Madras, Mandap, Beedar, Kerala & Jagadhari, Jaselmer
Saharanpur, Nagina, Hoshiarpor, Srinagar, Amritsar, Jaipur, Jodhpur,

Wooden Artwares Jagdalpur, Bangalore, Mysore, Chennapatna, Madras, Kerala &
Behrampur (WB)
Hand printed Textiles

Amroha, Jodhpur, Jaipur, Farrukhabad, Sagru & Sanganer
& Scarves
Kutch (Gujarat), Jaisaimer, Baroda, Lucknow, Jodhpur, Agra,

Embroidered goods
Amritsar, Kullu, Dharmshala / Chamba & Srinagar
Marble & Soft Stone

Agra, Madras, Baster, Jodhpur
Crafts
Papier Mache Crafts Kashmir, Jaipur
Terracotta Agra, Madras, Baster, Jodhpur
Zari & Zari Goods Rajasthan, Madras, Baster
Imitation Jewellery Delhi, Moradabad, Sambhal, Jaipur, Kohima (Tribal)
Artistic Leather Goods lndore, Kolhapur, Shanti Niketan (WB)

3.2.4. Challenges in the Indian Handicrafts and Décor Industry
Lack of economies of scale
Owing to inherent problems of finance,

dependence on simpler tools and social
issues, the artisans are not in a position to
furnish any large-scale orders.
Lack of information on sellers Scarcity of Raw Material

Challenges
The importers often find it difficult to access There has been a decline in the availability
the local artisans directly. Often, identities Décor and and quality of some of the raw materials
of true craftsmen are guarded by the Handicrafts Industry used in the production of handicraft goods.
middlemen, who do not wish to lose their The raw materials with acute shortages
commissions by enabling direct contacts include cane, silk, scrap and virgin metal.
between the craftsmen and importers.
Lack of information on buyers
Local artisans are mostly illiterate and do

not have information about their prospective
buyers. This asymmetry of information is
often exploited by the intermediaries, who
purchase artifacts at low prices and sell
them to the buyers at exorbitant rates,
thereby pocketing the huge margins.

4. Understanding the Value Chain
4.1. Furniture Industry Value Chain

Given the significant contribution of imports, the entire value chain of the Indian furniture
industry can be understood under two broad categories:
 Imported furniture
 Domestically manufactured furniture
4.1.1. Imports
Trend - Over the 5-year period from 2001 to 2006, furniture imports in India have grown at a
CAGR of 64%. This increase can be attributed to factors like increasing demand for furniture,
fuelled by the boom in housing and commercial construction. Increasing income levels and
influence of global lifestyle trends have also influenced many Indians to move towards imported
furniture.
The current furniture imports are mainly from China, Malaysia, Italy, Germany, Spain,
Korea, Indonesia, Philippines and Japan. China and Malaysia tops this country list by
contributing the most to the industry.
Furniture Imports in India (in Million USD)

152.43
2005-06
2004-05 92.79
2003-04 58.00
2002-03 32.93
2001-02 20.93 CAGR = 64%
0.00 40.00 80.00 120.00 160.00
Imported vis-à-vis domestic - Imported furniture is India is present in all segments – Low Price
to Premium priced furniture. It can be available at both cheaper and higher prices in comparison
to domestic furniture. However, still it is preferred more than the local products because of better
finish and use of modern technology and machinery in case of imported products. There is a
segment of locally manufactured products, which is of the same quality and better designs, but it

is available at significantly higher prices. At the same time, there are also some drawbacks
associated with imported goods. Example - the product life is quite short, lack of reliability and
responsibility in terms of after sales services. There is a good demand for mass produced
imported furniture as they could be purchased ―off the shelf‖ and, could be used instantly.
Whereas in terms of availability, the local product is good in comparison to the imported
products. Government does not allow FDI in single brand retailing for imported products in
India whereas for the local products there are no such restrictions.
Current Import Duty Structure - Wood product imports were liberated in India in 1995. Since
then, there has been decline in import duties on wood and wood products.
For furniture, the Indian government continues to reduce tariff rates from a peak rate of 300
percent in 1991 down to current rate of 31.70 percent on standard value of goods. Actually, this
rate ranges between 31 and 36 percent based on the type of furniture imported.
Value Chain for Imported furniture – In the current scenario, furniture is being imported by
both sectors of the industry – Unorganized and Organized. Within the sector, there are two
categories of suppliers who are responsible for furniture imports in India, these are -
1. Manufacturers – Some players are importing furniture along with their own
manufacturing set-ups. In case of organized sector, Style Spa and Godrej are good
examples. Because, most of the manufacturers in the current scenario have some strength
areas or competency in some specific product segments, (for e.g. Style Spa‘s focus is on
bedroom furniture) therefore, for rest of the categories, imports are preferred.
2. Importers – In addition to the above category, there are market players who are solely
into importing and selling furniture in India. This category can also be termed as Traders.
The figure below summarizes the entire value chain of imported furniture industry in India.
Franchisee
Manufacturers
Own Stores
Imports Distributors
Retailers
Importers
Distributors

4.1.2. Domestically Manufactured Furniture
Various aspects related to customers (changing lifestyle and preferences), raw material (type,
availability & sourcing), capacity to build (production capacity and utilization) and capability to
design (availability of professional designers) drive furniture manufacturing industry. These
factors combined together are responsible for deciding the actual value of the furniture.
The difference between value chain of domestically manufactured furniture from that of
imported furniture lies at the first stage. In this case, there is an additional level of stakeholders
before manufacturers; these are raw material suppliers. The above stated difference is depicted in
the figure below:
Franchisee
Raw Material Manufacturers
Suppliers Own Stores
Distributors
Raw Material
Imports
There is a wide variety of raw material used for furniture making in India. The key raw materials
include wood, metal and plastic, with bamboo and cane also being used in some cases. Wood
accounts for nearly 65 per cent of all furniture made in India. This includes several types of
indigenous wood, as well as imported wood.
Raw Material Share

Plastic, 10%
Metal, 25% Wood, 65%
India imports wood from various South East Asian countries such as Indonesia, Malaysia and
Myanmar. It also imports MDF (Medium Density Fiberboard) boards from Europe.

Depending upon the type of raw material to be imported, different players have different
preferences. For example, Particleboard is preferably imported from Thailand and rubber wood
from Malaysia.
4.1.3. Distribution Structure

Distribution channel adopted by leading furniture-manufacturing companies in India can be
classified into two broad categories:
1. Direct selling through own retail stores
2. Through distributors or franchisees
Distribution channel structures of three major players are described below for better
understanding.
Case 1: Distribution Model of Godrej Interio –

Brief Profile - Godrej Interio is a unit of Godrej - One of the largest engineering and consumer
products‘ company 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.
Distribution Channel Structure – Godrej Interio has adopted two types of distribution models:
1. Own retail Stores – named Lifespaces. Interio owns around 58 stores spread across 25
cities in India. Catering to office as well as home
furniture needs, this model of distribution largely sells
the latter, thus positioned as Home and Interiors Store.
2. Franchisees – named Interio. There are more than 500
franchisees, located in tier 1, 2 and 3 cities of India. In
contrast to the above category, these can be multi brand stores. This model sells both
office as well as home furniture.
Both the above-mentioned models sell directly to end customers, be it individuals or institutions,
no other intermediaries are involved.

In case of institutional customers, i.e. office furniture Godrej Interio does direct selling. The
same is done through either cold calling (whenever there is news of any company or office
expanding, presentations are made pro actively to sell) or else by attending to the requests
received from the customers directly.
Case 2: Distribution Model Style Spa Limited -

Brief profile: 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.
Distribution Channel Structure – Furniture is sold through two routes –
1. Style Spa Exclusive Stores -
These are exclusive stores owned
by the company where only style
spa products can be sold. There
are 90 showrooms of style spa all
over India – making Style Spa the largest chain of furniture showrooms in India. Out of
these 90, 74 stores are company‘s own stores and remaining 16 are stores owned by
exclusive dealers – which cannot sell other products or brands.
2. Through Dealers – Second model is of selling the furniture through dealers. Although,
in this case, furniture is sold under the brand name of Zuari, but these are not exclusive
stores, these are multi brand multi product outlets.
Indian Furniture Products Limited / Zuari  Distributors  Dealers
In this case, distributors take away the products on cash and carry basis. Then distributors
give away the product to the dealers. There are no other intermediaries.

Case 3: Distribution model of Durian Industries Limited
Brief Profile - 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 only for some categories of furniture - chairs, modular workstations.
98 percent of Durian‘s 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.
Distribution Channel Structure – Two types of channel
1. Through retail showrooms – 43 retail showrooms of Durian are present across India. Out
of 43, 30 are owned by Durian. Dealers own remaining 12-13, these dealers are
authorized exclusive dealers, and they cannot sell other brands. Material that is imported
is stored in warehouses and then distributed to showrooms all across India. By this route,
Durian mainly caters to the needs of the individual customers.
2. Project sales – This model is mainly to cater to institutional customers. Durian has project
offices in all the major cities like Delhi, Hyderabad and Bangalore. Orders are generated
in these project offices and their demand is communicated to Mumbai head office.
Depending upon the gap of demand and supply (furniture already available in warehouse)
import / manufacturing decisions is taken. Some of the material is manufactured; part is
imported (depending upon demand of the project).
Durian has a main/central warehouse (2.2 lakhs sqft area) in palgaon (100 Km from Mumbai).
There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi.
Orders from different showrooms come to the central warehouse through their ERP system. Then
as per the orders, arrangements are made for the logistics and material is finally sent to the
destination showrooms.

4.1.4. Furniture Industry and Organized Retailing
India has seen a resurgence of Retail sector. India has grown from the traditional Mom and Pop
stores present here and there in the neighborhood catering to the convenience of the consumers.
Emergence of shopping centers mainly in urban centers with facilities like car parking and
finally growth of modern retail formats like hyper and super markets trying to provide customer
with ‗3 V‘s - Value, Variety and Volume‘ is the latest trend.
Emergence of organized retail industry has its impact on the Furniture Industry as well. The
latter, which is largely dominated by unorganized sector in terms of supply, mostly follows
modern formats as far as retailing to end customers is concerned.
The retail formats present in the furniture industry of India can be categorized into following two
categories:
a) Hypermarkets
b) Specialty Stores or Home Improvement Stores
Hypermarkets
A hypermarket is a superstore that combines a supermarket and a department store. The result
is a very large retail facility, which carries an enormous range of products under one roof. Its
product assortment goes beyond routinely purchased goods and includes furniture, large and
small appliances, clothing and many items. The basic approach is bulk display and minimum
handling by stores personnel, with discounts offered to customers who are willing to carry
heavy appliances and furniture out of the stores.
In terms of space, such hypermarkets in India are present in the range of 50,000 square feet to
200000 square feet depending on various parameters like store location, demand etc.
In this category of retail, space that is allotted to furniture as a category may vary between
15,000 sq ft to 25,000 sq ft. These hypermarkets are typically multi storied, however one
product category is restricted to one floor only.
Example - Big Bazaar, a unit of PRIL (Pantaloon Retail India Limited) is one such example.
Furniture Bazaar is the section of Big Bazaar that focuses on furniture. Through this format, the
customer segment that is targeted is the middle class of the country. Furniture Bazaar along with
being present as a furniture-dedicated section under Big Bazaar is also present in two other

formats – online store and stand-alone stores (in few places). In case of latter, the appropriate
term would be specialty stores. This category of stores is explained in the next section.
Specialty Stores / Home Improvement Stores

A specialty store can be defined as a retail format that concentrates on a limited number of
categories along with some complimentary categories. These kinds of stores provide a high
level of service in their focus categories. Since this format has less diverse product range, thus
it is comparatively easy to manage the supply chains. Examples of such formats in Indian
furniture industry can be Home Town (Pantaloon Retail India Limited), Home Stop (Shoppers
Stop), Home Centre (Lifestyle) etc. Considering the fact that these stores not only specialize in
furniture as a product category but also focus on other home furnishing and home décor related
categories, these can be termed as home improvement stores as well. The objective with which
these stores operate is to provide one stop shop for those who are setting up new homes or
those who are renovating their homes. For a detailed understanding of this category, example
of Home Town is explained below:
Home Town, a unit of PRIL, is divided into three sections – exhibitions, markets and services.
Home Town has live displays of various rooms such as living room, dining room, bedroom,
kids' room, kitchen & bathroom in the exhibitions section. The markets section features
products for living market, dining market, bedroom market, kids' room market, kitchen market,
bathroom market, Home furnishings, mattresses, e Zone (consumer durables and electronics)
and Depot (books, music, etc). The services section offers service options such as - Mr.
Carpenter, Mr. Plumber, Mr. Electrician, Mr. Painter, Tilewala, Design Centre, best wishes,
grihapravesh, door delivery and installation. The store also has a customer service desk to help
customers with any service related challenges.
Home Town is an amalgamation of the value and lifestyle propositions, so appears eminently
approachable to the budget-buyer, the aspirational customer as well as the lifestyle-driven
customer. The displays echo the aspirations of the consumer, keeping traditions alive in a
contemporary world.

4.2. Handicrafts & Décor Products Value Chain
The Handicraft supply chain of India consists of importers and wholesalers who supply goods to
retailers and small chains. The importers/retailers prefer to deal directly with the producers
/exporter. Even the smaller independent shops that deal with the traditional, ethnic products do
most of their own importing and dealing with manufacturers. The distribution channel for crafts
and decorative products in India follows the following model -
Producers
Importers / Wholesalers
Final Point of Sale
Small Retailers Large Retail Chains E – Retailers
 Most common channel  Stock in bulk  In recent times, internet

has emerged as a major
 Carry variety of product  Sell to final consumers or distribution channel for
categories under one shop small retailers décor & handicrafts items
There is a definite trend in the Indian market towards flattening of the distribution channels for
crafts and decorative products. The reason being, importers/ wholesalers and large retailers want
a closer relationship with production in order to implement customized product development, an
essential for staying competitive in the market. As such the importers/wholesalers are
increasingly buying from producers with export marketing capacity, thus eliminating the need
for an independent exporter and as they are working less with sales representatives.
Secondly, there has been a rapid growth in the increase of crafts and decorative products sales
through large retailers like national and chain stores and mail order catalogue, which has further

accelerated the flattening of the distribution channels. This is mainly because the large retail
chains prefer to import directly from the producers and thus eliminate the role of the
importers/wholesaler. Direct import retailers that work with more than one supplier in a given
country often opt to work with an independent agent or an overseas export consolidator who is
responsible for coordinating orders and shipments.
The small importers/wholesalers are also no longer working with sales representatives so as to
keep price margins competitive & because sales representatives are geared to work with large
wholesale companies that have greater volumes and higher price margins than small to medium-
sized companies.
The most popular channel for distribution of the more traditional, ethnic products of the
decorative type is the large number of small and independent retail stores. However, with respect
to products, that are functional and not purely decorative, department stores and hypermarkets
are becoming the more prominent distribution mode. Since the large department stores cannot
compete on the terms of price, they cater to the higher-end market with special up-market ranges.

5. Industry Analysis
5.1. Indian Furniture Industry Analysis – Five Forces Model

To determine the competitive intensity and thus the attractiveness and opportunities of the Indian
Furniture Industry, it is important to consider the following five critical factors:
1. Bargaining power of the suppliers – how strong is the position of suppliers. Is there a
monopoly in supply side?
2. Bargaining power of the customers – how strong is the position of buyers.
3. Intensity of competitive rivalry – what is the level of competition among the existing
players of the industry
4. Threat of substitute products – How easily can furniture be made cheaper or substituted
by other products
5. Threat of new entrants – How easy or difficult it is for new players to enter the industry?
1. Bargaining power of Suppliers Low, as 2. Bargaining power of Customers With

raw material is not only available from local fast growing middle class and changing
abundant supplies but can be imported as lifestyle, huge demand is there. Only a
well, with imports getting easier day by day limited number of dominant players are
present in the organized sector. However,
Till date, Supply side is largely dominated in absence of the latter there is a possibility
by the unorganized sector 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 Products No 5. Threat of new entrants

significant threat except for the possibility Because of growing domestic market, large
of new concepts like plastic furniture, business conglomerates are planning to
virtual office space, traditional furniture, enter the industry in organized sector. (E.g.
small homes. Reliance, Aditya Birla Group). At the same
time, industry entry does not require very
Such concepts might take years to come, huge investments. No other significant
but can have significant impacts barriers
Intensity  High Medium Low

A detailed analysis of these five forces determining the competitive intensity and attractiveness
of the Indian furniture Industry is provided below:
5.1.1. Bargaining power of Suppliers

In terms of raw material, India as a country has abundant raw material supplies for this industry.
Not only the domestic availability, but the easier imports of raw material also lower the
bargaining power of the suppliers. It is no more difficult to import the raw material of your
choice. In fact, there are countries that specialize in different categories of raw materials. For e.g.
Malaysia is known for its Rubber wood. Similarly, Indonesia is preferred for importing synthetic
rattan, cane and MDF (medium density fibreboards).
However, unlike the finished products supplies, the raw material supply industry is yet very far
away from shifting towards the organized market.
Overall, it can be said that the raw material suppliers have low bargaining power.
5.1.2. Bargaining power of Customers

As discussed in the earlier sections, Indian consumer has undergone a change in terms of
lifestyle and purchase behavior. Today‘s affluent Indian consumer is ready to spend extra to buy
as per his/her aspirations. He/She is aware about the latest trends/fashion; options available in the
domestic as well as international market; has access to many information sources including
worldwide sources like internet; knows the best deal and is more knowledgeable. Given these
characteristics, Indian consumers have the right to choose from the various options available for
him. However, at the same time there are limited options available for the consumers from the
organized sector. Even though when consumers want to purchase branded furniture to ensure in
terms of quality and reliability, they cannot always do so because there are only a limited number
of players in the organized sector. In this situation, one might shift to town side shops from the
unorganized sector to avail more options in designs or price.
Therefore, it can be said that there is more of a positive aspect associated with the bargaining
power of the consumers – that is they want to shift to organized sector and have more options
from the latter. There will not be a significant threat of consumers buying from unorganized
sector if there will be more players in the organized sector.
To comment on the overall bargaining power of the consumers, it can be said that they have it,
but of a medium intensity only.

5.1.3. Competitive Rivalry
Today also, with 90% share, unorganized sector takes away the major proportion of the overall
Indian furniture industry. On the other hand, there has been a recent, rapid and day-by-day
increasing growth of the organized sector.
Considering this, a handful of players have mushroomed in the latter segment of the industry.
However, these new players have not faced a tough competition because of following factors:
 Growth Stage: Organized sector of this industry is still in its growth / unsaturated stage
and it will still take a significant number of years for organized industry to reach up to a
saturation level when all the products segments of the industry would be tapped by one
or the other player
o In the current scenario, there is maximum one player having a significant
presence in one product segment. For e.g. Style Spa in bedroom furniture,
Godrej in office furniture, Durian in living room furniture. That too, each of
these players still have a scope to expand to serve to the wide spread needs of
the country
 Growing Demand: Given the higher disposable incomes and other lifestyle related
changes mentioned in the earlier sections, the proportion of Indian population that wants
to buy branded furniture is increasing day by day. This huge demand and lesser number
of players in the organized sector has been the reason behind insignificant competition
among the existing players.
Therefore, to sum up, the internal competitive rivalry can be said to have a force of moderate
level on the overall attractiveness of the furniture industry.
5.1.4. Threat of Substitutes

There is no significant threat of furniture being replaced by other products as such. Nevertheless,
there is a possibility of other concepts of furniture usage coming into picture and affecting the
current product basket. These changes / new concepts can be:
 Plastic Furniture: With time, plastic furniture has grown and taken a share in living
rooms of most of the Indian households. Factors like lightweight, convenience, easy to
maintain etc. can motivate the new and young homemakers of India to buy plastic
furniture. Especially those, who do not have a permanent residence and keep shifting
their locations, will prefer such options. Given this, the industry might also think of

innovative ways to come up with high strength and designer plastic furniture. This kind
of change, which might take years to come, might sweep away the traditional household
and office wooden furniture.
 Small Homes: In the current scenario, most of the middle class families of India reside in
a house with five rooms, which includes two bedrooms, one common room/living room,
one kitchen and one bathroom. However, this might not be the case in coming years.
Given the higher prices and space constraints, affording big homes will not an easy
option for most Indians. There will be tendency of staying in smaller homes. Concept of
studio apartments (apartment with one big living cum bedroom with attached kitchen,
bathroom) might catch up. This will lead to sharp decline in furniture demand.
 Concept of Virtual Offices: Following the trends of western countries, India is also
catching up fast with the work from culture. Given the high rentals and huge overhead
costs of running an office, it might happen in future that most of the knowledge sector
companies follow a concept of virtual office. In that case, demand for office furniture will
go down substantially.
However, all these above-mentioned concepts might take ample number of years to percolate and
have an effect on the industry.
5.1.5. Threat of New Entrants

As explained above, the demand is growing exponentially but there are only a limited number of
players on the supply side, especially in the organized sector. This provides a fine opportunity
for new players to enter the industry. Along with the increasing demand, other factors like
comparatively low capital investments, easier imports etc. also make this industry vulnerable to
new players. Given this, some of the known and big business houses of India have already taken
steps to foray into this industry. For example, – Reliance and Aditya Birla Group – details
are as follows:

Reliance Retail to set up 100 Reliance Trends stores by 2011 - Reliance Retail plans to set up 100 Reliance
Trends outlets by 2010-11, besides making a foray into furniture segment and adding more stores for home furnishings.
Reliance Retail, which opened its first furniture store — Reliance Living Furniture — in Delhi, is also looking to
expand the format while synergizing it with home furnishing format. It plans to add one more furniture store in
Hyderabad by early 2009.The Delhi store has been set up under the label of ‗Reliance Living‘, where two stores from
furnishings and furniture segments would be co-located. The company is also expanding its newly launched Living
Furnishings format. The company plans to have five more stores by end of the fiscal in March 2009, including two
more in NCR and two in Hyderabad.
The retail arm of Aditya Birla Group, Aditya Birla Retail Ltd (ABRL) has announced plans of
investing Rs. 250-300 crore to expand its retail business and set up at least a dozen hypermarts across the
country under the brand name More Megastore in the coming financial year. "While our conveniently located
neighborhood super marts all over the country provide all the daily and weekly shopping needs, our destination
hypermarkets will cater to monthly and event-based shopping requirements. The More Megastore is a one-stop shop for
the entire family. Here we offer an extensive range of 60,000 products catering to every need of a household," Birla
said. "As you walk through the Megastore, you will find an excellent toys and stationery mart for children, every
household product for the woman of the house, furniture, electronics, mobiles, apparel and what-have-you for the
husbands and wives to shop together, a live bakery and a cozy café for parents to relax," he added.
To summarize the above analysis of the industry, it can be said that there is huge demand but
limited number of dominant players. This provides a very attractive opportunity for Thai
companies to enter the organized sector of Indian furniture industry. Except for the threat
of other new entrants, there is no significant threat. This threat of new entrants also can be
taken care off by adopting appropriate actions in terms of tying up with right players of the
industry, setting up most suitable distribution channels, targeting the most apt class of
consumers, marketing with right positioning platforms.
For interested players, this report, at the end also consists of a set of recommendations with
suggestions on all the above-mentioned factors.

5.2. Indian Handicrafts & Décor Industry – SWOT Analysis
 Large, diversified and potential market

 It has strong, diversified and supportive retail infrastructure
 Diversified product range that service different market
 Low barriers of new entry
 Abundant and cheap labor hence can compete on price
 Low capital investment and high ratio of value addition
 Aesthetic and functional qualities
 Variety of products categories
 Exporters willing to handle small orders
 Increasing emphasis on product development and design up gradation
Strengths
SWOT Analysis
Indian Handicrafts &
Decorative Industry
Weaknesses
 Lack of infrastructure and communication facilities

 Unawareness about international requirements and market
 Lack of co-ordination between government bodies and private players
 Inadequate information of new technology
 Inadequate information of current market trends
 Less interest of young people in craft industry
 Lack of skilled labor
 Still confined to rural areas, small cities, and untapped market
 Lack of promotion of products
 Inadequate market study and marketing strategy
 Capacity to handle limited orders

 Development of sectors like Retail, Real Estate that offers great requirements of
handicrafts products
 Development of domestic and international tourism sector
 E-Commerce and Internet are emerged as promissory distribution channels to
market and sell the craft products
 Large discretionary income at disposal of consumer
 Growth in search made by retail chains in major importing countries for suitable
products and reliable suppliers
 Developing fashion industry requires handicrafts products
Opportunities
SWOT Analysis
Indian Handicrafts &
Decorative Industry
Threats
 Quality products produced by competing countries like China, South Africa.
 Increased and better technological support and R & D facility in competing
countries
 In spite of having diversified products, some part of Indian market is still
untapped and market is price sensitive.
 Products are high priced in big and metro cities, which are beyond the reach of
people belonging middle and lower middle class.
 Craft producers have to compete on price, quality and delivery for different
segments.
 Inadequate supply chain management and distribution reduces the sector‘s
commercial viability and economic sustainability.
 Inappropriate energy supplies to rural and sub-urban areas.

6. Consumer Insights
The recent trend in the Indian consumer mindset is ―the concept of good living‖. This concept is
not only gaining importance in the upper class of the society, but it is catching up fast with the
middle - middle and upper – middle class as well. To understand the in-depth consumer behavior
associated with home furnishing purchases, focus group discussions (FGD) were conducted
across India as a part of this study. Detailed findings from these FGDs are as follows:
6.1. Respondents Profile

Based on exploratory study, this fact was vetted that females play a major role in most of the
household purchases, and especially in case of furniture and furnishing, they have a significant
role. Thus, these FGDs were conducted in such a manner that there is a considerable
representation of both the categories of women – workers as well as homemakers.
However, at the same time, considering the role of males as chief wage earners and financer in
most of the decisions, out of nine FGDs, one FGD was also conducted with working males. A
brief profile of the respondents identified for these discussions is given below:
 SEC* A1, A2 and B1 working females and housewives, across two age groups – 25 to
32 and 38 to 45 years
 SEC A1, A2 and B1 males, playing a role of chief wage earners in their households
between 38 and 45 years of age
*SEC refers to socio economic classification, which is done based on the educational qualification and occupation of the chief
wage earner of the household.
In order to get responses that are more accurate, one more qualification criterion was applied
within the above-mentioned profile of respondents - Each respondent should have purchased
furniture worth at least or greater than INR 25,000 (Twenty Five Thousand Rupees) in last six
months. This qualification criterion enabled the respondents to answer and discuss the
information areas more appropriately by linking their thoughts with their last purchase.
Objective of the FGDs being capturing the consumer behavior, respondents were asked for their
inputs on various behavioral and perception based aspects with respect to buying household
items. As per the scope of the study, there was a special focus on four product categories –

Furniture, Home Décor products, Utensils and Plastic products. Following part of this section
outlines the findings from these group discussions for the furniture and Home Décor products.
6.2. Purchase Decision Process – An Introduction

Behind every visible act of making a purchase, lies a decision process. The purchase decision
process is the stages that every buyer passes through in making choices about which products
and services to buy. Understanding or investigating this process is necessary from the point of
view of understanding the mental and social processes that precede and follow the purchase
actions. These behavioral sciences help answer questions such as why people choose one product
or brand over another, how they make these choices. The figure given below represents the five
common stages of any buying process. All consumer decisions may not always include all
stages, depending upon the degree of complexity and level of involvement in the product. In
addition, not all decision processes lead to a purchase.
Need or Problem Information Evaluation of

Recognition Search Alternatives
Post Purchase Purchase

Behavior Decision
Consumer purchase behavior with respect to Furniture and Home Décor products is explained
below with the help of above-mentioned process:

6.2.1. Problem Recognition / Need Awareness Stage
This is the stage when consumer recognizes a problem or need. The need can be triggered by
internal stimuli when one of the person‘s normal needs rises to a level high enough to become a
drive.
Furniture – Given that, there is limited space in “Last time when I bought
household, furniture purchases are always need based. As furniture, we were shifting to
our new home and I didn‟t
expected, It was observed that most of the furniture want to carry any old items
purchases are made- there” Homemaker, SEC A2, Delhi
 While setting up and decorating a new residence or
 While renovating a residence
Other than these two occasions, furniture is purchased in

“I can also buy furniture
any of the following cases – old furniture goes faulty, for whenever there are attractive
gifting in daughter child marriage and sometimes due to discount offers in the market.”
Homemaker, SEC B1, Delhi
attractive offers available in the market during festive
seasons like Diwali, people end up changing their furniture.
In addition, the major reasons

identified for home furnishing
purchases as identified in a study
that was conducted in early 2008
to understand the consumer
buying and spending preferences
with regard to Home Furnishings
are shown in the adjoining figure.
In this study, two surveys were
conducted – General Survey with
approximately 3000 respondents
General Survey Luxury Survey
from the middle class and a Source: The Home Furnishing & Décor Report 2008
Luxury Survey with around 1000 affluent customers from

the upper class. As can we see from the figure, the major reasons for such purchases are
redecorating or renovating existing homes.
Interior Decoration Items – Considering the low level of
“For decorating home, I buy
utility/purpose of home décor products, and based on on the spot, never plan,
consumer responses in the discussions it is understood that whenever I like I just pick up.
If I am with my husband, he
these products can be categorized under impulse should be ready to spend, I
purchases. Impulse buying refers to buying decision have no other considerations
while buying” Housewife, SEC A2,
made immediately, in an unplanned manner based on urge Mumbai
created by liking a product very much. Other then such on

the spot purchases, a customer buys home décor products in a planned manner at following
occasions –
 Whenever such products are to be purchased for ‗vaastu‘ or ‗fengshui‘ purpose, example
– Laughing Buddha, Vaastu or good luck plants, wind chimes etc
 When need arises to buy for gifting purpose
 While decorating a new home or redecorating a home during Diwali or Marriage in a

home
Although most of the decisions are impulse, if the product is of high value, some of the stages of
the above mentioned decision process is followed.
6.2.2. Information Search

This is a stage in which the consumer searches for information. The consumer may simply have
heightened attention or may go into active information search. This is usually done on higher
value purchases. Therefore, this stage is followed in case of furniture but not that much
applicable in home décor products.
In case of furniture, information sources that are referred the most are as follows:
 Internet – Websites of the manufacturers and retailers, websites about latest trends and
lifestyle
 Word of Mouth – for collecting information on aspects like quality, reliability of brand

 Print Media – Newspapers and Magazines – mostly referred for knowing the brands,
discount offers or schemes available
 Trade fairs and Exhibitions – to know more about products from other countries, as this is
the only platform for gaining knowledge about global designs, quality and trends
Sometimes customers also gain information on the new products designs, offers, price, and
brands by going and seeing the displays at places like clusters of furniture malls, shopping malls,
departmental stores etc. In other words, window-shopping is also an important source of
information.
As per the findings of Home Furniture and

appliances survey conducted in March 2008,
the majority of customers, 53 percent,
identify internet/websites as the source they
use to help decide what and where to make
their next big-ticket furniture or major
appliance purchases (shown in the adjoining
chart).
Referring to the same study, it was also observed

that of the consumers who say they research
furniture and appliances online, 31 percent indicate
that they expect to also purchase online.
When respondents were asked to select the main

reason, they would not make their next home
furniture or major appliance purchase online, 54
percent of respondents said it was the need to see
the actual product, 25 percent indicated the cost
of home delivery as the main reason they would
not purchase online.

In case of interior decoration item purchases, there is no
“Some time back, while I was
such stage of information search phase. Sometimes, in a trade fair, I saw very
visiting exhibitions become the source of information and beautiful products from
Thailand, I picked quite a lot
point of purchase as well. It‘s only from these from there to decorate my
international trade fairs that customers become aware of home. Before this I never
knew about Thai products.”
the products or specialties of other countries and if they Homemaker, SEC A2, Delhi
like it, they buy also.
6.2.3. Evaluation of Alternatives

In this stage, the information collected in the above stage is used by the consumer to evaluate
alternatives. This stage involves weighing different product attributes and their ability to deliver
benefits. Investigation of this stage leads to the understanding the most important and in-depth
aspects related to consumer behavior. Parameters identified as important to consumers while
buying furniture and interior decoration items are as follows:
Furniture – When it comes to Furniture and related home accessories: the first thing the
Consumer will look for is the Aesthetics along with Durability. Furniture though has a purpose,
yet the first factor influencing the buying behaviour will be its looks; how does it appear in the
first looks. Since furniture is still considered to be a product for long term utility, durability of
the furniture also takes in the first position along with aesthetics as far as important parameters
are concerned.
As identified in the Home

Furnishing and Décor Report 2008,
the three most popular decorating
styles based upon how the
consumers' homes are currently
decorated are casual, traditional
and contemporary in that order.
The luxury consumers tended to
show less of a preference for casual
and rank traditional and
General Survey Luxury Survey

Source: The Home Furnishing & Décor Report 2008
contemporary styles higher in their overall value system. The other styles included in the survey
are shown in the chart. Overall few statistically significant differences are found in terms of
home decorating preference.
Second most important parameter is the Functionality. What is the seating arrangement required
in the house, Number of Family Members and average guests visitors at a time. This factor will
influence the type and size of Furniture Purchase. Having satisfied the primary functionality that
is seating or sleeping, the secondary functions like multifunctional, storage etc. will come up. For
example – Is it a sofa cum bed, does it have storage capacity.
Price affects the decision but does not impact much as compared to other factors like durability
and designs. Reason behind this is that furniture is a Value Additive and Long Term Use
Product. Indian customers are now ready to pay an extra buck, but not ready to compromise on
quality. Based on the customer inputs, price bands of main home furniture products have been
identified for the middle and upper middle class. These are listed below:
 Bed: 14000 – 28000 Rupees

 Sofas: 20000 – 50000 Rupees
 Full Bedroom Set (Bed + Wardrobe + Dresser + TV trolley): 28000 – 52000 Rupees
Another factor which is considered as important is -

After Sales Support. Customers do not want to “Furniture should be durable, should
come with at least one year of
limit their transaction up to buying a product. They warranty. It should not happen that if
want the company to take care of the furniture I am buying imported furniture and I
face some problem and if I go back,
whenever they shift places, whenever furniture the shop keeper tells me that we are
needs repairs or services like making the furniture not responsible, as this is imported
from some other country” - Married,
termite resistant. Thus, many times this factor acts Working, 30, SEC A2, Bangalore
as a negative point or limitation for buying imported furniture. As most of the players who are
selling furniture imported from other countries, do not have a support system to take care of the
after sales aspects, customers have developed resistance for buying imported furniture until and
unless it comes with a warranty period and long buyer – seller relationship advantage.

Significance of Brand as a consideration parameter while buying furniture – recent shifts in
customers buying preferences includes shift from unbranded towards branded furniture as a
major trend. Branded furniture as defined by the customers is furniture available at malls or
shops like – Durian, Home Stop, Home Town, Furniture Walla, Tangent, and @Home. Reason
for preferring brands is again related to the two factors mentioned above - Quality and After
Sales Service. Buying from such established shops or malls gives them a satisfaction in their sub-
conscious that if something goes wrong then somebody would be there to take care of their
furniture. Thus, it can be said that brand is an important indirect parameter fulfilling the
expectations related to factors like quality and warranty. However, at the same time, there is a
perception among customers that branded furniture comes with a package of additional costs,
which sometimes become difficult to afford.
Therefore, the key take out is that if a new player wants to enter in the market, it should
establish itself in India in a full fledge manner with its own showrooms across the country,
with exclusive product designs and position itself as a brand which will be always there to
support it customers.
Interior Decoration items – As mentioned earlier, most of the purchases in this category are
impulse purchases, so this stage of buying process holds less relevance. However, in some cases,
where the products being considered are of high value, some considerations are there depending
upon the type of product category. In general, the factors considered while buying home décor
products are Price (should not be too expensive) and Aesthetics (look and design). Factors like
quality, durability and brand are not relevant in this case.

6.2.4. Purchase Decision
This stage mainly includes following decisions - Where to buy and What to Buy. Based on the
various factor considered and evaluation of alternatives, purchase decision is made. It is very
important for any company to target the person who takes this decision and one who plays a
major role in influencing this decision. For marketing any product successfully, it is of critical
importance to market it to the right person and from the right place. Objectives of these focus
group discussions also included identification of the decision makers, influencers and most
preferred points of purchase. These findings are as follows:
Furniture – Given the fact that Indian homes are

still a place to be managed under females, in either “Last time I bought furniture, it was a
joint decision between me and my
case – be it homemakers or workers, furniture husband. However, we had to change
purchase decision is mainly in the hands of the our decision at the end because we
were buying study table for our son
woman in the house. Depending upon the family and he did not like the decision.
composition, this role shifts accordingly. In case of Finally, all three of us who went and
bought it” – Housewife, 38, SEC A2, Ahmedabad
nuclear families, the role is clear, but in case of
joint families, women of the younger generation
take the decisions, while elder women (mother in law) also plays a major role. In addition,
considering that furniture is a high value and long-term investment, husbands are the influencers
and their influence matters to such an extent that the decisions can be termed as joint decisions.
The roles can be divided as follows:
Decisions related to design, color, fabric (in case of upholstered), functionality (bed with or
without drawers/storage boxes, sofa cum bed etc.) – Wives
Decisions related to point of purchase, imported vs. domestic, if imported – which country, type
of wood – Husbands
Decisions related to price / budget – Joint decision, equal role of both husband and wife

Use of Home Decorators or Designers:
In addition to the above roles played in traditional Indian families, some of the affluent and
upper class families have involved themselves in getting their homes decorated by interior
designers and architects. Thus, other than husbands acting as influencers in all the purchases, in
some cases, interior decorators also play
a major role.
It was identified that the services of a

home decorator or designer are a luxury
of the affluent. Some 20 percent of the
luxury consumers reported using the
services of a home decorator or
designer in the past year. In the general
home survey some 12 percent overall
used the services of a decorator. General Survey Luxury Survey
Source: The Home Furnishing & Décor Report 2008
As far as decision of point of purchase is concerned, trustworthiness in terms of after sales

support like repair and replacements drives the
decision. Thus, customers prefer to buy from well-
“I would prefer to buy from brands
established brands that are there in India since years. like Home Stop, Home Town, Durian,
and Style Spa. I know if I need their
In case of imported furniture, customers will always
help in future, they will be there. They
prefer to buy from companies that put their brand will not vanish like any other small
one off kind of showroom of imported
name on imported products and are accountable for
furniture on gurgaon highway. I can‟t
the after sales support. Examples of such companies trust those shops” – Husband, 41, SEC A1, Delhi
as given by customers include names like Style Spa,
Godrej, and Durian etc.
Home décor products – Since, these are impulse decisions, depending upon who has liked the
product buy it. As mentioned earlier, some of these products are purchased from vaastu / charm /
good luck perspective. In such cases only, vaastu experts or interior decoration consultants
influence the decisions.

6.2.5 Post-Purchase Evaluation
Any transaction between a buyer and seller does not end when a product is purchased. Based on
the experiences of using the product, support provided by the seller, real outcome of the
transaction come - Satisfaction or Dissatisfaction. Shortly after a purchase customers develops
Cognitive Dissonance. This is the buyer‘s doubts about whether it was the right decision or not.
Such post purchase effects can be reduced by taking appropriate steps like warranties, after sales
communication, etc.

Learning from Consumer Insights - Summarized
Furniture – While shifting to a new house, while renovating a house,

Need Sometimes for occasions like Diwali or Marriage in the family
Trigger
Interior Decoration – Mostly impulse purchases, Sometimes bought
for gifting purpose or if suggested by Vaastu experts
Furniture – Newspapers, Magazines, Trade Fairs / Exhibitions, Word

Information
of Mouth from Family or Friends
Sources
Interior Decoration – Trade fair / Exhibitions
Furniture – Aesthetics, Quality, Purpose, Price, After Sales Services /

Warranty Period
Alternatives
Evaluation Interior Decoration – No such considerations, look and feel of the
product matters. Sometimes, if the product is very expensive, price
can be a constraint
Furniture – Joint decision between husband and wife. Wife plays a

Purchase major role. Kids influence for new trends and designs. Preferred to
Decision be bought from well-established brands or chain of showrooms
Interior Decoration – Who likes it, buys. Husband can influence in

terms of spending or budget.
Furniture – Customers look forward for provisions like warranty,

Post Purchase
support in disassembly and reassembly while shifting to new home
Behavior
and after sales communication is expected from the seller

6.3. Customers’ Perceptions about Thailand
In terms of Product Quality &

Designs
“Thailand offers more variety in designs,
they are innovative, designs are attractive
and eye catching.”
“Comparing with other countries, it is

better than China and India, but behind
other countries like Italy and France”
“Thailand has amazing and very beautiful

designs of artificial flowers and paper
crafts”
In terms of Price Lifestyle Association*

“While I was on a trip to Thailand, I did a “A Person buying Thai products (furniture)
lot of shopping because I could afford most would be a person, who is young, newly
of the products there, unlike Dubai, where I married, working with MNCs, would shop
could not buy much” from places like malls, and would like to
spend his weekends either shopping or
“I think Thailand is present in all price travelling”
ranges like China.”
“A person buying Indian furniture would be
“In some product categories, like middle aged, more traditional in his
decorative items Thailand is costlier than approach, would like to spend weekends
India. But in some, like furniture, its like with family members”
China present in low end as well as high
end furniture” “A person buying Chinese furniture will be
again young, mostly bachelors or newly
“I think products from Thailand are very married, experimental in approach,
much affordable” working in call centers, will spend
weekends shopping”
* As a part of the Focus Group Discussions, respondents were put under a projective technique of imagining and describing the
lifestyles of three different personalities – (A) Person buying furniture from Thailand, (B) Person buying furniture from China
and (C) Person buying Indian furniture. Projective techniques are used to understand the in-depth feelings, motives and
perceptions of the customers. Based on their imagination of the above-mentioned three personalities, respondents were asked to
describe the latter in terms of age, lifecycle stage, value systems, affluence, weekend spending pattern, hobbies etc. A summary
of responses is given in the box above.

7. Recommendations for Thai Investors
7.1. How to Enter the Four Market Segments

Based on above analysis of the Indian furniture and Decorative items industry, following are the
key recommendations with respect to the four potential market entry segments.
Market Key Take Out from the Entry Distribution Target Critical
Segments Market Study Strategy Route Segment Success Factors
Middle class and Upper
middle class are expanding.
Product
Either
Establishing Innovation,
India is a complex country through Joint
own retail Exclusive
Household with cultural variations Venture or
chains – Upper designs, Well –
Furniture – after every 500 Kms. So, it step by step
Specialty Middle Established
High End is important to gather entry by
Store/Home Class Brand Name,
Segment information about the establishing
Improvement Better
market first only a liaison
store format packaging,
office first
Customization
Middle - middle and Upper
middle class of India is
ready to pay extra buck in
order to ensure durability
Competitive
Prices,
However, considered as a Tying up
Availability,
Household price competitive country, with existing
Middle – Warehouses in
Furniture – Thailand is seen as a Retail Chains
Imports Middle Tier 1 cities,
Low End country with a status –
Classes Strong Logistics
Segment quotient attached with its Hypermarket
Network, High
products. Perceived as a Format
Quality, After
shopping destination of
Sales Support,
moderately affluent class of
the society

Office Space in India is Timely
growing rapidly, will grow Delivery,
Direct Service
at 20% CAGR in coming Warehouses and
Joint Selling and Industry (IT
four to five years connectivity
Office Venture / Marketing and BFSI
through strong
Furniture Medium Tie ups with Sector) -
Institutional Customers Logistics
Scale Firms Builders and Mid Size
look for brand names that Network, Brand
Architects Offices
can compliment with their Name and After
own brand name Sales Support
Indian customers are now
spending more on Home
Large Product
Furnishing
Assortment,
Large Volumes,
Among Indian customers, Buying and
Better
Handicrafts Thailand is perceived to be Selling
Middle Packaging,
& Décor price competitive Imports Agents,
Class Product
Products through
Exclusivity,
Positioned as a country wholesalers
Ethnic / Culture
with delicate, attractive and
based
ethnic products in the
Positioning
handicrafts and décor
industry
A detailed description of the entry, distribution and brand building strategy is provided below:
7.1.1. Entry Options

(a) High End Furniture Segment – The focus of this segment will be value, not volumes. Thus,
in this segment Thai investors should build up in terms of branded and high design furniture.
However, it would be of critical importance for the investors to understand the market deeply in
order to build a strong position. Given that India is a complex country and there are strong
cultural variances leading to different taste and preferences, it is important for any entrant to
understand the market first. Especially, it is more appropriate for global players to enter India

through partnerships like joint ventures. Setting up of operations through a joint venture will
lead to the following advantages for a foreign investor:
 Already established distribution/marketing set up of the Indian partners.
 Financial resources availability of the Indian partner
 Established contacts of the Indian partner that help smoothen the process of setting up of
operations
Or else, the entry process can be divided into two steps for better understanding of the market.
Liaison/representative offices can be set up as an intermediate step before entering on the
own or through a joint venture. Typically, the liaison office is not allowed to undertake any
business activity in India. The role of such an office is to gather information about the possible
market opportunities and provide information about the company and its products to prospective
Indian customers. A liaison office in India is permitted to carry out only specified activities and
the permission for the same is given for a period of three years. This may be extended from time
to time. An example of such an approach is explained below:
Case Study – Teknion. This company initially established a liaison office in India and the
company‘s operations were focused in Chandigarh, Hyderabad, New Delhi, Mumbai and
Bangalore. Presently, Teknion employs permanent employees for its operations in India. It has
an after-sales service function that includes reconfiguration and new orders. The firm also
employs sub contractors for installation of its furniture solutions. Teknion imports furniture from
its Malaysian operations. Presently, Teknion‘s aim in India is to establish itself as a leading
designer and promoter of high quality furniture solutions. Teknion also plans to establish a new
showroom and a joint venture with Indian distributor. In the longer term, Teknion plans to
maintain an assembly unit with standard furniture and standard product ranges.
(b) Low End Furniture Segment – Motive of Thai investors in this segment should be to serve
to the middle class masses and play on volumes. Rather than putting high investments in setting
up own infrastructure, benefit should be taken from the already established organized retail
sector of India. As volumes based on price competitiveness would matter more than brand name
or other criteria, Thai manufacturers can just import their furniture here and get good margins.

(c) Office Furniture Segment – As mentioned earlier, key criteria of the customers in this
market segment would be that they would like to buy furniture from a brand name that will
compliment the consumers own brand. Thus, in this segment it would be critical to tie up with an
already existing and well-established brand name that fits fine in the customers‘ mind.
(d) Décor and Handicrafts Products Segments – Based on its positioning as a country with
reasonable priced handicrafts and decorative products, Thailand has a better option to play on
volumes rather than value. Thus, the aim should be to cut on huge investments of establishing
own infrastructure and enter India through imports route. In case of high value products as well,
this route of entry shall be more beneficial.
7.1.2. Distribution
Distribution or supply chain management is critical for furniture manufacturers for catering to
both, the home and commercial segments.
For the home segment, the most critical factor will be availability - to cater to India’s diverse
customer needs and a spread-out market. The challenge would be to do the same without
adding to inventory or costs. The critical success factor in this case would be to make the product
easily available in at least the top 20 cities of India, where the affluent and high-income middle
class of India resides.
In case of the commercial segment, which includes both office and hotels, the key requirement
would be to ensure timely deliveries and satisfaction in terms of value for money. Such
requirements can be taken care off by having appropriate and required investments in the
infrastructure as well. For example, company needs to have its own warehouses at least in all
the top six cities of India otherwise timely distribution becomes difficult. Style Spa‘s one of the
strength areas is availability of its furniture stores throughout India, which at the back end is
supported by its mother warehouses and twenty other small warehouses across India.
Last but not the least; Indian furniture industry has now become a part of the fashion industry, it
is very important to make the right thing available at the right time. Therefore, logistics also
play a very important role. There are some players, which have a strong regional presence and
have good furniture designs, but logistically it is not possible for them to reach in all the parts of
the country. Therefore, if any company wants to expand, it should have a strong logistics
network to expand.

7.1.3. Brand Building & Promotion
First step for any new player is to create awareness about its products in the market. The same
can be done through various routes – Print Media, Interactive Media and Trade fairs or
Exhibitions; latter being the most appropriate method for introducing a new brand or product
from a new country.
Once the customers are aware about the presence of a particular product or company, the next
step is to build the brand value. In recent times, brand as a buying decision parameter has
gained significant importance in the consideration sets of the customers. This is applicable in
case of both institutional as well as individual customers.
Institutional Customers – As institutions, be an office or hotel, it would prefer to have its
infrastructure, interior and furniture that compliments or enhances its own brand. At the same
time, this segment of customer is price sensitive. Therefore, any player wanting to focus in this
category, should position as a well-known brand available at optimum value for money.
Individual Customers – This segment of customers is also price sensitive, but quality and
reliability factors play more important role as compared to price. Well-known brand names are
looked up to in this category as well to ensure Quality, Durability and Trustworthiness. For any
player wanting to focus on home furniture, it would be helpful to focus itself as a company with
good quality furniture and a company which shall be available for after sales services as and
when the need arises.
As far as promotion is concerned, such activities are helpful mainly in the home furniture
segment. Various methods that are prevalent in the market can be adopted. Such as discounts,
new product introductions, package options for doing the entire bedroom/living room,
interior decoration products or accessories free with furniture. India, still being a traditional
country, follows many old rituals of buying new things or renovating the house around
auspicious occasions like Diwali or a marriage in the home. Thus, such kind of promotions
would be more helpful in Diwali or Marriages seasons. Examples of promotion activities by one
of the major players Durian – Twice in a year Durian offers its customers flat 60% discount on
all the products available in all its stores. Other than this, there is one or the other item that is
provided free of cost to the customers. These free products are mainly accessories and home
décor products like lamp etc.

7.2. Market Attractiveness
Along with the above-mentioned entry suggestions in the four product segments, an evaluation in
terms of market attractiveness was undertaken to develop a rank order for each of these. This
ranking has been done based on the various criteria, such as:
 Industry Growth Stage
 Growth of Customer Segments
 Growth in Allied Sectors
 Competitive Scenario
 Potential Entry Barriers
 Scale of Investments required etc.
The findings of the above analysis are as follows:
Market
Market Segment Main Criteria / Advantages
Attractiveness
Huge target customer base, advantage in terms of
volume; Minimum efforts and investments
Household Furniture required for market development (entry through

– Low End Segment JV and distribution through existing
hypermarkets) and promotion; Huge demand but
limited supply from organized sector
Office Segment of India is in a booming stage,
Office Furniture  growing at a fast pace (20% CAGR), Limited
number of sector strong players in the industry,
There is no need for macro-investment; Products
Handicrafts & Décor are present throughout the low value to high value

Products added band, providing an opportunity to make
good margins
Increasing Affluence of Indian upper middle class;
Household Furniture Given higher disposable income, customers are

– High End Segment ready to pay an extra buck for better quality and
designs; No strong industry player in this segment

8. Annexure
8.1. Annexure A: Profile of Major Players in the organized sector of Indian

Furniture Industry
8.1.1. Style Spa

Company Profile
 Indian furniture products limited is manufacturing company and Style Spa limited is the
marketing company
 Is one of the largest manufacturer and pioneer in panel based furniture
 Manufacturing facility is 14 kms from Chennai
 Company owns 90 exclusive stores which makes it the largest chain of furniture
showrooms in India
 Also sells furniture under the brand name of Zuari through dealers, which are not their
exclusive stores.
 Style Spa positions itself as Bedroom Furniture Company, 65% of their business comes
from Bedroom furniture
 Strength of Style Spa – its nation wide presence
o With 90 style spa showrooms, present in all states of India
o Similarly in case of Zuari, present in 145 cities across India
 Style Spa and Zuari‘s combined last year (07-08) sales – 120 Crores
 Only manufactures bedroom furniture, living room furniture (sofas, dining tables) are
imported –
o Imports from Malaysia and China
o Rough break up of sales – 65% manufactures, 35% imported
o Half leather and full leather sofas we are importing solely from China. Similarly,
dining table and centre table with glass and metal we are again importing from
China only
o From Malaysia, style spa is importing chairs and dining table made from rubber
wood.
 Style Spa as a company targets middle - middle and upper - middle class of customers

 Production capacity of the factory – 2, 00,000 units furniture per year. This includes only
bedroom furniture - beds, bedside tables, wardrobes, dressers, entertainment units, TV
trolleys, computer tables and study tables. We are not into manufacturing of chairs or
sofas or dining at our factory, these are only imported.
 Expansion plans -
o Sales target for 2008-09 = 140 crores
o Targeting 400-450 crores in next three years time, that is by 2011
o When expanding, import component will go up. Current dependence on the
factory is 65%; while the company expands, this dependence on the manufactured
furniture will go down to 45-50%.
o Reason to grow more on imports is higher margins on imported products
o For their strength, which is bedroom furniture, Style Spa will continue to depend
on its factory only.
 Promotion activities undertaken: Discounts, new product introductions, package options
for doing the entire bedroom. Such promotions are done in Diwali and marriage season.
8.1.2. Godrej Interio

 Godrej Interio is primarily into furniture – both home and office
 Also serves some special segments like navy, laboratories / provide customized services
also depending upon customer needs
 Godrej – present in all product categories (focused more towards office furniture)
 Godrej is present in all price ranges – Premium, value for money, economical
 Godrej Sales 2007-2008 – 800 Crores (2/3rd office furniture)
 Exports – 2.5 percent of the above amount
 Two type of distribution models:
o 58 Own retail Stores – by the name of Lifespaces. Godrej largely sells home
furniture through this model
o Franchisees – More than 500 in number, by name of Interio franchisees located in
tier 1, 2 and 3 cities. These can be multi brand stores, this model sells both office
and home furniture

8.1.3. Durian
 Durian is mainly into manufacturing of plywood, PVC doors, decorative veneer
 1998 onwards Durian is in furniture trading
 Import furniture from Malaysia, China, Thailand, Spain, Italy
 Also into manufacturing – only for some categories of furniture - chairs, modular
workstations
 Last year (2007 – 08) – Approximately 100 Crores
 In case of office furniture, Durian has limited presence – Office table, Office chair,
Conference table and Book Shelves
 Household category – Almost all types of household furniture, strong in leather sofa
category
 Actually in case of sofa sets, most of the players have a set pattern of selling 3+1+1 sofa
sets. However, Durian offers different customized options depending upon the regional
preferences. For e.g. 3+2+2 for Delhi, 2+1+1 for Mumbai or 3+1+1 for Kolkata
 Break-up of Durian Showroom sales: 60% Household and 40% Office Furniture
 98% of Durian‘s Sales is imported furniture and only 2 % is manufactured
 Durian is mainly importing from China – 50%
 Remaining 50% from other countries, mainly Thailand and Malaysia. Little bit from
Taiwan, Spain and Italy
 Two types of Distribution Channel
o Through retail showrooms – 43 retail showrooms of Durian are present across
India. Out of 43, 30 are owned by Durian. Dealers own remaining 12-13, these
dealers are authorized exclusive dealers, and they cannot sell other brands.
Material that is imported is stored in warehouses and then distributed to
showrooms all across India. By this route, Durian mainly caters to the needs of
the individual customers.
o Project sales – This model is mainly to cater to institutional customers. Durian has
project offices in all the major cities like Delhi, Hyderabad and Bangalore. Orders
are generated in these project offices and their demand is communicated to
Mumbai head office. Depending upon the gap of demand and supply (furniture
already available in warehouse) import / manufacturing decisions is taken. Some

of the material is manufactured; part is imported (depending upon demand of the
project).
 Durian has a main/central warehouse (2.2 lakhs sqft area) in palgaon (100 Km from
Mumbai). There is one more warehouse in Delhi for meeting the demand of 6-7 retail
showrooms in Delhi. Orders from different showrooms come to the central warehouse
through their ERP system. Then as per the orders, arrangements are made for the logistics
and material is finally sent to the destination showrooms.
 Durian‘s target market - upper middle class - Families with at least Rs 40,000 of monthly
income
 Promotion activities undertaken by Durian
o Up to 60% discount twice a year
o Free Accessories of 10% amount of bill amount. Accessories like table lamps,
table stands, anything related to home décor

8.2. Wooden Handicrafts Industry – Overview
Wooden handicrafts are specialized skills passed on from one generation to the next. The term
'wooden handicrafts' refers to a wide range of wooden items carrying utilitarian and artistic value
that are made by hand, or with the use of simple tools. Indian wooden handicrafts reflect
unmatched workmanship, fine designs, and subtle elegance. This makes India one of the chief
exporters of wooden handicrafts in the world market.
According to the classification of Indian industries, a small-scale industry is defined as an

industry that is:
 Not registered under the Factory Act

 Investment in fixed assets does not exceed Rs.60 lakhs
Small-scale industries are classified into two categories:
 Modern small industries like power looms etc.

 Traditional industries like handlooms, sericulture, khadi, coir, and handicrafts.
Wooden handicrafts fall in the category of small-scale traditional industries.
8.2.1. Role of Wooden Handicrafts Industry in Indian Economy

The wooden handicrafts industry plays an important role in the Indian economy. This industry
requires low capital investment and other resources. The wooden handicraft sector provides a
high ratio of value addition, and has emerged as one of the major sources of foreign exchange
earnings for India.
Indian wooden handicrafts are much sought after the world over, and form an important export
commodity of India. Although India's handicraft exports show a consistent increase of sixteen
per cent every year, its share in the international market is not more than two per cent.
The Indian wooden handicraft sector is the second largest employment provider (after
agriculture). It employs about six million artisans. Women constitute a large section of the
handicrafts industry, including people belonging to the weaker sections of society.

8.2.2. Factors That Affect Growth
Though India is one of the chief suppliers of wooden handicrafts in the world market, its share in
world imports is insignificant. Mass existence of craftsmen combined with an excellent
production base has failed to aid India towards cashing on the existing opportunities.
There are a number of factors that affect the growth of the Indian wooden handicraft sector.
They are:
 The Indian handicrafts industry is a decentralized one. As a result, the products are not
sufficiently remunerative. The artisans work on a part-time basis, while taking up other
means of alternate options of livelihood.
 Production of wooden handicrafts in India is chiefly dependent on the raw materials

available locally. Deforestation comes across as one of the main reasons for the setback
in production levels of wooden handicrafts.
 The wooden handicrafts sector is based in rural India where lack of proper
infrastructure and working capital is a major cause for concern. Weak infrastructure
leads to delay in delivery and affects the quality of finished products.
 The Indian wooden handicrafts sector is plagued by poor marketing strategies.

Craftsmen are not independent enough to resort to direct marketing of their own products.
As a result, they are unable to handle the threat to their industry from machine-made
products.
 Most of the craftsmen in the wooden handicraft sector live below the poverty line, and
are illiterate. They are also ignorant of the benefits bestowed on them by the
Government.
Wooden handicrafts are sold at least three to four times the price paid to the craftsmen. Improper
pricing mechanisms and the intervention of middlemen deprive the artisans from getting their
due.

MODULE 2 - INVESTMENT POTENTIAL STUDY
INDIAN HOME UTILITY INDUSTRY – UTENSILS AND PLASTIC
CONTAINERS

Executive Summary
E.1. Tableware Industry in India

The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the
unorganized market. The organized tableware market which is around 8% of the total market
comprises of both domestic players like La Opala RG Ltd., Bharat Bone China Ltd., Magppie,
Art d‘Inox as well as multinationals like Corelle, RAK Glass, Luminarc etc.The organized
tableware ,market is growing at the rate of 15-20% on an average after taking into
consideration the effects of slowdown.
The major growth drivers for this industry in India are –
 Increasing middle class population

 Increasing per capita income
 Growth in organized retail
 Ownership of luxury products
 Openness to Trade
 Increasing Hotel & Catering Industry
The tableware industry in India can be segmented based on –
 Application
o Dinnerware,
o Beverage Range
o Barware Range)
 Material used for manufacturing
o Stainless Steel – with & without Matte Finish
o Ceramic – Bone China & Porcelain
o Glassware – Transparent glassware & Opalware).
Out of these segments, the market size of Glassware, at INR 12 billion which is the largest in the
total tableware market in 2007-08. Based on the application of tableware - beverage range is the
fastest growing product category growing at around 20-25% p.a. and contributes maximum to
the sales of tableware manufacturers.

The major sets of customers in tableware are domestic consumers & institutional consumers
(hotel/ catering & corporate players). The domestic consumers at present occupy the largest
consumer base for products in this category. However, with the increase in gifting trend
amongst Indian consumers & growing number of hotels / restaurants, purchase of products in
these categories is expected to rise in future.
E.2. Plastic Container Industry in India

The consumer plastic goods industry includes household ware, kitchenware, writing instruments,
molded luggage, and molded furniture. The kitchenware, tableware and household products
contribute around INR 15 billion to the revenues of the total consumer plastic goods industry
(according to Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian
Exporters of Plastic Consumer Products‘ in 2003). The industry is divided into organized &
unorganized players with organized player capturing 58% of the total market size of consumer
plastic goods. The organized plastic container market has few major players who are Hamilton
Housewares Pvt. Ltd., Cello, Tupperware, Pearl Pet, Eagle Thermoware etc.
The changing preference of people for using plastic containers for storage purpose in turn
is promoting the growth of this industry. They want quality products, which are leakage proof,
airtight and aesthetically appealing.
The major growth drivers for his industry in India are –
 Openness to Trade
 Increasing disposable income & middle class
 Increasing pattern of corporate gifting/ freebies
 Increasing storage requirements with increase in working women
 Replacing old containers of steel with plastic due to rising modular kitchen concept
 Impact of organized retail
These factors would enhance the growth of a new entrant in this market if they enter with the
optimal set of products after keeping in mind the changing consumer preferences.

Plastic Container Industry can be segmented as-
 Storage Boxes
 Thermoware
 Dine ware
The plastic container industry is growing at the rate of 12-15% with the increasing storage
requirement of people and preference for more aesthetically appealing containers rather than
stainless steel containers due to modular kitchen concept coming in place.
The major set of customers for plastic container industry is domestic consumers & institutional
consumers (hotel/ catering & corporate players) with domestic consumers occupying a larger
share of the pie. In case of institutional players, the branded plastic containers can be used for
gifting purpose as well as for corporate gifting / freebies for product promotion, thereby enabling
the growth of this industry.
E.3. Value Chain – Tableware & Plastic Container Industry
E.3.1. Value Chain for Manufacturers –

The tableware & plastic container industry in India follows a similar value chain model. In order
to minimize expenditure at each level of the value chain, it is very important for the
manufacturers to source raw material from a supplier who provided them at low cost and from a
near-by source. Also, they should optimally utilize all the available channels for distributing their
product i.e. through company‘s own stores, through multi-brand outlets & retailers with
minimum number of intermediaries in between to ensure presence across all geographies, reach
to maximum number of customers possible and to save on cost.
Own Stores
Factory Multi brand

es outlets
/ Institutional sales
Raw Material Dealer / Customer

Distributor
Sourcing Retailer

E.3.2. Value Chain for Importers –
Importers or Super distributors in Indian tableware & plastic container industry can be exclusive
distributors or multi-brand distributors. They may sell the products through various channels like
through a distributor/ dealer, through retail outlets or directly sell to customers. However, for a
new brand to establish its name in the Indian market, it is very important that the importer/ sub-
distributor should be an exclusive distributor of that brand to reduce the bias which arises
because of difference in the margins offered if selling multiple brands through a single
distributor and they should utilize all the channels optimally to reach maximum number of
customers.
Customer
Importers / Super
Imports Retailer
Distributor Customer
Distributor / Retailers Customer

Dealer
E.4. Industry Analysis
E.4.1. Tableware Industry

The tableware industry is affected by existing competition, supplier & buyer bargaining power,
new entrants who would be entering this industry and substitute products, who are posing threat
to an investor in this industry to varying extents. Thus, after analyzing the tableware industry in
India, it can be inferred that there are small number of players in the organized tableware market,
whereas the unorganized market is highly fragmented. However, the major target segment i.e.
middle & upper middle class prefer to purchase products from the organized market due to better
quality, variety & changing preference for purchase of lifestyle goods.
The major threat posed to tableware industry is from new entrants due to the attractiveness of
this industry. Existing competition & substitute products pose medium threat to the tableware
industry. Thus, it is very important for a new entrant to position its products in the Indian market
based on the needs of the consumers that are not fulfilled from existing products.

E.4.2. Plastic Container Industry
This industry when analyzed through Porter‘s Five Force Model revealed that the major threat
is posed by new entrants & competition amongst existing players due to increase in the size
of this market.This is because of the rise in number of working women, increasing disposable
income of people & preference of people for branded & good quality plastic products which
attracts new entrants. Also, there are access capacities available in the Indian market, which can
help to boost the production in the future. Many players in the medium scale industry are also
selling branded products, which will be good for the future prospects of the industry. Also, the
amount of investment required to start the business in this segment is low. These factors attract
foreign investors to venture in this industry.
E.5. Consumer Insights

Key consumer insights, important from the point of view of foreign entrants are as follows:
Need for purchase of Tableware & Plastic Containers
o Tableware is purchased whenever the need arise, with the increase in number of family
members and when they need to replace the old tableware. They may also purchase for
gifting on occasions like Diwali or Marriage in the family.
o In plastic storage containers, most of the purchases are impulse in nature and also
depends upon the increasing storage requirement. It can also be purchased for gifting
purpose.
Information Sources
o For both these product categories, newspapers, magazines, trade fairs/ exhibitions, word
of mouth from family or friends are the most common sources of gaining
Alternative Evaluation
o In tableware, the products are evaluated based on the following parameters - . Quality,
Price, Brand, Variety, Aesthetic Appeal, Maintenance
o In plastic storage containers, the products are evaluated based on the following
parameters- Quality, Functionality, Hygienic, Variety, Aesthetics

Purchase Decision
o For both these product categories, wife plays a major role in purchase of the products in
these categories. Kids also influence the decision in selecting new trends and designs.
o They prefer to buy from well-established brand outlets or chain of showrooms. These
products are purchased once in six months with no fixed budget in mind
Post Purchase Behavior
o For both the product categories, customers look forward for provisions like warranty,
replacement of defected products & should be communicated about the same
E.6. Market Attractiveness of Tableware & Plastic Container Industry

Market attractiveness analysis of the above-mentioned four segments has been done based on
factors like Industry Growth Stage, Growth of Customer Segments, Growth in Allied Sectors,
Competitive Scenario, Potential Entry Barriers Scale of Investments required etc. The findings
from this analysis are summarized in the table below:
Market
Attractiveness
Demand is huge and it‘s the fastest growing category (more than 20%
p.a.); competition is high ;Both domestic & institutional customers
Tableware- purchase products in this category for personal as well as gifting

purpose; entry barriers are minimum and customers change products in
Beverage Range this category very often; investment required in terms of plant setting &
manufacturing cost is less than other categories; margins are low
Demand base is increasing with the increase in possession of lifestyle

Tableware- products; few players in the organized market; growing product category
 (around 20% p.a.) ; both domestic & institutional customers purchase
Dinnerware products in this range; Investment required is more than in beverage
range category; margins are high
Tableware- Comparatively slow growing category; customer base is limited to

 institutional customers (Hotel & Catering Industry) & upper middle class
Barware Range segment in domestic customers; investment required is more than other
categories; competition is less; margins are high
Demand is huge in this segment; competition is high; growth is almost
Plastic Storage stagnant at 12-15% p.a.; both domestic as well as institutional customers

Container purchase products in this category; investment required is low in this
product category; entry barrier is low; margins are low

Thus, Tableware is the most attractive category and within tableware, a new entrant should focus
upon Beverage Range & Dinnerware for entry in the Indian Tableware market.
E.7. Recommendations
India has retained its position as the second-most preferred global location for foreign investment
in 2008 and will continue to do so till 2010, lagging only behind China, according to the World
Investment Report 2008. Tableware & Plastic Containers imports from other countries are
increasing because changing preference of people towards lifestyle goods and desire for more
variety. Thus, it is very important for a new entrant to enter this industry with the right entry
strategy and targeting most profitable set of customers with positioning of products according to
consumer needs
Entry Strategy
o In order to enter the tableware market in India, the potential investor should enter either
through Joint Venture or Merger & Acquisition with the existing player in this industry
in India
o In order to enter the plastic storage container market in India, the new entrant should
enter either through Joint Venture or through strategic alliance with an existing player
in that market
Positioning
o Tableware should be positioned as easy to maintain i.e. unbreakable, scratch free, easy
to handle and clean & available in variety of designs & colors across all regions in India
o Plastic Storage Container should be positioned as leakage proof, beneficial for storage of
all kind of food materials- perishable & imperishable.
Target Product Categories
o In tableware, beverage range especially tumblers is the most fastest growing category
o In plastic storage containers, containers for storage of perishable food items is an
important critical success factor for positioning their products

Target Customers
o For both these categories, women in upper middle class & middle class should be the
target segment
Distribution
o For institutional customers, direct distribution system is the best option for both these
product categories
o For domestic consumers, multi channel or hybrid distribution network ensures
coverage of wider market
Brand Building & Promotion
o Through proper mix of advertisement in print media, T.V., exhibitions etc.

o Introducing schemes like scratch card, discounts etc. on occasions like Diwali for
customers & schemes for dealers should also be used to motivate them to sell more
Thus, a new entrant should focus upon Tableware category – beverage range & dinnerware
in joint venture or merger & acquisition with an existing player and ensure that the products are
available across all geographies and address customer needs in terms of scratch free, unbreakable
& maintenance is easy and inexpensive.

9. Global Scenario
9.1 Global Tableware Industry:
9.1.1 Overview:
Tableware is marketed these days as a lifestyle product. End consumers now want a more
personalized service in all areas. And they prefer to spend their precious disposable income on
leisure products rather than fine china. In the last ten years, therefore, sales of tableware have
been trending ever lower in the traditional western European markets.
Cooperation between the suppliers of machinery and raw materials has become much closer, in
particular because optimizing process quality is a challenge that can only be mastered by
working together. The market leaders among the tableware manufacturers are pointing to the fact
that it‘s not just technological innovations that count, but also innovations in design. In addition,
the western European tableware manufacturers have to pursue clever brand and price policies,
positioning themselves not only in the up-market segment. Targeted outsourcing for
manufacturers in high-wage countries is very much a part of this strategy and thereby introduces
Asian manufacturers into the process. Technology has to keep pace with these changes.
Ceramic and porcelain table ware are used by household, hotels, restaurants, barracks, and these
table ware mainly comprise of coffee-tea sets, plates, soup tresses, salad bowls, tea and coffee
pots, sugar bowls, cups and source boats, dishes, egg cup etc. According to the use of tableware
in USA, it can be divided into three categories i.e. Dinner sets, tea and breakfast sets, drinking
glass sets.
USA is one of the biggest market for ceramic and porcelain tableware. However, the market for
ceramic and porcelain tableware is different to that of Europe. It is the large market very
competitive with high professional importers/ distributors placing large orders.
9.1.2 The Changing Consumers

Tableware can be classified in six basic ways: style (formal or casual, traditional or
contemporary); material (fine china, stoneware, glass); place of origin (imported vs.
manufactured domestically); price segment (high-end, mid-range, or low-end); distribution
channel (department stores, mass merchants, specialty stores, etc.); and retail category (the

"upstairs" china/crystal/silver department vs. the "downstairs" house wares department). The
house wares mass market dominates the U.S. dinnerware market.
In recent years, the global tableware industry has faced changes in purchasing habits of
consumer products, lifestyles and attitudes toward the home. Consumers have turned toward a
more casual lifestyle around the world. Since many consumers now consider tableware a
replaceable fashion product, manufacturers and retailers are aggressively designing new patterns
to keep with this trend. This casual trend has even extended to the foodservice industry, with
some restaurant chains using "warm" tableware patterns.
Even so-called formal crystal stemware is being used in casual ways by the consumer. In
response, major companies like Noritake and Lenox have developed more casual lines of crystal
or have repositioned their formal stemware at lower prices. Wedgwood is trying to address this
trend as well by introducing a casual, less expensive range of tableware over the next few years.
The casual trend has also resulted in a demand for brightly colored glassware. Such colors as
Spanish green and Mediterranean blue have emerged as everyday basics in glassware. This color
trend is expected to continue into the millennium. The interest in embossed and textured looks in
glassware also continues to grow. The growth of casualware has increased the market for
specialty glassware (such as sugar containers and creamers), while the market for stemware and
barware remains flat. Decorated glassware has also become more popular, especially fruit and
flower decorations with gold accents.
While casual tableware patterns are popular, steady demands for formal ware continues.These
trends are leading to a new style defined as transitional, which is something between casual and
formal. Formal companies have thus explored a more proactive, two-pronged marketing
approach: open-stock availability of their traditional lines, and the introduction of open-stocked
casual lines. Some tabletop manufacturers have responded with comprehensive, mix-friendly
stories in open-stock, comprised of several coordinating patterns, plus accessories in the same or
alternative materials.

9.2. Global Plastic Products Industry
9.2.1. Plastic Industry

The global plastics industry is marked by dynamic growth with both quantity and quality aspects
helping boost the upswing. For many years now, overall population growth, a good global
economic climate and ongoing substitution processes in favor of plastic have combined to foster
steady expansion in the sector.
Plastic has occupied a major role in the lifestyle of the 21st century. Based on Frost & Sullivan‘s
Report -2003, Commodity plastics contribute US $ 90 billion that is 5.6 percent of the entire
chemical output and polyolefin output is US $ 61 billion that is 3.8 percent of the chemical
output. This gives us an idea of the size plastic industry and the significance that it holds in the
global scenario. This becomes even more significant when the global polymer industry is
growing by almost twice the rate of the global GDP. The demand for the major polymers is
growing at a rate of 5.2 percent annually and polyolefin alone make up for the 63 percent of the
entire polymer industry. The demand for Polyolefin is growing at an even faster rate of 5.6
percent per year. The global demand for polymers is 139.3 MMTA out of which polyolefin form
89.04 MMTA. There are tremendous capacity expansions that are happening for polymers all
over the world. At present, the global capacity for polymer production is around 170 MMTA and
is growing at a rate of 10.5 percent per annum. Out of this, more than 35 percent of the capacity
is in Asia – pacific region and around 28 percent of the capacity is in the North America.
Western Europe contributes to around 21 percent of the entire capacity. These three regions form
the major polymer production regions of the world.
9.2.2 Plastic containers

Plastic bottles accounted for 77 per cent of plastic container weight in 2003 and will continue to
remain the dominant type for during this decade, the firm predicts.The estimated demand from
the US alone (for plastic food containers) has been estimated to touch as much as $21 billion by
2009. Currently, five HPL supported FIBC units exported 7 KTA worth goods annually.

10. Tableware & Plastic storage containers Industry in India
10.1. Tableware Industry

10.1.1. Overview - The tableware market in India is estimated to be around *INR 30 Billion in
2007 including the unorganized market. In the organized market, there are both domestic players
like La Opala RG Ltd., Bharat Bone China Ltd., Magppie, Art d‘Inox as well as multinationals
like Corelle, RAK Glass, Luminarc etc. who are a part of this large chunk of market size.
The organized and unorganized market has a huge difference in terms of value but with the rising
disposable income of middle class & upper middle class as well as growth in hospitality industry,
the organized market is growing at a much faster rate than the unorganized market.
Graph: Percentage share of the organized and unorganized tableware market in terms of value
The organized market is 8% of the total tableware market in India i.e. around INR 2.4 Billion
including domestic manufacturers & brands imported from abroad which are sold through
organized retail channels.
*The Financial Express – June 2007
10.1.2. Industry Segmentation

The tableware market is classified according to their application & raw material being used for
their manufacturing.

10.1.2.1. Segmentation Based on application
Based on their application, the tableware is broadly classified as:
Tableware
Market
Dinnerware Beverage Barware
Within each product categories, the products are:
 Dinnerware range – This includes plates (quarter / full), dinner set, pudding set, etc.
Around 62% of the total organized tableware market (INR 2.4 Billion) comprises of
Dinner ware i.e. Rs. 1.5 Billion. The growth in this category is fast with the changing
lifestyle & increasing income of people.
 Beverage range – This includes glasses, cups, saucer, lemon sets, jugs etc. This is the
fastest growing category in tableware especially among glassware.
 Barware range – This includes ice buckets, cocktail shakers, wine sets, salad bowls,
cutlery, fruit bowls, trays etc. This category is growing after beverage range because of
the growth in hospitality industry.
Category wise market share for organized tableware
38%
Dining ware
Beverage & Bar ware
62%

10.1.2.2. Segmentation Based on Raw Material
The material used for their manufacturing may differ from manufacturer to manufacturer. Major
kinds of material which are used for the manufacturing of Tableware are:
Tableware
Market
Stainless Steel Ceramic Glass
Without Matte Bone China Transparent

finish Glassware
With Matte Porcelain Opal ware

finish
The market for tableware is dominated by a large number of unorganized players for stainless
steel tableware. Hence, it is difficult to predict the share of stainless steel tableware in the total
table ware market. Based on the responses of players in the organized tableware market, market
size of each category in India based on the material used can be predicted.
Stainless Steel Glassware Ceramic
 The total market for  The total market for  The total market for
stainless steel tableware glassware is INR 12 billion ceramic tableware with is
with matte finish is INR in overall tableware market INR 2.15 billion in the
400 million in the  Total market for opal ware overall tableware market
organized tableware is INR 6 billion in the
market overall tableware market
-Based on the responses of a senior
- Based on the responses of a - Based on the responses of senior
manager in the organized ceramic
senior manager in the organized managers in the organized
tableware
steel tableware with matte finish glassware & opal ware

Glassware has the largest market size in terms of value in the Indian tableware market. This is
because glass wares are available in variety of designs, can be used in microwave as well as for
serving and are used by most of the domestic as well as institutional players. Also, opal ware
which is unbreakable in nature is preferred by most of the consumers for domestic purposes as
well in hotels / catering.
Ceramic ware comprising of crockery and tableware is produced both in organized and
unorganized sectors. There are 16 units in the organized sector in India with a total installed
capacity of 43,000 tones per annum. Bone China crockery ware is being imported from
Bangladesh and Sri Lanka in view of the better availability of raw material there.
10.1.3. Customer classification

According to the usage of tableware, the customers can be classified in two groups, namely:
 Domestic customers – for personal usage / gifting

 Institutional customers
o Corporate customers – for gifting & as freebies
o Hotel / Catering & Restaurant customers – for business usage
Amongst the Institutional customers, the corporate customers include a majority of
Pharmaceutical companies. Apart from these two categories, exports also form a major
proportion of the total sales for all the manufacturers.
Domestic customers Vs. Institutional customers for

Tableware
44%
Domestic customers
Institutional Customers
56%
Graph: Percentage share of the tableware market in terms of customer base in organized tableware market of INR
2.4 Billion

Presently, the tableware industry in the organized segment is growing at the rate of 15-20% on
an average taking into consideration the effect of slowdown. Thus, there is a huge market for
new players to enter this industry through proper marketing & sales network. The fastest
growing category is beverage range, where tumblers are the most fast selling items.
10.1.4. Major manufacturers in India

The major domestic manufacturers in India for Tableware according to the material used for
manufacturing are:
 La Opala RG Ltd. in Opal ware

 Yera in Glass ware
 Bharat Pottery Ltd. in ceramics & stone ware
 Art d‘inox in steel with matte finish
 Magppie in steel with matte finish
10.1.5. Growth Drivers for Tableware Industry
Increasing per capita

income
Impact of growth in
Increasing middle
organized retail
class population
Key Growth
Drivers
Ownership of luxury Increasing Hotel &

products catering industry
Openness to Trade

 Increase in per capita income with the growth in I.T., ITES, Real Estate industry which
leads to increase in expenditure
o Planned expenses are to increase by 47 per cent and non-planned expenses
increased by (about) 6 per cent, which really adds to excessive expenditure*
 Increase in the number of middle class & upper middle class

o The middle class currently numbers some 50 million people, but by 2025 will
have expanded dramatically to 583 million people—some 41 percent of the
population**
o These households will see their incomes balloon to 51.5 trillion rupees ($1.1
billion)—11 times the level of today and 58 percent of total Indian income**
 Increase in the ownership of luxury products.
o The current market size of luxury-very premium goods and services is INR 840
Billion which is rising at 16% p.a. according to KSA Technopak
 Increase in Hotel & Catering industry
o There are some 1,980 hotels approved and classified by the Ministry of Tourism,
Government of India, with a total capacity of about 110,000 hotel rooms
o The hospitality industry is poised to grow at around 25-30% p.a. and is expected
to reach INR 826.76 billion by 2010

o Dining in restaurants on weekends and other holidays, with family members and
friends, has become a very popular concept in urban India
 Openness to trade, channelization of investment and deregulation in India would promote
imports /exports with other countries
*The Times of India: Advantage India- Growing Young Population (March 2007)
** Business Week – May 19 2007: Next Big Spender‟s – India‟s Middle Class
Thus, after considering the drivers for the growth in Tableware Industry, it is expected that it
would grow at the rate of 15-20% for next five years. However, due to the economic recession in
recent times, it would certainly affect the demand in this industry. But tableware is a need based
category and with the increasing disposable income and growth in hospitality industry, the
demand for this category will not be affected much for the organized players.

10.1.6. Analysis of Tableware Industry in India
The tableware industry is highly disorganized in India. However, there are few major players
who are a part of the organized tableware along with importers who are selling brands from
abroad by establishing their sales & distribution network in India. Also, several players are
coming in the lifestyle products category in Joint venture with established brands in India.
1. Bargaining power of Suppliers 2. Bargaining power of Customers With fast

Raw material is available in abundance in India growing middle class and changing lifestyle, huge
& is also imported from abroad like Bone Ash, demand is there. In addition, people want change
however steel prices are increasing which has and get bored of their old tableware after some time.
increased the bargaining power of suppliers of However, with the increasing competition in
steel tableware organized market, bargaining power of customers is
increasing
3. Competitive Rivalry Industry shifting from

highly unorganized towards organized sector.
Competition is increasing because of the entry of
new players & joint ventures with the existing
players. Also, due to FTA between India &
several countries, imports have become cheaper
4. Threat of Substitute Products The organized 5. Threat of new entrants Several new players &
market as well cheaper products being imported from importers are coming in this market. In addition,
countries like China are a major threat to the products Joint venture of Versace with Rosenthal and several
manufactured in India or abroad. Also, stainless steel other players in the lifestyle brands are targeting the
utensils sold in unorganized market & melamine upper middle class after looking at the rising
tableware which are cheaper are substitutes in this opportunities in this segment
category

1. Threat from new entrants - With the increasing size of middle class & increasing disposable
income, this is an attractive segment to focus upon in household segment as well amongst the
lifestyle goods. Thus, in order to capture a significant market share in this category, several new
players are coming with the existing players diversifying their product portfolio. Also, products
in this category are imported from several countries which would increase with the increase in
demand in future. Thus, the threat posed by new entrants is high.
2. Substitute products – Due to large base of unorganized market & economies of scale, the
stainless steel utensils can be manufactured at a lower price than glassware or ceramic ware.
Thus, they can be used as a substitute for these product categories which are expensive. Thus, the
threat posed by substitute products is medium in this product category.
3. Competition amongst existing players – The players in the organized market are targeting
the same set of customers in the domestic consumer‘s i.e. middle class & upper middle class.
Thus, the threat posed by existing competition is medium because of the difference in the raw
material being used for manufacturing these products.
4. Bargaining power of customers – Customers have a limited choice base in the organized
market at present. But with the increase in the number of new entrants, their bargaining power is
also increasing with the increase in awareness level. But this bargaining power is limited by the
product & quality attributes i.e. brand proposition.
5. Bargaining power of suppliers – Raw material for the manufacture of ceramic ware and
unbreakable glass ware is imported from outside India from cheaper sources. Thus, the
bargaining power of suppliers is low for these material categories except in the case of steel ware
because of the high bargaining power of steel suppliers in India.

10.1.7. Critical Success Factors for Tableware Industry
A well connected
distribution network
Targeting domestic as Focus on easy to handle
well as institutional & low maintenance

tableware
customers
CSF
Creating a Brand Knowledge of needs &

Image expectations of target
customers
Proper marketing
activities in various
media
Based on the above-mentioned critical success factors, it is very important for a new entrant that
they have good distribution network with wide coverage and with minimum number of
intermediaries to save on cost. In addition, creating the brand image in the minds of consumer in
the Indian market is very important for a new entrant by proper positioning of their products
based on the strategy being followed by them. They need to adopt various marketing initiatives
to promote their brand and sell their products through various channels rather than just one
source.

10.2. Plastic Containers Industry in India
10.2.1 Overview
Based on Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of
Plastic Consumer Products‘ in 2003, Plastic is one of the fastest growing industry segments in
India. At present, there are 25,000 to 30,000 plastic processing units in the country. Consumption
of plastics will be touching 4 million tons per annum in almost 2 years and is growing at a rate of
14 percent per annum.
The plastic industry has been witnessing tremendous growth due to the widening of its
application spectrum and penetration of new generation polymers in all the key sectors of Indian
economy.
Consumer plastic goods account for approximately 15 % of the market. Within this market,
household ware and kitchen ware is the largest segment both in terms of domestic demand and
the export potential from India. The total imports of household articles, personal care products,
and kitchen ware by US totaled $ 1000 million in 2002. Writing instruments and travel ware are
other promising segments having a potential to generate export revenues. The Indian plastic
processing industry possesses strong capacities and capabilities in these segments. Consumer
goods include Household ware, Kitchen ware, Writing instruments, molded luggage, molded
furniture, and personal care products, Toys, gift articles and novelties, tailoring materials, etc.
Almost 50 percent of the plastic manufacturers have some operations in this particular category.
Given below is the break up of the following consumer goods in polymer consumption,
revenues, and the respective growth rates for 2002
Categories KTA Size in revenues in Billions Growth Rates
Molded Luggage 150 12.0 10
Molded Furniture 140 9.0 25
Writing instruments 40 13.6 20
Kitchenware, Table ware & 190 14.7 15

Household products
Total 520 49.3

Source: Frost & Sullivan - 2003

Indian plastic container industry comprises of a large number of unorganized players and few
organized players who dominate with major market share in this industry. The plastic products
industry comprises of storage boxes & thermoware containers.
With changing preference of people for using plastic containers for storage purpose is promoting
the growth of this industry. They want quality products which are leakage proof, air-tight and
aesthetically appealing. The changing lifestyle and increasing disposable income is enabling
people spend on products in this category which are either branded or imported and are also good
in quality attributes.
The industry is divided into organized & unorganized players with organized player capturing
58% of the total market size of Consumer Plastic goods.
Organized Vs. Unorganized tableware market in India
42%
Organized
Unorganized
58%
*Based on the responses of a senior manager of an organized player in plastic container market

10.2.2 Industry Segmentation
The plastic product market is classified as:
Plastic Container
Storage Boxes Thermoware Dine ware
 Storage boxes – This includes boxes for dry food items as well as cooked or uncooked
perishable food items
 Thermoware – This includes lunch boxes, flasks, water storage jugs etc.
 Dine ware – This includes bowls, jugs, hot pots, jugs, bottles, Mugs
STORAGE BOXES used in kitchen, based on their application and benefits offered are
classified as:
 Dry Storage boxes – They are used primarily for the storage of food items which can be
kept for a longer duration of time. For e.g. Pulses, Rice, Wheat, Dry Fruits etc.
 Food Preparation boxes – They can be used for preparing food items like shakes, salads,
mixing bowls etc.
 Microwavable boxes – They can be used for heating and cooking food items in
microwave. They are multipurpose boxes and hence used for cooking, storage and
serving purposes.
 Refrigerator & freezer boxes – These are air tight & liquid tight boxes, which are
primarily used for storage of fruits, vegetables, juices etc., which are perishable in nature.
 Storage Canisters- These are large sized boxes, used for stocking dry food items like
pulses etc.

The level of imports for these storage boxes used in kitchen is increasing at a fast pace. As per
the views expressed by a retail giant in household product category in India, they are already
importing plastic storage containers from Thailand for last 4-5 years. However, it is during the
last 1- 1.5 years that the volume of import has grown from Thailand within the plastic container
category.
The plastic container industry is growing at the rate of 12-15% with the increasing storage
requirement of people and more aesthetically appealing containers rather than stainless steel
containers. Also, the branded plastic containers can be used for gifting purpose as well as for
corporate gifting / freebies for product promotion.
10.2.3. Customer classification

According to the usage of tableware, the customers can be classified in two groups, namely:
 Domestic customers – for storage purpose / gifting

 Institutional customers
o Corporate customers – for gifting
o Hotel / Catering & Restaurant customers – for business usage and for promoting
their products by offering plastic containers as freebies
Apart from these two categories, exports also form a major proportion of the total sales for all the
manufacturers
10.2.4. Major manufacturers in India

The major domestic manufacturers in India for Plastic containers are:
 Cello
 Hamilton Housewares Pvt. Ltd.
 Tupperware
 Pearl Pet
 Eagle Thermoware

10.2.5. Growth Drivers for Plastic storage containers Industry
Openness to Trade
Increasing disposable
income & middle Impact of organized
class retail
Key Growth
Drivers
Increasing pattern of Plastic replacing steel

corporate gifting/ due to rising modular
freebies kitchen concepts
Increasing storage
requirements with
increase in working
women

10.2.6. Analysis of Plastic storage containers market in India
The plastic container market is highly disorganized in India although the majority of market
share is possessed by organized players. Several players are also importing plastic containers
from other countries with increasing demand & better quality offered. Increasing organized retail
is also supporting the growth of this industry.
1. Bargaining power of Suppliers 2. Bargaining power of Customers With fast

Raw material is available easily in India & is growing middle class, increasing working women
also imported from abroad like Polycarbonate, and changing lifestyle, huge demand is there.
Polyurethane are available at lower price in People tend to prefer branded products and hence
Asian countries than in other European the bargaining power is low due to less number of
countries players in organized market
3. Competitive Rivalry The number of

players in the organized market is less but
with increase in imports due to FTA
agreement with several countries,
competition is increasing
4. Threat of Substitute Products The 5. Threat of new entrants Several new

unorganized market offers cheap substitutes in players & importers are coming in this market.
this category. Also, people prefer steel With increasing middle class & working
containers for storage than plastic because women, new entrants find this market very
plastic is considered unsafe. attractive
1. Threat from new entrants - With the increasing size of middle class and increase in number
of working women, this is an attractive segment to focus upon in household goods. The new
entrant should offer products which are good in quality and comparable in price offered by
existing players. Also, products in this category are imported from several countries which
would increase with the increase in demand in future. Thus, the threat posed by new entrants is
high.

2. Competition amongst existing players – The existing players are posing threat to the new
entrants due to established brand name and trust in the minds of customers. Hence, the intensity
of threat posed by them is high in this product category.
3. Substitute products – Due to large number of unorganized players in the plastic product
category, they imitate these products and offer them at much lower cost due to usage of low
quality plastic. Thus, the threat posed by these substitute products is moderate because of the
increasing preference of people for branded & good quality products.
4. Bargaining power of customers – Bargaining power of customers is low in organized market

because of the good quality plastic being used for the manufacturing of storage boxes which
allows them to spend. Hence, quality is important for the target customers who are willing to
shell out money for the product attributes like leakage proof, air-tight, good aesthetic appeal.
5. Bargaining power of suppliers – Raw material for the manufacture of plastic containers i.e.
Polycarbonate, Polyurethane are available at cheaper price in Asian countries. Thus, the threat
posed by bargaining power of suppliers is low in this product category.

10.2.7. Strengths and the weaknesses of the industry
Strengths
 There are access capacities available in the market, which can help to boost the
production in the future
 Many players in the medium scale industry are also selling branded products, which will
be good for the future prospects of the industry
 The amount of investment required to start the business in this segment is low
Weaknesses
 The industry is dominated by a few players in terms of revenues as well as number of

goods produced.
 Export markets are tapped by very few players because of non-availability of resources in
terms of representations in the foreign markets as well as capacities.
 Imports from the Chinese manufacturers are hampering the growth of the industry. Indian
products find it difficult to compete in the price-sensitive markets, both at the domestic
and the export level.
 Most of the companies are privately owned entities and are lacking in managerial aspects.

10.2.8. Critical Success Factors for Plastic storage containers
A well-connected
distribution network
Targeting domestic as Focus on ―Leakage

well as institutional proof, air tight &
customers for freebies aesthetically
appealing‖ products
CSF
Creating a Brand
Knowledge of needs
Image
& expectations of
target customers
Trained sales team to
create awareness
amongst customers
Based on the above-mentioned critical success factors, it is very important for a new entrant that
their products are different from the ones offered by existing players. They should target working
women for this product category. They should have a large presence across all the regions in
India. They should have a trained sales team to promote their products rather than spending
much on advertising. Also, they should create a brand image in the minds of consumer about the
benefits being offered by their products over other similar products.

11. Imports structure in Indian Tableware & Plastic containers
market
11.1. Overview
In case of tableware category, there are players like Shubhda Impex, World Kitchen, RAK
Porcelain etc., who are importing products in tableware category, either single brand or multiple
brands from several countries like China, Sri Lanka, Iran, Thailand and many others, are not
facing any barriers at present. They are importing brands like Luminarc, Crystal D‘Arques, Paris,
Corelle, RAK Glass etc.
In case of plastic containers & storage boxes, the major players which are importing consist of
Lock n Lock, Tupperware etc.
11.2 Current Import Duty Structure

Players importing products in India from other countries, they have to pay custom duty for
importing the tableware & plastic products (containers & storage boxes) from abroad. In both
these categories, total duty paid by importer is 30% (Basic Duty + Additional Duty +
Educational Cess) of the purchase price. In case of SAARC countries like Pakistan, Sri Lanka,
the duty paid is half of what is paid in case of imports from other countries. For products that do
not fall in the FTA, total custom duty can be as high as 50 % of purchase price.
Apart from custom duty, state local taxes are charged at 12 % based on the states where it‘s sold.
In order to import products in this category importers have to pay import duty
11.3. Major brands being imported in Indian tableware market

 Corelle in Opal ware
 Milton Treo in glassware & opal ware
 RAK Porcelain in ceramics & porcelain
 Luminarc in opal ware
 Noritake in ceramics & porcelain
 Crysal D‘Arques Paris
 Other Chinese brands

11.4. Major brands being imported in Indian Plastic containers market
 Lock n Lock
 Tupperware
These brands are imported by both Indian manufacturers as well as importers (in organized
market). Manufacturers & importers follow the same import procedures; however, their channel
structure may differ in terms of distribution of the products in this category.
11.5. Channel Structure for Importers

The channel structure for manufacturers importing tableware & plastic containers from other
countries is:
Multi brand
outlets
Exporter Manufacturers Dealers (in Retailers /
Distributors
some cases) Customers
Own Stores
es
In case of manufacturers in tableware category, they might also import products from countries
like Europe, China etc. & sell them under their own brand like Milton sells glass ware imported
from other countries with the brand name ‗Milton Treo‘. The advantage for this kind of model is
that the well-established players in Indian market can use their sales & distribution market for
similar product categories imported from other countries. In addition, through licensing
agreement with Indian manufacturers, similar items can be co-branded and sold.
Manufacturers in plastic products category like Cello & Hamilton, import products from Italy,
Thailand. Players like Cello have tie-ups with Italian brands like ENJOY manufacturing the
products in India under Cello‘s brand name through licensing agreement. This helps the foreign
manufacturers to utilize the patent/ trademark of Indian manufacturers and can sell their products
in Indian market to the same target customers.

The channel structure for importers in tableware & plastic containers (both organized &
unorganized players) in India who sell products with the same brand name as they are sold in
their own country is:
Retailer
Imports Importers /
Super Customer
Distributor
Distributor Retailers
/ Dealer
The major importers in India are unorganized players. However, some of the organized players
in both the categories who have set up their offices in India for distribution of the brands
manufactured abroad like World Kitchen sells Corelle, Noritake, Arc International sells
Luminarc, RAK Porcelain, Lock n Lock etc.
In case of tableware, sourcing price for importers are around 60% - 80% less than the selling
price varying from high volume to high value items. Thus, the margins are very high. However,
they have a limited presence due to lack of proper infrastructure in terms of distributing these
products across the country. The super distributors may be multi brand distributors or exclusive
distributors as in the case of Noritake. The advantage of selling products through exclusive
importers is that they would focus on establishing the brand name & selling the same through
their distribution channel. However, in case of importers who are importing multiple brands, they
may promote those brands / products which they think is more profitable to them or the margins
are high.
Thus, for products which are imported, it is important that either they are sold through a
licensing agreement with an established player in the market in that country or through exclusive
distributors of their products being imported.

12. Understanding the Value Chain
12.1. Value Chain of Tableware Industry

The products being manufactured in India in tableware category include dinnerware, beverage &
barware. The major manufacturers in these categories are La Opala, Magppie, Art d‘inox, Yera
etc. With the increasing demand of products in these categories, it is very important for
manufacturers to maintain the availability across the country, provide them at competitive price;
thus, decreasing their cost of manufacturing to pass on the benefits to customers. In order to
achieve this, their value chain should be designed in such a manner that, they would save on cost
at each level of value chain. Discussed below is the value chain of one of the leading tableware
industry player.
12.1.1.Case study for Tableware: Value chain of La Opala RG Ltd.

About the company - La Opala RG Ltd. (LORL), promoted by Mr. Sushil Jhunjhunwala and
Ajit Jhunjhunwala, and is involved in the business of manufacturing Opalware and Crystal ware
products. It started manufacturing crystal ware in March 1996 sourcing the exclusive right to use
the technical know-how, information, data for the manufacture and sale of crystal ware (Brand
name: Solitaire) in India and abroad, from Doosan Glass of South Korea, a leading manufacturer
of crystal ware globally. La Opala‘s core strategy is cost leadership i.e. by focusing on those
activities in the value chain to squeeze out the cost from value – adding activities.
Inbound Logistics & Operations - The company made a diversification in the field of glass
tableware by producing (24% lead oxide) lead crystal ware at Madhupur, Bihar. In the year 1999
the company merged with itself Radha Glass, a group company manufacturing plain Opalware.
Another plant has already started functioning in Uttaranchal with imported equipments being
used for manufacturing the new brand called ‗DIVA‘ in which the material used is almost
unbreakable. The new unit avails an exemption of excise duty and income tax for 10 and 5 years
respectively. It has a range of 100 products including tea cups, mugs, plates, bowls, casseroles
and the like. La Opala has an USP of elegant designs, world class quality, microwave safe, chip
resistant and 100% recyclable mark. They also import bake ware from abroad.

Outbound Logistics – La Opala has a well-established distribution network across the country
to make their products available all across the country. Their distribution network is as shown
below:
Own Stores
Factory es outlets
Multi brand
Dealer / Customer
Raw Material Distributor
Retailer
Sourcing
* Although La Opala does not has its own stores, some of the manufacturers do. For example Magppie has its own
stores.
La Opala has a total of 85*** distributors across the country with 25 distributors in North, 25 in
West, 15 in South & 20 in East India. They have tie ups with several multi brand outlets like
Shoppers Stop, Westside etc. The main outlets currently include departmental stores, general
utensils merchant and gift retailers.
Marketing & Sales – They are targeting masses between the age group of 21-35 years*** of age
and among the institutional players, they target Pharmaceutical companies and Four & Five Star
hotels. They introduce several consumer schemes like scratch card system & festive discounts.
They are promoting their products through distributor, through advertisements in print media and
are planning to come on TV.
Services – They tend to provide new varieties at economical cost to the customers like
unbreakable material being used to manufacture tableware.
*** Based on the responses of a Senior Manager at La Opala
12.2. Value Chain of Plastic Containers Industry

The products, manufactured in India in plastic container category, include Storage Containers,
Thermoware & Dine ware. The major manufacturers in these categories are Hamilton
Housewares Pvt. Ltd., Cello, Tupperware, Eagle Thermoware etc. With the increasing demand of

Plastic containers, value chain of manufacturers should be such that products are available across
all geographies. Discussed below is the value chain of one of the leading tableware industry
player.
12.2.1. Case study for Plastic containers: Value chain of Cello Thermoware Ltd.
About the Company
 Cello Thermoware ltd. - Founded by Mr. G.D. Rathod, Chairman, in May 10, 1986, at a
small factory in Goregaon, Bombay, with just 60 workers and 7 machines engaged in the
manufacture of the finest range of Casserole, or Hot Pots, as they were later positioned,
that the Indian market had ever seen
 Mr. Pardeep Rathod, Managing Director and Mr. Pankaj Rathod, Deputy Managing
Director, spearheaded the growth & diversification into new products and markets
 First & Largest Manufacturer of Branded household products in India, having wide range
of plastic moulded products
 Annual sales turn over of more than USD 100 million and exports of USD 28 million
 2100 employees- more than 300 engineers and plastic technologists
Inbound Logistics & Operations -
 They have increased production capacity by 1 million & are continuously adding on to
their capacities of production every year of 10 % -15 %.
 Investment of more than USD 50 million in ultramodern plastic processing machines
from BATTENFIELD- Germany, WIMPLAST -Italy & SUMMITOMO – Japan
 Strong in house R&D base, developed the Unique Breakthrough Insulation technology -
THERMI-GUARD
 Many product designs PATENTED in Europe
 They have warehouse and sales offices in different locations in India, Nepal, Sri Lanka,
U.A.E, Kenya & U.S.A.

 Regularly export to more than 60 countries including U.S.A., U.K., Italy, Germany,
Japan etc
Outbound Logistics –
 They sell it through distributor network who then sell it to the retailer
 For organized retailers, they directly sell through the factory
 They have 90 exclusive distributors in this product category throughout India.
 They are planning to increase the number of distributors by 100 in next 1-2 years
Multi brand outlets

Factory
Dealer / Customer
Raw Material Distributor
Retailer
Sourcing
Sales & Marketing –
 Dealer oriented activities are incorporated i.e. those dealers who achieve higher sales
target, receive more benefits in terms of the revenue
 Direct selling team is in place for corporate sales
 They also incorporate schemes for customers in festival seasons like Diwali, summer
season etc.
Services –
 Availability is a major concern in this business. Thus, Cello ensures that their products
are available across all cities through a well connected distribution network

Thus, for any player entering the tableware & plastic containers industry, it is very important to
effectively utilize all the activities in the value chain based on the strategy they want to follow
i.e. Cost Leadership or Differentiator. Their value chain should be organized in such a way that
each activity aligns with the strategy they want to incorporate in the Indian market
13. Consumer Insights
13.1. Overview
As mentioned earlier, FGDs conducted across the country covered the consumer insights for four
product categories inclusive of plastic products and utensils as well. FGD findings for these two
product categories are presented below:
13.2. Customer Purchase process

1. At the Problem Recognition / Need Awareness Stage – As discussed above, in this stage the
consumer recognizes the need for purchasing a particular product.
Tableware – With the changing lifestyle & customer preferences, the major reasons when
consumers find that they need to buy Tableware were observed as:
 For occasions like Kitty parties, birthday parties

 For changing old tableware with new ones
 With increasing requirements of family members
 For gifting on occasions like Diwali, Anniversary, Daughter‘s wedding etc.
 When the items break, then they need to replace them with a new set
Other than the above mentioned reasons, they may also purchase tableware if they can exchange
their old tableware with new ones or some festive offers are going on (discounts). Also, they may
purchase products in this category just because they like something while visiting a store
(Impulse Purchase)
 „I would buy tableware at occasions like birth day parties ,kitty parties & when many people are coming
at a time‟- Working , SEC A2/B1 , 25-32 years, Bangalore
 „ I would buy tableware in festive season or for show off- Housewives‟, SEC A2/B1 , 38-45 years , Delhi
 „ I would purchase tableware when the need arises and for change‟ – Working , SEC A1/A2, 25-32 years ,
Kolkata
Plastic Products – Although products in this category (storage boxes, containers) are purchased
whenever they need to store food items – perishable / imperishable. But they can also be
purchase anytime you find them, even if there is no need at present (impulse purchase which
refers to buying decision made immediately, in an unplanned manner based on urge created by
liking a product very much). With the difference in the storage of food items, their purchase
would depend upon the kind of item to be stored like for perishable items, they should be
moisture proof. With the increase in number of working women, the purchase of plastic
containers is increasing for carrying food items. With the modular kitchen concept coming in
place, people prefer to purchase plastic products which are aesthetically appealing and keep the
food items fresh. Also, they may purchase them for changing the old boxes with new ones & for
gifting on occasions like Diwali etc. since they are not very high value items. Also, people in
Southern India prefer to store food items in stainless steel containers rather than plastic boxes.
For microwave, most people prefer to use glass containers and not plastic containers across
majority of the regions.
 „ There are no specific occasion or any function for purchase of these items because plastic items are useful
always‟- Working women, SEC A2/ B1, 25-32 years, Hyderabad
 „ I would purchase plastic products when the need arises and for change‟ – Working , SEC A1/A2, 25-32
years , Kolkata
2. Information Search – In case of tableware & plastic products, the customer doesn‘t spend
much time in searching information about such products because they are not very high value
items and are purchased whenever the need arises or even if there is no need, they might
purchase these items.
Information Sources – The major sources of information for products in this category are:
 Word Of Mouth – after hearing about the quality of products from friends/ family,
consumers tend to purchase those products
 Print Media ( Newspapers & magazines) – customers tend to refer these sources to know
about different brands in the market & schemes/discounts going on in the market at any
point of time

 Retail stores – Most of the multi brand outlets display products of different brands, from
where customers can see, touch & feel about the quality of products as well as the price
range suitable for them
 Trade fairs & exhibitions- Most of the imported products are displayed in these
exhibitions & customers visiting these places tend to purchase them if they like the
products being displayed
 „For purchase of tableware ,we see them before purchasing the same as displayed in stores or if
someone has given reference or told about the quality of products‟ - Working , SEC A2/B1 , 25-32
years, Bangalore
3. Evaluation of Alternatives – This stage involves weighing different product attributes and
their ability to deliver benefits based on the information collected in the previous stage & based
on the requirements of customers.
Parameters identified as important to consumers while buying Tableware are as follows:
 Quality – In this parameter, several sub-aspects are present. They should not loose color,
preferably they should be unbreakable, should be light in weight, handling of the product
should be easy.
 Price – This is considered less important in comparison to quality. Usually customers
have no fixed budget for this category of products. So even if it‘s expensive but satisfies
them on quality & social status front, they would not mind paying extra price for that
 Brand- It should be able to reflect social status i.e. luxury products. It should be
trustworthy.
 Variety – It should be available in variety of colors & designs.
 Aesthetic appeal- It should look good & available in various shapes & designs. Finish of
the product should be good
 Maintenance – It should be easy to handle and can be cleaned easily
 „For purchase of tableware ,we see the brand we are purchasing should be trustworthy‟- Housewives,
SEC A2/B1, 38-45 years, Ahmedabad
 „While purchasing tableware, we see that handling & cleaning of products should be easy‟-Working ,
SEC A1, 38-45 years, Mumbai

In case of Plastic products the major parameters are quality & functionality of the container.
This includes that the plastic should be of good quality, food items kept inside should not smell
& the taste of food should not change. It should be air tight & leak proof in order to store food
items in them. They should look good & after washing the color should not fade or it should not
get disfigured. They should be available in various sizes. Lid should be comfortable & durable. It
should be hygienic & should be multi-purpose in nature i.e. it can be kept in fridge &
microwave. It should be long lasting. Brand is also considered as an important parameter in the
purchase of products in this category for upper middle class & higher class people.
But people also face barriers in the purchase of branded plastic ware because they are expensive
and can be purchased only through agents like Tupperware i.e. they are not freely available in
open market.
 „For purchase of tableware , we see that it should be air tight & food has to be preserved well, & should
be odor less‟- Working, SEC A1/A2, 25-32 years, Kolkata
 „We see that after washing the color should not fade or disfigure & it should not start looking old‟-
Housewives, SEC A2/ B1, 38-45 years, Delhi
 „Brand is an important criterion in the purchase of plastic ware like Tupperware‟- Working , SEC A1, 38-
45 years, Mumbai
4. Purchase Decision – This involves decision related to what to purchase & from where to
purchase & who will purchase. Key decision maker in case of both tableware & plastic products
are women. Men are only involved in the financial decision making or in accompanying women
while making a purchase. However, in selecting any product children might influence the
decision in terms of design & looks of the product.
„For purchase of tableware& plastic products, we are the Decision maker. Husband only takes care of financial
part, they are admirers‟- Working, SEC A2/B1, 25-32 years, Bangalore
The frequency of purchase of products in these categories is almost once in every six month.
Although there is no fixed budget kept for the purchase of these products, but price does mater to
customers. But it is not as important as quality of the products.

Point of Purchase- In order to purchase these items, customers prefer multi brand outlets like
Pantaloons, Shopper‘s Stop, Big Bazaar etc. where they can see, touch & feel these items & can
compare with other brands as well in terms of functionality as well as prices. Also, they find
variety in terms of colors & designs under one roof in these stores and they can go their any time
along with their family. They prefer exhibitions as well to purchase these products, but the major
problem, which they face in these exhibitions, is that no exchange is possible in these exhibitions
as they are temporary in nature, which is not the case in case of multi brand outlets or shopping
malls.
„For purchase of tableware & plastic products, we purchase from malls, exhibitions & Home furnishing stores‟-
Working, SECA1, 38-45 years, Mumbai
5. Post Purchase Evaluation – In these product categories, customers expect that there should
be an exchange mechanism if the product is defected and some kind of guarantee / warrantee
schemes should be provided based on the kind of product they are purchasing. Also, customers
should be made aware of such schemes in advance so as to build trust in their mind.

Learning from Consumer Insights - Summarized
Tableware – Whenever the need arise, with the increase in number

Need of family members or parties and when they need to replace the old
Trigger tableware. They may also purchase for gifting on occasions like
Diwali or Marriage in the family.
Plastic Products – When they need to store food items but mostly
impulse purchases, sometimes bought for gifting purpose as well.
Information Tableware & Plastic Products – Newspapers, Magazines, Trade
Sources Fairs / Exhibitions, Word of Mouth from Family or Friends
Tableware – 1. Quality 2. Price 3. Brand 4. Variety 5. Aesthetic

Alternatives
Appeal 6. Maintenance
Evaluation
Plastic products – 1. Quality 2. Functionality 3. Hygienic 4.
Variety 5. Aesthetics
Tableware & Plastic products – Wife plays a major role in purchase
Purchase of the products in these categories. Kids influence for new trends
Decision and designs. They prefer to buy from well-established brands or

chain of showrooms. Husband can influence in terms of spending or
budget.
These products are purchased once in six months with no fixed

budget in mind
Post Tableware & Plastic Products – Customers look forward for
Purchase provisions like warranty, replacement of defected products & should
Behavior be communicated about the same

14. Conclusion
14.1. Market Attractiveness

Based on the understanding of Tableware & Plastic Storage Container category, an evaluation in
terms of market attractiveness was undertaken to develop a rank order for each of these. This
ranking has been done based on the various criteria, such as:
 Industry Growth Stage

 Growth of Customer Segments
 Growth in Allied Sectors
 Competitive Scenario
 Potential Entry Barriers
 Scale of Investments required etc.
The findings of the above analysis are as follows:
Market
Attractiveness
Demand is huge and it‘s the fastest growing category (more

than 20% p.a.); Competition is high ;Both domestic &
institutional customers purchase products in this category for
Tableware- personal as well as gifting purpose; Entry barriers are

Beverage Range minimum and customers change products in this category
very often; Investment required in terms of plant setting &
manufacturing cost is less than other categories; Margins are
low
Demand base is increasing with the increase in possession of

Tableware- lifestyle products; Few players in the organized market;
 Growing product category (around 20% p.a.) ; Both
Dinnerware
Domestic & Institutional customers purchase products in
this range; Investment required is more than in Beverage

range category; Margins are high
Comparatively slow growing category; Customer base is

Tableware- limited to institutional customers (Hotel & Catering
 Industry) & upper middle class segment in domestic
Barware Range
customers; Investment required is more than other
categories; Competition is less; Margins are high
Demand is huge in this segment; Competition is high;
Growth is almost stagnant at 12-15% p.a.; Both domestic as
Plastic Storage
 well as institutional customers purchase products in this
Container
category; Investment required is low in this product
category; Entry barrier is low; Margins are low
Thus, Tableware is the most attractive category and within tableware, a new entrant should focus
upon Beverage Range & Dinnerware in Glass material for entry in the Indian Tableware
market.
15. Recommendations
Based on the analysis of tableware industry in India, following are the key take-outs for potential
entrants in Indian Tableware market:
15.1. Entry Strategy

In order to enter the Indian tableware market, the potential investor should enter either through
Joint Venture or Merger & Acquisition with the existing player in this industry in India. JV
has its own pros & cons since it will limit the control over business and dilution of control takes
place and the partner may become a competitor. But the major advantage of these mechanisms is
that an investors can use the technology as well as the name of the existing brands in Indian
market. Through M & A they may use the established distribution network of the existing player
along with inbound and outbound logistics for managing the product availability and delivery to
the final customer. Also, these entry mechanisms are less risky in comparison to fully owned

manufacturing facilities where the chances of loss are high. Also, they can sell their products to
the same target customers.
In order to enter the Indian plastic container industry it is very important that the products are
widely available across all geographies. Thus, in order to enter this market in India, the new
entrant should enter either through Joint Venture or through strategic alliance with an existing
player in that market.
15.2. Positioning of Tableware & Plastic storage containers

In order to target the masses i.e. middle class & upper middle class women, tableware should be
positioned as easy to maintain i.e. unbreakable, scratch free, easy to handle and clean & available
in variety of designs & colors across all regions in India. Also, they should tie up with the
existing player in the Indian market with similar positioning of products in tableware segment to
effectively utilize the value chain of that player and pass on the benefits to customers.
In case of Plastic containers for storage purpose, they should be positioned in such a manner
that they are different from the other products in this category in terms of quality of plastic used,
leakage proof, beneficial for storage of all kind of food materials- perishable & imperishable.
15.3. Target Product Categories

Based on inputs from industry experts, the fastest growing category in tableware is Beverage
range followed by Dinnerware. Thus, a new entrant should first enter the Indian tableware
market with beverage range particularly tumblers in variety of shapes & designs and them they
can increase their product portfolio with barware and dinnerware as well when they are able to
establish their brand name in the Indian market.
In plastic containers for storage purpose, they should enter the market with products for storage
of perishable food items and can be used in both refrigerators & microwaves.
Also, they should offer variety in terms of size, color & utility. Later, they can also offer large
containers for storage of imperishable items and thermoware as well.

15.4. Target Customers
Based on the analysis of the Indian Tableware & Plastic storage container market, it can be
seen that women especially newly wed in upper middle class & middle class should be target
segment for a new entrant as the middle class currently numbers some 50 million people, but by
2025 will have expanded dramatically to 583 million people—some 41 percent of the population.
Also, there is a considerable increase in the disposable income and people are purchasing more
number of lifestyle goods because of the rising income levels. Also, number of working women
is increasing who need plastic storage containers for themselves & their kids which are air-tight,
leakage proof and safe. They can also target companies & hotels due to the increase in the gifting
levels of companies & rising hotel & catering industry due to the next commonwealth games
which are going to take place in India. For beverage and barware, the target customers should be
Corporate & Hotel/ Catering segment for gifting or as freebies for promoting their product and
for personal usage. In case of dinnerware & plastic storage containers, the target customers are
domestic users who use these products for their personal usage or for gifting.
15.5. Distribution
In order to sell the products in tableware & plastic storage containers category to institutional
customers, there is a need for direct distribution system where there are no other parties
involved in the distribution process that take ownership of the product. In the direct distribution
system, Personal Selling Systems should be employed where a person whose main responsibility
involves creating and managing sales (e.g., salesperson) is involved in the distribution process,
generally by persuading the buyer to place an order.
For selling to domestic consumers at large, Multi channel or hybrid distribution network
should be used where a marketer is following a multi-channel or hybrid distribution system. This
approach expands distribution and allows the marketer to reach a wider market i.e. selling
through company stores as well as multi brand outlets like Magppie sell their products through
Multi brand outlets, exclusive boutiques, shop -n-shop model where dedicated space in an outlet
is provided to Magppie. However, the marketer must be careful with this approach due to the
potential for channel conflict.

15.6. Brand building & Promotion
In order to build a brand in a new market, it is very important that the new entrant specifies &
communicates about the quality they are offering, how it is different from others & establish an
image of credibility in the minds of consumer.
For an investor in the tableware & plastic storage containers market in India, in order to
establish the brand image of its product, it is very important that the product attributes are
specified clearly not just to the consumers but internally within the organization & how these
product attributes would help in satisfying the customer requirements. Also, in order to
successfully position the brand in consumer‘s mind it is important that proper mix of brand
name, image, service standards, product guarantees, packaging and the way in which it is
delivered is employed. Also, in order to reinforce this image in the mind of customers, proper
mix of advertisement through print media, T.V., exhibitions etc. should be employed. Also,
schemes like scratch card, discounts etc. should be employed on occasions like Diwali etc.
15.7. Value Chain

It is very important for a new entrant to align all the activities in the value chain in accordance
with the strategy adopted for selling their products in India & based on the need gaps faced by
the consumers from the existing players.
 Inbound Logistics & Operations – After having tie-ups with the existing players in India
who are manufacturing products similar to the positioning of the products manufactured
by a new entrant, it is easy to utilize the technical know-how of the existing manufacture
as well as their patent/ trademarks. Thus, raw material acquisition would be easier from
the existing suppliers in the Indian market.

 Outbound Logistics – The new entrant can utilize the warehousing facility and
distribution network of the existing player in the tableware & plastic storage containers
market. Thus, they can utilize multiple channels of distribution – Retail, Direct Selling &
Exclusive Outlets and expand the distribution channel based on the demand of people
across various regions in India.
 Marketing & Sales - They can utilize the existing network along with the establishment
of new methods of marketing like direct marketing as employed by Tupperware,
advertising on T.V. on channels emphasizing on family shows and through web-sites like
ebay.com
 Service – The products if offered with some guarantee or replacement warranty for a
fixed period of time. Also, they need to educate the customers about the differentiating
features of their products and benefits they offer to the customers. Also, promotion
schemes to attract customers during festive season can be incorporated and institutional
players can be offered discounts based on bulk purchases.
Thus, a new entrant should focus upon Tableware category – Beverage Range & Dinnerware
in Joint Venture or Merger & Acquisition with an existing player and ensure that the products are
available across all geographies and address customer needs in terms of scratch free, unbreakable
& maintenance is easy and inexpensive.
16. Annexure
16.1. Profile of major players in tableware category
16.1.1 La Opala
Company Profile
 The Jharkhand plant of La Opala has a capacity to manufacture 3,500 tones per annum of
opal glass tableware and 1,600 tones per annum of crystal ware under the brand name
‗Solitaire‘

 Another plant at Uttaranchal has production capacity of 4,000 tones per annum and
manufactures opal glass tableware under the brand name ‗DIVA‘
 La Opala has 10% market share in opal glass ware market i.e. their last year sales were
INR 600 million in the domestic market & exports worth INR 1.4 Billion
 Out of total sales worth INR 600 million, INR 400 million are into dinnerware & INR
200 million into beverage & bar range
 They are growing at an average of 20-25% p.a.
 Beverage range is the most fastest growing category amongst dinnerware, beverage &
barware and bake ware
 They are targeting masses in India in the age group of 21-35 years for selling their
products
 Their price range varies according to the target customers –
o For masses – INR 1200 - 3000
o For upper middle class- INR 2000 – 4000
o For higher class –INR 1000 for six glasses ( crystal ware)
 For selling their products in institutional segment , they target pharmaceutical companies
& five star hotels
 They have a total of 85 distributors (multi brand) in the country. From distributors, the
product goes to dealers / retailers. For institutional sales, they directly pitch in for
customers.
 The margin they pay to distributors is 10% and dealer gets a margin of around 20-25% on
the amount being sold by them
 They also sell their products through multi brand outlets where products are directly
transported through their factory
 They imported bake ware from other countries worth INR 350 million in last year
 They use print media for advertising about their products & are planning to come on T.V.
 They also have consumer schemes like scratch card, discounts etc.
16.1.2 Yera
Company Profile

 The company has a manufacturing facility in Baroda, Gujarat with total production
capacity of 165 tones per day. They are utilizing their production capacity fully.
 The company is No. 1 in glass ware market. They are into dinnerware & beverage range.
 Their market share in total glassware market of INR 12 Billion is 5.4%
 They manufacture plates, tumblers, jugs, lemon sets, dinner sets etc.
 Tumblers are the fastest growing category amongst the products being manufactured by
Yera (Shreno Pvt. Ltd.)
 They are targeting middle class people in India & price of products being manufactured
by them lies in the range of INR 50 – 1000
 Last year total turnover for Yera was INR 650 million out of which 90 % of the sales
were in domestic market & 10% sales were in exports
 Out of the total domestic sales, 60% sales were among domestic consumers & 40% sales
were among institutional & hotel/catering sector
 They have a total of 400 dealers across India & around 62 in North
 They sell their products through dealers/ distributors ( multi brand) to retailers
 For institutional sales , they have a direct sales team
 They promote their products through trade fair, exhibitions and advertising in print media
 They are importing Bar ware from China & Iran worth INR 200 million
16.1.3. Bharat Pottery Ltd.

Company profile
 They have a manufacturing facility in Jaipur with the production capacity of 2 lakh pieces
per day
 They have a turnover of more than INR 1 billion last year
 They are into dinnerware and beverage & bar ware – plates, dinner sets, cups & saucer,
mugs, glasses. Platters, bowls etc.
 They have achieved sales of INR 20 million per month – highest amongst all ceramic
ware companies
 The total market for ceramic tableware is INR 2130 million and Bharat Pottery Ltd. has a
market share of 40% ( i.e. INR 850 million) in this market

 They are growing at the rate of 15-20% per annum where ceramic tableware industry is
growing at the rate of 5-10%
 Out of the total sales of Bharat Pottery Ltd., 85% is sales in domestic market where as
15% sales come from exports
 In the domestic sales, 85% consist of dinner ware & 15% consist of beverage range ,
where 55% are domestic customers , 25% are hotels/ catering & 20% are institutional
segments
 Their products lie in the price range of INR 4000 to INR 10000 ( dinner set)
 They have a total of 150 distributors in India distributed district wise
 They sell their products from distributors to small retailers. For institutional sales, they
have a sales team
 They also have tie-ups with multi brand outlets like Shoppers Stop, Big Bazzar ,
Pantaloons etc.
 They give advertisements in newspaper, magazines and introduce promotional schemes
to attract customers
16.1.4. Art d’ inox

Company Profile
 Their manufacturing facility is located at Rohad , Haryana

 They manufacture around 4,00,000 units per month
 They are into the manufacturing of tableware , serving ware , home accessories & office
accessories
 They use steel with ceramics, glass , wood & leather to manufacture these items
 They are targeting upper middle class
 Their product range starts from INR 300 -15000
 Major portion of their sales come from corporate sales (60%) & from domestic sales
(40%)
 Bar & beverage range contributes to around 50-55% of their total sales
 They have their own company stores to sell their products & also have distributors who
sell to retailers (Multi brand outlets).

 For institutional sales, they have a sales team to directly pitch in for corporate who
purchase their products for gifting & five star hotels
16.1.5. Magppie
Company Profile
 Their manufacturing facility is located at Kundli , Haryana

 They have a turnover of more than INR 1250 million
 They are into the manufacturing of dining, tabletop accessories, barware, décor, beverage
range. Dining & Barware are the fast growing categories whereas Décor is a slow
growing category
 They are presently growing at the rate of 35% p.a., whereas industry is growing at 15% -
20% p.a.
 They are targeting upper middle class & institutional players
 Price range for their products start from INR 700 – INR 75000
 Out of their total sales, 60% comes from exports & 40% from domestic sales
 Presently, they have 10 stores of which seven are into retailing stainless steel products
and three in modular kitchen
 They are planning to open 40 more stores in next 3-4 years
 They sell their products through Multi brand outlets, exclusive boutiques, shop -n-shop
model where dedicated space in an outlet is provided to Magppie
 For channel sales i.e. to multi brand outlets , they sell through distributors
 They promote their products through advertisements in print media, through PR activities
& CRM. Also, they initiate special offers for customers
16.2. Profile of major players in Plastic storage container category
16.2.1 Cello
Company Profile
 CELLO Group are the manufacturers of Thermoware, Vacuumware, Household Plastic

Items, Plastic Moulded Furniture, Writing Instruments, Nonstick Cookware items and
Toothbrushes

 Cello has seven up-to-date manufacturing units in Daman (U.T.) and one in Pune, with
latest molding machines and excellent infrastructure
 Cello has developed the unique, breakthrough product - Thermi Guard, which is
innovative, protective shield, giving Cello an edge over rival products
 They use Polycarbonate , Polypropylene & High tensile strength plastic as raw material
 The present sales turnover of CELLO has reached INR 3.5 billion
 They are targeting middle & upper middle class to high income group having income
class of above INR 25, 000 – INR 0.1 million per month
 Their products percentage break-up is 30% - plastic , 70%- thermoware
 Their products are priced in the range of INR 2500 per unit of thermoware
 They sell it to distributor network who then sell to retailer and for selling through
organized retail, they directly sell through company warehouses
 They have 90 distributors who are exclusive distributor in this product category through
out India. They have a distributor after every 100 kms, but in metro's they have 2-3
distributors /city. They tend to avoid intermediaries & are planning to increase the
number of distributors by adding on 100 distributors in next 1 - 2 years
 They select those distributors who exhibit a good financial background and ability
demonstrated in similar line of products for 4 – 6 years
 They have introduced dealer oriented activities rather than the usual promotion activities
to sell their products. They give extra benefit to dealers if the sales are more
 They are importing steel flasks from China & have tie-up with Italian brand & Thai
brand ‗ENJOY‘ to manufacture the same with their name in India for 10 years
16.2.2. Tupperware
Company Profile
 They have their manufacturing facility in Hyderabad

 They offer products in plastic kitchenware which are classified as- Lunch boxes, Dry
storage boxes , food preparation items & serving items
 They use Polypropylene ( cloudy view plastic) & Polycarbonate ( clear view plastic) as
raw materials in the manufacturing of their products

 Clear plastic products are more expensive, hence they are slow growing category.
Whereas cloudy plastic products are less expensive and fast growing category
 Their products are priced in the range of INR 145 for a container to INR 2500 for a
dinner set
 They are targeting SEC A & SEC B women in the age group of 25 year onwards
 They have a direct selling team i.e. women who join as a consultant and after appointing
six more consultants in their team, they become managers. They source their products
from distributors.
 For institutional sales , they have a direct selling team in the company
 For promoting their products, they do advertising in women magazines and are venturing
into TV. They are already using F.M and undertake several below the line activities like
kiosks in malls, school activities for students who use lunch boxes most often, loyalty
club for consumers who want to keep in touch with what is going on in Tupperware
16.2.3. Hamilton
Company Profile
 Milton is one of the oldest players within the organized plastic Industry in India
 Milton developed its own technology and technical know-how and pioneered the
Thermoware segment
 Milton has over 350 key selling items in its product basket ranging from Casserole,
Vacuum flask, Water Bottle, Water Jugs, insulated and non - insulated Tiffin, Soft
thermoware items & regular household items like trays, containers, buckets, tubs etc.
 Milton's world-class plants in Pune, & Silvassa have been awarded the ISO 9001 :2000
certification for successful implementation of Quality Management Systems
 Their products are targeted to the class of customers who are masses means lower middle
class & some middle class pre dominantly due to the basic gifting nature of Indian culture
 The price of their products ranges from INR 300 – INR1000
 Also, they target another segment of people i.e. upper middle class & higher income
group of annual income of INR 0.5 million & above
 The products for these customers are in the price range starting from INR 2000 – INR
3000 like Barware

 Marketing takes place through distributors (more than 200) present in every metro, mini
metro , big towns , mini towns in India

16.3. Import Legislation in India
With the globalization of the Indian economy and consequent upon comfortable balance of
payments position, the Government of India has liberalized the Import Policy and practically all
Controls on imports have been lifted. Imports may be made freely except to the extent they are
regulated by the provisions of Import Policy or by any other law for the time being in force.
Importers need an Importers/Exporters Code Number from the Directorate General of Trade in
order to be able to import
16.3.1. Principal Law & Import Export Policy

Principal Law
Imports in India are governed by the Foreign Trade (Development & Regulation) Act 1992.
Under this Act, imports of all goods are Free except for the items regulated by the policy or any
other law for the time being in force. In exercise of the powers conferred by the Foreign Trade
(Development & Regulation) Act 1992 items, not appearing in Prohibited list or restricted list
can be imported freely without any import license. A large number of Consumer goods are freely
importable without license. For import of items appearing in the restricted list you, need to
secure an import license.
16.3.2. Mode of Pricing and INCO TERMS

While finalizing the terms of import contract, the Importer, should be fully conversant with the
mode of pricing and the manner of payment for the imports. As regards mode of pricing, the
overseas suppliers normally quote the terms prevailing in international trade. The importer for
his benefits should know the meaning of the technical terminology. To avoid ambiguity in
interpretation of such terms, International Chamber of Commerce, Paris, has give detailed
definition of a few standard terms popularly known as 'INCO TERMS'. These terms have almost
universal acceptance and are explained below:
Ex-work
'Ex-work' means that the seller's responsibility is to make the goods available to the buyer at
works or factory. The full cost and risk involved in bringing the goods from this place to the
desired destination will be borne by the buyer. These terms thus represents the minimum
obligation for the seller. It is mostly used for sale of plantation commodities such as tea, coffee
and cocoa.

Free on Rail (FOR)/Free on Truck (FOT)
These terms are used when the goods are to be carried by rail, but they are also used for road
transport. The seller's obligations are fulfilled when the goods are delivered to the carrier.
Free Alongside Ship (FAS)
Once the goods have been placed alongside the ship, the seller's obligations are fulfilled and the
buyer notified. The buyer has to contract with the sea carrier for the carriage of the goods to the
destination and pay the freight. The buyer has to bear all costs and risks of loss or damage to the
goods hereafter.
Free on Board (FOB)
The sellers‘ responsibility ends the moment the contracted goods are placed on board the ship,
free of cost to the buyer at a port of shipment named in the sales contract. 'On board' means that a
Received for Shipment' Bill of Lading is not sufficient. Such B/L if issued must be converted
into 'Shipped on Board B/L' by using the stamp 'Shipped on Board' and must bear signature of
the carrier or his authorized representative together with date on which the goods were 'boarded'.
Cost and Freight (C & F)
The seller must on his own risk and not as an agent of the buyer, contract for the carriage of the
goods to the port of destination named in the sale contract and pay the freight. This being a
shipment contract, the point of delivery is fixed to the ship's rail and the risk of loss or of damage
to the goods is transferred from the seller to the buyer at that very point. As will be seen though
the seller bears the cost of carriage to the named destination, the risk is already transferred to the
buyer at the port of shipment itself.
Cost Insurance Freight (CIF)
The term is the same as C & F but with the addition that the seller has to obtain insurance at his
cost against the risks of loss or damage to the goods during the carriage.
16.3.3. Customs Duty

Customs duty is levied under the Customs Act, 1962 on the import of goods into India. The rates
of customs duty are laid down in the Customs Tariff Act, 1975. Customs duty on imports
comprises the following:
 Basic Customs Duty
 Additional Customs duty in lieu of excise duty
 Additional duty of customs to countervail state taxes/VAT

 Education Cess
The general rate of basic customs duty ranges between 0 % and 20 %, with most products being
charged duty at a rate of 12.5 %. However, additional duty in lieu of and additional duty of 4 %
in lieu of sales tax/VAT payable on the sale of goods is also applicable on the imported goods. In
addition, 2 % education cess is also charged on the aggregate customs duties. Certain specified
categories of goods are exempt from this levy in accordance with commitments under the WTO.
Thus, imported goods, which have a basic customs duty rate of 12.5%, are subject to an effective
customs duty rate of 36.74 % because of the additional duties. Further certain
exemptions/concessions (drawback of duties, benefit under export promotion capital goods
scheme etc.) are available for import of specified products such as IT products or for imports
under specific schemes and projects. The primary basis for the valuation of goods under the
Indian customs law is the transaction value. The government of India has entered into a number
of free trade agreements with trade partners like Thailand, Sri Lanka, and South Asian
Association for Regional Cooperation (SAARC) countries and Singapore to promote preferential
tariffs for certain identified goods. Similar trade agreements with ASEAN, Mercosur countries
and the European Union are also on the anvil.

17. References
Primary Research
In-depth interviews were conducted with following categories of organizations
1. Manufacturers & Retailers

a) Godrej & Boyce Mfg. Co. Ltd, Mumbai
b) Style Spa Furniture Ltd, Delhi
c) Evok (HHRL), Gurgaon
d) Milton Global Ltd ( Hamilton), Mumbai
e) La Opala RG Ltd, Delhi
f) Art d'Inox, Delhi
g) Cello Thermoware Ltd., Mumbai
h) Magpie International Ltd., Delhi
i) Bharat Bonechina, Delhi
2. Retailers and Importers

a) Durian Furniture, Mumbai
b) Home Stop, Mumbai
c) Home Town, Mumbai
d) Furniture Bazaar, Mumbai
e) House full International Ltd., Mumbai
f) Fine Living – Wooden Furniture and Interior Concept, Mumbai
g) Living in Style, Mumbai
h) Noritake, Chennai
i) Shudhda Impex, Delhi
j) Tupperware India, Gurgaon
k) Yera, Delhi
l) Big Bazaar - Future Group, Mumbai

Imports
3. Industry Associations
a) EPCH – Exports Promotion Council for Handicrafts, Delhi
Nine Focus Group Discussions were also conducted to obtain consumer insights for the
identified product categories. These were conducted across following cities
1. Delhi (2)
2. Mumbai (2)
3. Kolkata
4. Ahmedabad
5. Chennai
6. Hyderabad
7. Bangalore
Secondary Research Sources

1. Report on Furniture Industry in India, Indo Italian Chamber of Commerce, India
2. Furniture Market and Opportunities, IBEF Report
3. The World Furniture Outlook, CSIL Report
4. Market feasibility study and Business development plan for the Handicrafts sector, Frost
& Sullivan Report
5. EPCH Country Study, USA, D&B Report
6. A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products,
Frost & Sullivan Report

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INVESTMENT POTENTIAL STUDY

INDIAN HOME UTILITY & FURNISHING INDUSTRY

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -1-

a. Furniture – Largely focusing on house hold furniture e.g. Sofa-set, Dining

b. Interior Decoration items – This would include Showpieces, Wooden

c. Utensils – Household (kitchen), HoReCa (Hotel Restaurant Catering)

2. Construction Material: This would include Bathroom Fittings, Tiles/Floorings

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -2-

b. Accessories / decorative items e.g. music systems, alloy wheels etc

1. Module 1 – Home Furnishing (Furniture & Interior Decoration)

2. Module 2 – Home Utility (Utensils and Plastic Products)

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -3-

MODULE 1 – Furniture & Decorative Items Industry of India

Executive Summary ...............................................................................................11

E.2. Furniture Industry in India..................................................................................................... 11

E.3. Indian Décor and Handicrafts Industry ................................................................................. 12

E.4. Understanding the Value Chain of Furnishing Industry........................................................ 13

E.4.1. Furniture Industry Value Chain .................................................................................. 13

E.5.1. Furniture Industry Analysis......................................................................................... 14

E.7. Recommendations for Thai Investors .................................................................................... 16

1. Global Furniture and Handicrafts & Décor Industry ...................................18

1.1.1. Overview: .................................................................................................................... 18

1.2.1. Overview ..................................................................................................................... 21

3. Furniture and Handicrafts & Décor Industry in India..................................27

3.1.1. Overview: .................................................................................................................... 27

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -4-

3.2.1. Overview ..................................................................................................................... 31

4.1.1. Imports ......................................................................................................................... 35

5. Industry Analysis ...............................................................................................45

5.1.1. Bargaining power of Suppliers .................................................................................... 46

6. Consumer Insights .............................................................................................52

6.2. Purchase Decision Process – An Introduction ....................................................................... 53

6.2.1. Problem Recognition / Need Awareness Stage ........................................................... 54

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -5-

7. Recommendations for Thai Investors ..............................................................65

7.1.1. Entry Options ............................................................................................................... 66

8.1.1. Style Spa ...................................................................................................................... 71

8.2.1. Role of Wooden Handicrafts Industry in Indian Economy ......................................... 75

E.2. Plastic Container Industry in India ........................................................................................ 79

E.3. Value Chain – Tableware & Plastic Container Industry ....................................................... 80

E.3.1. Value Chain for Manufacturers – ................................................................................ 80

E.4.1. Tableware Industry...................................................................................................... 81

E.6. Market Attractiveness of Tableware & Plastic Container Industry....................................... 83

E.7. Recommendations ................................................................................................................. 84

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -6-

9.1.1 Overview: ..................................................................................................................... 86

9.2.1. Plastic Industry ............................................................................................................ 88

10.1.2. Industry Segmentation ............................................................................................... 89

10.2.1 Overview .................................................................................................................... 99

11.2 Current Import Duty Structure ............................................................................................ 108

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -7-

12. Understanding the Value Chain ...................................................................111

13.2. Customer Purchase process................................................................................................ 115

14. Conclusion ......................................................................................................121

15. Recommendations ..........................................................................................122

15.2. Positioning of Tableware & Plastic storage containers ..................................................... 123

15.3. Target Product Categories.................................................................................................. 123

15.4. Target Customers ............................................................................................................... 124

15.5. Distribution ........................................................................................................................ 124

15.6. Brand building & Promotion ............................................................................................. 125