The Hindu Business Line : Well furnishing the homes

As Indian buying habits evolve in line with international trends, the consumption of necessity products will increase and move on to the fashion segment rather than just bare necessities.

Dipali Goenka, Director, Welspun India

D. Murali
Shanthi Venkataraman

This statistic will not make happy reading: An Indian household uses one-and-a-half towels and one bed-sheet on an average per year, which is one-third in comparison to other developing economies and one-fifth to developed economies.

But the good news is that dual income households are on the rise in India and by a whopping 2.5 million every year. The average age of a home owner is also falling from 40 to 27 years. Given this, an increasing spend on home textiles is inevitable, says Dipali Goenka, Director, Welspun Retail Ltd (WRL), an organised retail chain in the home segment, with brands catering to distinct segments: the elite shopper and to the value-for-money seekers.

With Indian buying habits evolving in line with international trends, the consumption of such necessities is expected to increase and move on to the fashion segment.

Welspun retails its products through two brands: Spaces Home & Beyond and Welhome. The company, which has 215 outlets of Welhome and 25 of Spaces is targeting revenue of Rs 1,000 crore by 2011. WRL occupies over 15 per cent of the organised market which accounts for 6 per cent of the home textile industry (worth Rs 9,300 crore) in India.

In an interview with Business Line, Goenka shares her thoughts on the Indian home textiles industry.

What has been the experience thus far with Spaces Home & Beyond format? Has it cannibalised what would otherwise have been sold through your other outlets?

The experience with Spaces Home & Beyond (Spaces), which caters to the ‘aspirational consumer’ through company-owned stores and shop-in-shops has been good. With the influx of dual-income, nuclear families and the rising spending power of the Indian middle class, Spaces is occupying a premium position by catering to the evolving consumer needs — by providing a ‘coordinated’ solution for their bed and bath requirements.

Customers are coming to our stores for an experience; and upwardly mobile consumers are getting the same quality and assurance as they have been getting when they purchase similar products during their visits abroad.

Both Welhome and Spaces business models are entirely different — catering to different clientele without really affecting each other’s business. Hence there is no cannibalisation of one business by the other.

Do you see an increasing spend on home textiles? Are there any statistics or market studies on this?

With dual income households on the rise by 2.5 million every year and the average age of a home owner falling from 40 to 27 years of age, an increasing spend on home textiles is inevitable.

A research done by KSA Technopak reveals that spend in the Indian home textiles industry is expected to be over $25 billion in the next five years.

It is also noteworthy that an Indian household uses one-and-a-half towels and one bed-sheet on an average per year, which is one-third in comparison to other developing economies and one-fifth to developed economies.

As Indian buying habits evolve in line with international trends, the consumption of such necessities will increase and move on to the fashion segment rather than just bare necessities. We expect the Indian consumer to be at par with similar developing countries in three years. This in itself would mean that the Indian home textile market would treble in the next three years.

Who makes the buying decision: the husband or the wife? Also, do you find single men and women shopping for your products, considering that most of them spend inordinately long hours at work?

At Spaces, it is always the woman who makes the purchase. She may be accompanied by her spouse — however, she makes her own decision. At Welhome, even though the woman takes the upper hand in making a decision, she is always accompanied by her family and the money comes mostly from her husband.

What is the mix of franchisee-run versus COCO (company-owned, company-operated)?

Ratio of franchisee-run versus company-owned stores is currently 50:50. However, we are looking at a 70:30 mix very soon. We hope to make each of our stores a self-sustainable outpost within six months of its opening.

Can you tell us about the unfolding innovations in your design studio? Is there a trade-off between fashion and VFM (value for money)?

The team at our design studio gets inputs from colleagues based in New York and Mumbai to understand and to work with the latest trends in vogue. We undertake sample surveys across the country to learn about consumer behaviour. We understand, for instance, that some particular colour/texture that runs in one geographical area of the country may not entice our buyers from another. Fashion is now an international phenomenon and with the reach of lifestyle channels in all living rooms, fashion is ubiquitous.

Our consumers in India are value-driven. Remember that TV commercial of a consumer extracting extra value from the barber? We have identified the likes of both consumer categories we cater to and try to provide them the best possible products at the best possible price.

At Spaces, we have come up with two seasonal ranges every year — the Spring-Summer and the Autumn-Winter. At Welhome, we focus more on variety in colours, patterns and the price range. Our bath towels at Welhome are priced between Rs 79 and Rs 549 and our bed-sheets range between Rs 199 and Rs 1,299.

What is the level of indigenisation of your products?

It is important to focus on the needs and likes of the consumer. Our products cater to the needs and likes of every buyer whether they are from the metro cities or from tier III towns. Our products are largely made in India and cater to the need of international consumers across the globe.

Are you also active in the B2B market?

We do a lot of institutional sales, such as to hotels and pharmaceutical companies. We also recently registered our bed and bath products range with the Canteen Stores Department (CSD) owned by the Ministry of Defence.

Any research findings of significance (anti-microbial, bamboo, organic cotton, spun)?

Welspun as a group is amongst the pioneers of organic products in the world with patented fabrics to its credit. In India, the market for such fabric is evolving and we are hopeful that we will be able to bring in more and more products and educate our consumers the importance of these products. We will soon be launching our anti-microbial range.

What about the ecology-related initiatives (recycling of old furnishings) …

We are encouraging maintenance of ecological balance in all our businesses. To promote recycling, we have tie-ups with various business partners who recycle old furnishings and use them for making new fibres suitable for re-use.

In a world that speaks of SaaS (software as a service), don’t you think it makes eminent business sense to offer home textiles too on a similar model, and have customers enter into AMCs (annual maintenance contracts) rather than buy the furnishings?

Our primary duty today in India is to evolve the segment of home textiles and enhance the buying habits of the consumers. We aim at making consumers understand the importance of the use of home textiles and shift from the unbranded to the branded segment.

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