India 2015:
A New Economy,
New Consumers, and
New Opportunities for
Home Textile & Furnishings
Arvind Singhal
19th November, 2010
Structure …
Emerging India: The Last 5 Years and The Next 5 Years
Emerging Consumers
Emerging Home Textiles & Furnishings Opportunity
Some suggestions
2
Emerging India:
The Last 5 Years &
The Next 5 ....
Indian Economy Poised To Hit The Next Level
4
All values in US$ Bn
2,500
2170
2,000
1540
1,500
1180
1,000
830
639
500
371
0
2005
2010P
GDP
Private Consumption
Source: Economist Intelligence Unit
2015P
5
Dramatic Increase In Consumption Across Many
Categories …
Transportation
6
 By 2015, ~ 100 Million Indians will own a four wheeler…
Passengers cars sales per year will increase from 2 Million
to over 4 Million
Passenger cars sold per year (in ‘000 Cars)
4,000
110
2,000
% share of
demand
670
Premium & Luxury
1,100
42
220
58
350
3120
1550
800
2005
2010
2015
5%
Mid Sized
17%
Small & Compact
78%
Source: Society of Indian Automobiles Association, Technopak Analysis
Consumer Durables
7
By 2015, about 240 Million will use smart phones and 50 Million will
have laptops
Demand for these devices will increase by 2.5x-3.5x
Smart phones
% of mobile phone sold
1.7%
4.3%
Laptops
Entertainment devices
Million units sold per year
18%
550
7.5
3X
2.5X
24
5X
220
2.5
40
5
0.2
0.6
2005
2010
2015
Source: Gartner Report, Technopak Analysis
2005
2010
2015
2005
2010
2015
Source: Euromonitor, Technopak Analysis
Source: MAIT, Technopak Analysis
Media - TV & Internet
8
~ 250 Million will have access to internet
~ 40 Million new Digital TV connections will be added in the next 5
years
Number of Internet users (in Million)
Number of DTH subscribers (in Million)
60
40 Million new
connections
25
75
250
20.5
% of urban population
8%
2005
21%
45%
1
2010
2015
2005
Source: IMAI – Internet and mobile association of India, Technopak Analysis
2010
2015
Source: TRAI – Telecom regulatory authority of India, Technopak Analysis
Leisure
9
~1200 new multiplex screens are likely to be added by
2015, leading to a nearly three fold increase in ticket sales
No . Of multiplex tickets sold per year
(in Million)
Multiplex Market Size (US$ Million)
% total revenues generated from multiplexes
Number of multiplex screens
275
900
2100
1300
240
3X
2.5X
100
13%
2
2005
<1%
2010
2015
Source: Industry reports, Technopak Analysis
350
4
2005
2010
2015
•- projections from a demand standpoint
Source: Technopak Research & Analysis
35%
Tourism
10
165 Million domestic travelers per year – an increase of 50%
15 Million international travellers per year – an increase of 40%
Domestic Air Travellers (in Million)
Indians Outbound (in Million)
165
15
109
11
7
51
2005
2010
2015P
Source: Ministry of Civil Aviation
2005
2010
2015P
By 2015, India will have…
11
 250 million people with access to internet
 250 million smart phone users
 300 million with access to Digital TV
 100 million who own a 4 wheeler
 100 million who watch movies in multiplexes
 50 million with laptops / net books
The target population for lifestyle consumption product &
services categories will be between 50- 250 million.
…Supported by a significant ramp up of Infrastructure
12
India will spend 9% of its GDP (US$ 1 Trillion) on Infrastructure over
the next 5 years
Over 200 new consumption centers will witness increase in
consumption
Lane Km of Highways
(‘in ‘000)
227
131
Installed Power Capacity(
in GW)
No. of airports of international
standard
12
255
133
159
99
4
0
2005
2010
2015P
Source: NHAI – National highways authority of India
2005
2010
2015P
Source: Ministry of Power
2005
2010
2015P
Source: Ministry of Civil aviation, Technopak Analysis
India Will Create Another 125 Million Or More Jobs In Next
10 Years ….
510
Million
637
Millio
n
254
Services
164
68
83
Manufacturing
Agriculture
279
300
2010
2020
India has generated more
than 11 million new jobs
every year in the last decade,
which is higher than China's
7 million, Brazil's 2.7 million
and Russia's 0.7 million
Almost 75 million new jobs
will be in the service industry,
lifting lower middle class
consumers to well groomed
middle class, creating market
for many mid level
discretionary products.
13
13
14
Economic Development Already Creating New
Consumption ‘Hot Spots in the Country
Many new centre of
consumptions are being
created across countries led
by new investments in
manufacturing and services
industries
340 Hotspots &
1063 Moons
3
9
By 2020, there may be more
than 65 Indian cities having
population in excess of 1
million and another 200
having population between
500,000 and 1 million
14
10
26
7
22
13
38
5
19
8
14
10
16
59
27
93
2
1
3
13
11
19
19
53
5
16
7
51
11
3
3
21 4
4
4
1
3
31
92
42
13
9
3
13
17
58
6
15
Based on planned investments in industry,
infrastructure, roads and development of
Special Economic Zones
41
13
9
32
96
Hotspots
Number of Moons
Emerging Consumer…
Dramatic Changes In India’s Consumption Basket Of “Roti,
Kapda, Aur Makaan”
All values in US$ Bn
Rank
2009
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Category
Food & Grocery
Healthcare
Apparel & Home Textiles
Education (K-12, higher
education & vocational)
Telecom
Jewelry & Watches
Personal Transport
Travel and Leisure
CDIT
Home – Furniture, Furnishing
Personal Care
Eating out
Footwear
Health & Beauty Services
Size
2010
290
41
37
Size
2015
360
66
49
33
30
29
28
15
13
12
12
6
4
1
53
47
40
43
23
20
17
16
8
6
2
Rank
2015
1
2
4
3
5
7
6
8
9
10
11
12
13
14
16
Expanding Consumption Basket
17
Expanding consumption basket from 7 categories in 1991 to <19 categories in 2015
1991
• Food and Grocery
• Clothing
• Footwear
• Consumer durables
• Home linen
• Movies and theatre
• Eating out
2010
• Food and Grocery
• Clothing
• Footwear
• Consumer durables
• Expenditure on DVDs and VCD’s
• Home linen
• Home accessories
• Accessories
• Gifts
• Take-away/ Pre cooked / RTE meals
• Movies and theatre
• Eating out
• Entertainment parks
• Mobile phones and service
• Household help
• Travel packages
• Club membership
• Computer Peripheral & Internet
Usage
2015
• Food and Grocery
• Clothing
• Footwear
• Consumer durables
• Expenditure on DVDs and VCD’s
• Home linen
• Home accessories
• Gifts
• Take-away/ Pre cooked / RTE meals
• Movies and theatre
• Eating out
• Entertainment parks
• Mobile phones and service
• Household help
• Travel packages
• Club membership
• Computer Peripheral & Internet
Usage
• Beauty and Spa
• Gaming
• ??
Note: The above categories account for 80% of consumer spending
Source: Technopak Analysis
Emergence of New Categories and Inter Category
Competition
US$ 30 Bn on mobile handset
and calling charges
US$ 28 Bn on auto &
transport
US$ 9 Bn on self-learning and
coaching
US$ 15 Bn on travel and
tourism
18
Consumers Trading Up & Trading Down
19
As the need and desire basket changes, consumers
dynamically allocating and reallocating priorities on
spending
The same consumer displays extreme price sensitivity for
one product (normally functional products of low
perceived differentiation e.g. Food, Clothing, Home
Textiles) and at the same time, willing to pay a premium
for another product (mostly a visible consumption product
or a product of high perceived differentiation e.g. mobile
phone, automobile, even coffee at a café ).
A New Way Of Classifying Consumption ?
20
There may be a new way of classifying consumption* (for the “mass”
class of consumers which excludes, in India’s context, the SEC A-1
which comprise of about 3% of the total consumer base of about 650
million i.e. about 20 million, and the BPL families which comprise of
about the bottom 35% or so i.e. the bottom 225 million consumers
leaving a core of about 400 million consumers – decision takers. The
rest – about 400 million are children below the age of 18 and hence
not directly the consuming class)
• Need based merchandise and services
• Aspiration / lifestyle based merchandise and services
* Technopak hypothesis
A New Classification Of Consumption ?
21
Need based merchandise and services:
•
•
•
•
•
•
•
•
•
•
Food & Grocery
Prepared food / food services
Textiles and apparel (other than “global” youth-fashion labels)
Footwear (other than “global” youth fashion brands)
Medicine & healthcare services
Air & other public transport travel
Consumer durables (white and brown goods)?
Consumer electronics (select categories e.g. DVD players)?
Kitchen appliances
Mobile telephone handsets?
A New Classification Of Consumption ?
22
Aspiration based merchandise and services:
•
•
•
•
•
•
•
•
•
Home & Home décor
Personal transport vehicle
Jewelry & wrist-wear (both for women and men)
Accessories (handbags, pens, others)
Grooming
Well-being
Coaching & learning
Leisure & recreation
Socializing & other lifestyle
Emergence Of A New Price – Value Continuum
23
Product
Price in 2005
(US$)
Price in 2010
(US$)
Price Increase
(CAGR)
Pair of 301 Levi’s denim
25
60
20%
Pair of basic Reebok
shoes
30
60
16%
Cappuccino at Café
Coffee Day
0.5
1.5
19%
Cost of a movie ticket
1
4
25%
Education
MBA Education in IIMs
(per annum)
6,500-9,000
20,000-23,000
18%
Hospitality
Cost of room night in 3
star hotel in Mumbai
45
90
15%
Accessories
Price of a premium
watch
45-70
110-220
> 20%
35
70
15%
Category
Apparel &
Footwear
Leisure
Fitness
Monthly fee for a Gym
Source: Technopak Research & Analysis
Emerging Home Textile
Opportunity…
Textile And Apparel Industry Will Grow Substantially
25
India’s US$ 70 Billion Textile and Apparel industry has the potential to grow
@ 11% CAGR to reach ~ US$ 135 Billion by 2015
~ 135
US$ Billion
45
CAGR 11%
78
70
46
26
23
90
16
30
2005
*All numbers are rounded off
47
52
2009
2010(E)
Domestic
Exports
Total (US$ Bn)
2015(E)
Indian Home Textile Market is Growing at 9%..
26
Home textile & furnishings market is expected to grow by 9% CAGR to reach
$6 Bn by 2015 on the back of increased discretionary expenditure
Home Textile Domestic
Market (INR Cr)
30,000
26,650
25,000
20,000
17,000
15,000
10,000
10,000
5,000
-
2005
2010 (E)
2015(E)
Category wise growth rate
Categories
Bed Linen
Towels
Curtains
Blankets
Upholstery
Kitchen Linen
Rugs and Carpets
Total
CAGR 2010-15
9%
9%
10%
8%
10%
8%
11%
9%
…Other Factors Pushing the Demand of Home Textiles
27
Increase in discretionary Income
• Spend on aspiration based purchasing including home
textiles
Urbanization
• Over 100Mn people will join urban areas during the
next decade who will drive the consumption
Growing Eve Power
• Estimated 40 to 45 million career woman across age of
20 to 40 years in Urban India over next 10 years, with
increased purchase decision making power
The Urban Spaces Are Growing…
28
Many drivers for home textiles and furnishings growth:
• Growing number of households
• Growth in discretionary income
• Growth of end use sectors
•
•
•
•
•
Housing
Office Space
Hospitality
Health Care
Restaurants
Increase in Housing Supply
Housing Supply in Top 7 Cities
in India(000’s)
29
Demand will still be higher than supply
due to:
280
Increase in Nuclear Families
Increase in Double income families
leading to Increase in disposable
Income
110
70
Easy availability of Housing Finance
2005
2010
2015P
Similar trend in demand /supply is
expected across urban India
Source: Cushman & Wakefield Research
Hospitality & Healthcare
30
 Branded hotel rooms & organized restaurants are expected to grow by
2x and 4x times in next 5 years
 Increase in Hospital beds will also result in increased bed linen
consumption
No. of Branded Hotel Rooms(‘000’s)
Organized Restaurant Market
No. of Hospital Beds (‘000’s)
280
104
1575
1370
2X
4X
800
50
35
68
2005
2010
2015
Source: Industry reports, Technopak
Analysis
2010
2015
Source: NRAI ,Technopak Analysis
2005
2010
2015
Source: Technopak Analysis
Leveraging the Opportunity:
Some Suggestions
Some Suggestions…
Build national home-textiles and home-furnishings brands (beyond
corporate brands)
Build national home-textiles and home-furnishings retail businesses –
pan India
Build / strengthen “key-account” philosophy and marketing,
straddling:
• Large national retail businesses such as Future Group, Tata Group,
Reliance, Wal-Mart / Bharti etc.
• Large hotel / hospitality chains
• Large secondary and tertiary healthcare delivery businesses
32
Build National Brands…
Build national home-textiles and homefurnishings brands (beyond corporate brands)
• Emulate apparel and footwear companies for brand
building effort
• Emulate home-décor companies for brand building
effort
33
Build National Retail Networks …
34
No. of Stores Across Retail Segments
1000
900
800
700
600
500
400
300
200
100
0
Reebok
Adidas
Sportswear
Benetton
Levis
CCD
Fashion
2007
2008
Barista
Coffee Cafes
2009
Samsung
Sony
CDIT
2010
Source: Technopak Analysis
Build Key Account Management Capabilities…
Build / strengthen “key-account” philosophy and
marketing, straddling:
• Product development strengths
• Relationship management
• Logistics to align with key accounts
35
Thank You !
For Further Dialogue, Please Contact :
Arvind Singhal
Chairman,
Technopak Advisors
T : 0124 454 1111
E : arvind.singhal@technopak.com
Web : www.technopak.com