Expansion and development in real estate and a booming retail sector has had a trickledown effect on home furnishing, a market which is expected to garner $664 billion globally by 2020 and register a compound annual growth rate (CAGR) of 4.2% between 2016 and 2020 (source: Allied Market Research Report).
In emerging economies, home furnishing has become an ‘it’ industry because of the significant increase in homeowners. Furthermore, the growth of hypermarkets and superstores in these countries has contributed to the overall growth of the segment. The home decor segment is broadly categorised into furniture, textiles and floor coverings.
According to the All Pakistan Furniture Exporters Association (APFEA), the total value of furniture sold in Pakistan is in excess of $2.5 billion. The market is dominated by the unorganised sector and only a handful of documented companies are retailing their products to a bigger audience. These include Habitt (IBL Group), Interwood and ChenOne (Chenab Group). Then, there are the few which cater exclusively to a higher-end niche and work on a small scale; they include Baroque, House of Zunn, Natuzzi and Renaissance.
Historically in Pakistan, there are traditional values attached to furniture, and items like charpais (string beds), inlaid door jambs, handcrafted cupboards, jhulas (swings), wooden kursis (chairs), takhts (divans) have been the must-haves in every household – and since most of these items are custom made and of premium quality, they are meant to last a lifetime. However, all this has undergone a seachange in the past two or three decades. The focus from quality and tradition has shifted to modern, contemporary and functional, and classical pieces are now mostly found in affluent households.
In Pakistan, the furniture and interior decor market has followed the footsteps of the clothing industry, providing customers with convenience, a diverse product range and affordability. Earlier, stores catered to upholstery, furniture, bed linen and decorative items independently, but in the last decade, they have started to merge all these items under one roof in order to cater to a growing demand for buying more products in less time, with as little commute as possible. According to industry experts, the main reason for the segment’s growth is globalisation and a change in consumer behaviour, especially among Millennials, who want attractive solutions to improve their lifestyles within a suitable budget.
“According to our research, over 50% of purchase decisions are influenced by digital media,” states Aoan Muhammad, Manager Marketing, Habitt. He adds that today’s consumers are smarter and research different sources before visiting a store or purchasing an item. “It’s not just about ‘dikhay ga to bikay ga’ anymore.”
“Also, the lifecycle of products has reduced. Previously, furniture was bought to last for years; today, people get tired of seeing the same cushions and chairs again and again,” adds Amna Umair, Brand Manager, Interwood.
Readymade items, affordability and new channels of information have also prompted people to indulge in DIY home decor projects. Never before have so many people been keener on furnishing their homes using their own creativity inspired from visiting stores that have laid out separate bedrooms, living rooms, bathrooms and so on. To lure customers even further, these stores have on display all the possible associated accessories one can imagine to enable customers to mix and match products according to their preferences. Further enabling this trend, the major banks are offering loans for home decor, especially for households that cannot afford to spend a lump sum in one go on furnishing.
The products displayed are either imported or locally made (local: 65%, imported: 35%). Textiles are usually made in Pakistan, while some furniture items and household accessories are imported from China, Germany and Malaysia. Given that the retailers of such furniture are mostly located in high-end areas and malls, one could assume that the target market would be SEC A and A+. However, Umair dispels this notion. “We are offering bed sets that start at Rs 35,000, while dining sets cost Rs 24,000.” She adds that as this business is working along the lines of the clothing industry, cost is a very important element. “Either you price it well, or you are out of the market.”
Another important aspect is that these furnishing brands are focusing on visual merchandising, in-store communication and presentation in order to give customers a better shopping experience.
“Retail design has become something of a science now; sights, sounds, even scents are controlled to put the customer in a positive state of mind,” says Taimur Ali Khan, GM, Marketing, ChenOne. He says that the more welcoming and comfortable a store is, the greater the footfall is going to be. Stressing on the importance of presentation, Mohammad Ahmed Khan, Senior Manager, Interior Design, Khaadi, gives this as an example: “Take a bun kebab bought from a street hawker; serve the same to a consumer in a five-star hotel with the presentation razzmatazz, and it will sell at six times the cost.”
Catching on about the importance of display and layout, other brands have also emulated the format. The most obvious change has been observed in mattress companies that have set up high-scale ‘sleep stores’ offering their luxury range of mattresses. Diamond Supreme’s Dolce Vita Home and Master Céleste Home Fashion Store are proof that visual appeal is the key in attracting customers.
Anam Mudassir, Director, Diamond Group, puts it this way: “Sofas are no longer just seats to sit on; they have become statement pieces that need to blend with the house and the owner’s preferences. Furniture, along with home accessories, has become synonymous with fashion; everyone wants to refurbish their space every three to five years. We saw this potential and revamped our layout and it had a massive impact on our sales.”
Another trend is that of home furnishing brands diversifying into clothing and vice versa. For example, Khaadi now has an entire floor dedicated to Khaadi Home. Similarly, the IBL Group (founders of Habitt) have launched their clothing line named Tarzz.
In terms of advertising, the focus that earlier was on print and OOH, has shifted to digital, exhibitions, events and mall branding. Also, being well aware of the South Asian tradition of gifting furniture when marrying off daughters, these stores offer bridal packages with different price ranges as well as apartment packages, where the stores take responsibility for the entire decor.
Planning ahead, these retail finishing companies are aiming to invest more in technology addition and expanding their outreach across Pakistan as they believe the economy holds a lot of promise. However, they unanimously agree that due to the absence of intellectual property rights, it is easier to find ‘me too’ products in the unbranded market, so it is becoming vital for brands to safeguard their exclusivity, and yet, be price competitive. “That would be the key to success in the future,” remarks Muhammad.