The home to the spectacular Taj Mahal, spicy food, colorful celebrations, and Bollywood, India is a magical place on planet earth. But when it comes to doing business, is there enough magic in the air for Italian furniture brands to further expand their business in India? To answer the question, we looked at Indian furniture market and learned a handful of interesting insights.
India is the second most populated country in the world after China, with approximately 1.39 billion people (2022 UN est.). It is the largest South Asian economy and the sixth largest consumer market in the world.
The country’s large spatially diversified economy (service 55%, Agriculture 17%) where nearly 60% of India’s gross domestic product is generated by domestic private consumption, is not dependent on a few products, commodities, or natural resources. According to India’s Ministry of Statistics, the economic growth in India has steadily accelerated in the last fifty years without any prolonged reversals. The GDP has steadily increased from 4.4% in the 1970s and 80s to 5.5% during the 1990s and early 00s, and further to 7% in the late 2010s. The country aims to become a $5 trillion economy by 2025.
But let’s come to us. It has been said by several sources that India is the fifth largest furniture producer at a global level and the fourth largest consumer of furniture. The top countries where India currently imports from are China, Malaysia and Italy. Currently, Italian Exports of Furniture to India makes up for around 6% of total Indian Imports and less than 1% of Italian Exports to the world. This set of trade data, itself, may not seem very promising; however, we must dig deeper to realize the full potential of Indian market as the export destination for Italian Furniture Brands since the trade data is based on monitoring the organized sector, while the lion share of the market in India is unorganized.
Statista Analysts forecast that Revenue in the organized Indian Furniture market amounts to US$3.66bn in 2022 out of which the share of Luxury Furniture Market in Organized Sector is around 30% ($1.3bn). The organized market is expected to grow annually by 10.56% (CAGR 2022-2026) and its largest segment is the segment Living Room Furniture with a market volume of US$1.70bn in 2022. Whereas, Indian furniture market, organized and unorganized, has been valued at around $ 17.4 Bn in FY21. This shows the extent to which the market demand is high.
On the other hand, the Urbanization phenomena is enlarging the growth of the residential furniture market with a rise in the urban population, which fuels the demand for premium products like luxury furniture. According to a joint report by India Sotheby’s International Realty and CRE Matrix luxury residential properties worth USD 3 Bn were sold in Mumbai in 2021, compared with the sale of USD 1.25 Bn in 2018. The increase in new projects focusing on aesthetics and urban lifestyles such as APARTMENT 6 by Anushka Contractor and ABIL Mansion – interior designed by Versace Home, are further leading to higher usage of high-end furniture products.
The price positioning of Italian Brands in India compared to the local ones, would place them on the verge of Luxury products spectrum – from affordable to aspirational. Hence, the target segment would be Luxury consumers only. When it comes to Luxury consumers, it is a niche yet flourishing cohort in India. According to Credit Suisse, there were nearly 700 thousand dollar-millionaires in India at the end of 2020 and more than 120K Expats who earn around USD 250K or more. Hence, Luxury consumers are an up-and-coming segment that is quickly evolving.
According to Global Journal of Marketing Management and Research, the current urban middle- and upper-class Indian consumer buying behavior to a large extent has western influence. The Indian consumer has become much more open-minded and experimental in his/her perspective resulting in wide consumer acceptance of foreign brands in India. Rising incomes in the hands of a young population, a growing economy, expansion in the availability of products and services and easy availability of credit all has given rise to new consumer segments.
Further, the penetration of internet and social media has increased consumer awareness and consequently affected buyer’s behavior in cities, towns, and even rural areas, as a result the purchasing behavior of Indian consumers has changed dramatically.
All in all, luxury furniture, as a segment, is evolving in India and we believe that the future for Italian Furniture brands seems bright and the market has a lot to offer especially given the Made in Italy design excellence popularity in this country. However, it is important to keep in mind that India is a huge market and spreading the business across the country demands strategic planning and consistency over time.