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Mumbai , Sept. 1

HOME Solutions Retail India, a subsidiary of Pantaloon Retail, on Thursday opened its first home solutions store in Mumbai called MeLA, a precursor to the launch of its Home Town which will offer solutions in home furnishings, furniture, consumer durables, etc.

According to Mr Raghu Pillai, Managing Director and Chief Executive Officer, Home Solutions Retail India Ltd, the size of the sector was estimated at Rs 70,000 crore - Rs 80,000 crore. The furniture market is estimated at Rs 20,000-22,000 crore. Both are largely addressed by the unorganised market. He added that even organised players had not scaled this sector sufficiently, with the largest player drawing sales of only about Rs 200 crore annually.

He said that in the past decade the average age of an Indian homeowner had fallen to 29 from 40 earlier. In addition, interest rates had fallen by seven basis points over the last five years. Seventy per cent of the population was under the age of 35.

He added that the fourth largest spend in household was on the home and Pantaloon's entry would be a structured effort.

Home Solutions would have large format stores called Home Town, which would sell home furnishings, home furniture, consumer durables and appliances, building materials such as tiles and paints, and eventually home services, and even home improvement services.

These would be promoted through Pantaloon's lifestyle and value formats — Central and Big Bazaar.

The first Home Town will come up in Gurgaon in May 2006. He added that four Home Towns had been signed up, and, on average, would stretch over 100,000 sq ft. The rollout would touch 20 Home Towns by 2008. It plans about 20 smaller standalone formats, which will measure 25,000 sq ft. Ultimately it is envisioned that most Big Bazaars, 55 by 2007, would provide home solutions. In terms of investment, Mr Pillai said that initially funding would be through equity of Rs 125-300 crore and through debt.

The company hopes to eventually have a turnover of Rs 1,000 crore by 2007-08.

As far as pricing is concerned, Mr Pillai said it would be "as affordable as possible... we are going for the mass market and will work across different price points." He said the main idea was to grab volumes and the lifestyle stores would provide a mix of premium and non-premium products.

He said that the furniture and furnishings business was typically high margins, the consumer durable and appliances was low margin but had high turnover per sq ft; the building materials, electrical and services would be a combination of outsourcing products, such as electrical items, and the services of architects, builders, plumbers etc.

Of MeLa, Mr Pillai said it was a replicated business and Mumbai alone would account for 6-8 MeLas. The unit was currently testing the feasibility of finishing the product and short time deliveries.

He said that tailoring facilities and in-house designers were available to help consumers.

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