Small is Big: Kids' segment to drive big growth in organised furniture retail

This relatively niche and nascent segment is growing in the range 45-50%

The share of branded kids' furniture in the overall Rs 10,000 crore branded furniture market in the country might be miniscule at the moment, but it is the segment to watch for in the coming years, says the industry. While organised branded furniture retail is clocking a 10-15% growth rate annually, this relatively niche and nascent segment is growing much faster, in the range 45-50% (partly owing to a lower base). 

The traction is much more in the online space, given that the buyers are mostly young parents who start their search for a perfect kids' room from the web. As Kashyap Vadapalli, chief marketing officer and business head, Pepperfry.com, an online furniture retailer claimed, "To fulfill the supply gap we recently launched a private label Mollycoddle especially for kids. There is a strong growth potential in the kids segment. Given the current trends we are expecting Mollycoddle alone to grow at a 300% year-on-year." 

As such the online furniture retailers are expected to come off age in near future. The current overall size of furniture and home products market in India is around $32 billion (with the domestic furniture market accounting for nearly 65% of this space), it is expected to touch $71 billion by 2020. According to industry estimates, while the total market is growing at 10-15% year on year, the online component is growing at around 300% year on year. Over the next four years, online retailers like pepperfry expect the online home and furniture business to become at least 9% of overall e-commerce and around 6% of the overall home and furniture market. 

Home and furniture segment constitutes more than 10% of e-commerce in markets across the world, around 13% in the US, 19% in China and about 20% of Brazil's e-commerce. 

India is anyway one of the major furniture importers in the world; it was the largest furniture importer globally in 2004-05 with a 17% share of furniture imports worldwide. The trend continues. Industry insiders claim that furniture imports in India have been clocking a 50% growth rate since 2009 and around 2014, India accounted for nearly 16% share of global imports. 

This perhaps assumes significance in the context that kids' furniture players have mostly been importing their range from countries like China, Indonesia, and even from Denmark.

Founder and director of kids' furniture brand Child Space in Bangalore, Neelu Jain Prasanna said that she imports her entire range from China where she has tie-ups with five manufacturers. In fact, before setting up her studio (stand-alone store) in Bangalore in 2005, she travelled extensively in China and Malaysia to zero in on suppliers. Prasanna feels that much of the traction actually come from the online space, and her brand is available across leading online retailers.

Vadapalli said that while there are very few branded players in this segment, some of the leading names are Alex Daisy & Child Space which are onboard with Pepperfry. "We also have Pink Guppy, Tezerac, Orka, and Mee Mee," he added. 

Godrej Interio, the furniture brand from Godrej & Boyce,is another major player. With a turnover of around Rs 800 crore, Godrej Interio actually enjoys around 8% market share of branded furniture market in India, and it also exports to countries in the Gulf, South America and Africa, with exports accounting for nearly 5% of its turnover. The share of kids' furniture in this is unknown as the company did not respond to emails sent to it.

Denmark based furniture brand Flexa, a leading kids' furniture brand in Europe, recently entered India through a partnership with Trendsetters Retail Private Ltd, and launched its first brand store in India in Ahmedabad. Pranav Dalal, chief executive officer, Trendsetters Retail, which holds a sole franchise agreement with Flexa, said that this niche segment has been clocking a growth rate of over 50% in the recent years. "Flexa has been working with psychologists, paediatricians, therapists etc to design kids furniture and these are made of non-toxic material without any sharp edges or so," Dalal claimed. 

He would be importing his entire range from Flexa's Estonia factory, and says that the duty on furniture imports was not prohibitive at all, around 30%.

One of them key reasons for fueling growth in this segment is rising disposable incomes. 

"Parents who have been classified as “baby boomers” are spending a large chunk on their kids rooms. They typically fall in the age group of 28-40 years hailing from metro cities and look for furniture ranging in the age group of 3-14 years. They are well traveled and informed about latest trends which is also a major driver in this segment," felt Vadapalli.