Home furnishing industry positive for 2017, but was not so happy last year

The home industry has been in focus of late and amidst the extension of garment sector benefits to made-up units, dull market sentiments and shocking news of Target Corp. terminating business relationship with Welspun India for passing off cheap cotton sheets as made from premium Egyptian Cotton, for most of the exporters, 2016 was just about satisfactory. The good thing though is that a majority of them are enthusiastic about 2017 and clear about their plans and strategy, while a few of them are still in process to finalize the direction.

There is greater focus on product development, participation in more international sourcing exhibitions, adding new product categories and bringing more processes in-house for most of the companies in 2017. Yet, small or big, none of the companies across India is planning to adopt a disruptive 360-degree approach, as market scenarios is critical. Companies depending majorly on domestic market are of the opinion that demonetization was having a more negative impact on them as compared to other players in the industry.

Reacting to incentives announcement by the Government, exporters are of the opinion that it will take some more time to get advantage at the ground level. Irrespective of market, whether traditional like Europe, US or any other non-traditional market, exporters have similar experience from buyers’ side as price pressure and expectations have increased this year. “Volume business seems the only way to face price pressure which is growing day by day. Business was okay in 2016 as far as volume is concerned but from value perspective, it was hard. It was satisfactory that despite low sentiments demand did not fall too much. For me it is too early to say anything for 2017,” says Ashwani Kanodia, Director, Kanodia Global , a Delhi-based company having manufacturing facility in Panipat.

One of the biggest tools to counter price pressures is more focus on product development which can compel buyers (to some extent) to work with them and even pay a little penny extra. “It was another routine year and even we were not having much hopes but whatever feedbacks are coming in from the buyers, the year 2017 should be a little more positive. Though we already have design development as our focus, but now it will be enhanced even further. We will get some inputs from outside apart from more sampling efforts from our in-house designers. Experiments in colours and sizes will be another thing which we will try more in 2017,” said P K Krishnan, Managing Partner, Sri Jeyavel Exporters, Karur who is expecting 25 per cent growth in the new year. Wholesalers and chain stores of Sweden, Germany and Canada are the core buyers of the company and focus will remain on the same.

Increasing competition within the country and around the world is another reason which is driving companies to enhance their focus on PD. Shweta Darabari, Elite Eternally, Delhi emphasises that now companies are working much more seriously to really offer something new and different from others. “Strong product development is the only thing which gives a company the ability to negotiate with buyers. Very soon we will launch such products,” she said.

Working with top or selected buyers that are continuously growing, supported some companies across the country to achieve good business during 2016 and they are expecting even more in 2017. As these companies already have enough focus on PD, or are diligently following only buyers’ indication for products, they are making effort to improve on other fronts. Ludhiana-based home furnishing giant Jawandsons is exploring technology for yarn dyeing as it plans to start a unit of the same in the next 6 months. “We are analysing the viabilities of this entire project and are hopeful about it, as till now things seem good and as per our expectations,” informed Gian Singh, Business Director, Jawandsons who is positive about overall business despite various pressures. The company is investing almost Rs. 2 crore on this new plant that will have initial dyeing capacity of 3,000 kg per day. Turnaround time, be it sampling or delivery, is reducing and will reduce further. “As of now we have 14-15 days’ lead time for this process, which will come down to 3-4 days once we do it in-house. The company also reorganized its working systems and recently shifted its cutting, stitching and packaging to one single location. Mattress cover, a new product category for the company was explored this year. “Every year we are witnessing 10 to 15 per cent growth and hopefully 2017 will be good,” says Gian.

On the other side, there are some companies who despite having niche product segments have suffered a lot in the past year. And it is not only the less demand which hurts them, there are other reasons and they are helpless on these fronts as Gajanand Sharma, from Vandana Handicrafts, Jaipur offering specialized handmade products with vintage/traditional strength of Rajasthan explains, “We are down by 25 per cent in this particular year and that too when we put all possible efforts to sustain our last year level. We participated in some international events but didn’t get buyers. Every year during the Christmas season, we used to get many small orders, it used to be the most happening time for us but this time there was no demand at all. Handmade items had good demand earlier but now as machine-made is very cost-effective and easy to wash and colour fastness too is better compared to handmade, customers prefer machine-made.”

For some, new efforts made in 2016 bore fruits for them. Genesis, Jaipur claims to have got many new buyers in 2016 and is expecting repeat order from them in 2017. “We met almost 30 buyers in 2016 due to various exhibitions and direct contacts, hopefully order flow will increase from them in the new year as they are appreciating our products. We never offer same or similar products to buyers, every time we have new things to serve their purpose,” said Dimple Gudhaneia, Director, Genesis . The company uses surgical cotton in quilts rather than basic cotton like many others.

Domestic players struggling

Big chunk of companies working in the domestic market are not aggressive as of now as they strongly believe that it will take at least 2-3 months to overcome effects of demonetization. Sachin Gupta, House Attire, Ghaziabad who is manufacturing mainly cushion covers and sofa covers bemoaned, “Few of the portal that were selling reasonable numbers of products before demonetization, are now having almost zero sales and similar is the status of many top showrooms as they face heavy impact of the move.” But he also added that after this phase the market will be as active as it used to be.” Sachin is also going to add curtains in its product basket. Naman Narang of Ekta Loomtex, Panipat also shared that 2016 was a very negative year for them and as things stand today there is no clear idea how 2017 will shape up. Despite the challenges of the current time, there are some companies that comparatively had less impact and also have enough orders. One of the main reasons of the same is that they work ahead compared to others. “We experienced very good sales of home furnishing in 2016 and recorded higher turnover of 35 per cent from last year, margins also improved by 50 per cent as compared to last year. For ongoing 2017 order book is full till March end,” shared Harish Kumar Gupta, Chairman, Bella Casa Fashion & Retail Limited, Jaipur . The company is mainly working with top Indian brand retailers.

Buyer’s perspective

“Being a buying agency and mainly doing American market, we have seen the demand for home furnishing rising over the years. In 2016, the trend has been more towards innovative designs and patterns. Customers are looking for more natural fabrics and a gamut of colours. We see that customers are willing to pay better prices for high quality products. The trend would continue for 2017 and would be dominated by prints. Knitted fabric has also seen an increase in demand for home furnishing. I feel the year ahead is very positive for the industry,” said Jitendra Sodhi, CEO, India Buying Consultants, Gurgaon .