With close to 200 million regular households, India is always expected to be one of the biggest markets for most consumer products, and so it is. India is the the second largest market in the world for Furniture and is the third largest market in the world for Televisions. The market size of Furniture (excluding home decor and utilities) in India is around $20 billion in 2020, and the market size of Televisions in India is around $13 billion in 2020.
Out of the $20 billion market of Furniture, domestic household consumption contributes to about $13 billion (65%) and institutional businesses (majorly office, hotels and education institutions) contributes to the remaining $7 billion (35%). This means the television market size is almost equal to the domestic furniture market size. But, for the time being, let’s ignore and assume the market sizes of Furniture as $20 billion and TV as $13 billion, and come back to this difference at the end of this article.
Since both televisions and furniture are highly ubiquitous products, it is fair to assume almost the same household penetration for both the categories. According to Television Audience Measurement (TAM), India has a household television penetration of 80% and most of these households will have some form of Furniture. Since the penetration is almost the same, but the Furniture market size is about 1.5-1.7 times that of the television market size, it implies that an average household is broadly spending about 1.5 to 1.7 times on furniture compared to the money spent by that household on a television. This means either the household is buying furniture more frequently than they purchase TV with the same average amount being spent on both category goods or the household is buying furniture goods worth 1.5-1.7 times more than the TV in their household with the same repeat purchase cycle or the household is buying goods worth 3 to 3.4 times more than the TV in their household with double the repeat purchase cycle of that of TV. We’ll see which is the most reasonable option among these basis some numbers.
Average Selling Price (ASP) & Average Spend per Household (ASPH)
In 2020, more than 70% of the market in Televisions in India is contributed by 32 inch (50-55%) and 43 inch sizes alone. An average 32 inch TV in India costs around Rs.17000 and average 43 inch TV costs around Rs.32000. Assuming 32 inch still has a lion’s share, let’s assume the average Indian TV spend can be considered as Rs. 20000.
An average household only has one TV whereas an average household typically has a minimum of 4 furniture items (bed, couch, wardrobe, and one among dining or study table or dressing table or other furniture). Even though a household typically has 4 furniture items vs only 1 television, the household spend on furniture is just 1.6 times that of the TV. This means three possibilities: either the household spend per Furniture item is exactly 40% of the TV cost (4 Furniture items in a household is contributing to 1.6X the TV value in the household) with the same repeat purchase cycle as that of a TV or that the repeat purchase of Furniture for a household is 4 times longer than that of a television with 1.6X the spend of a TV or the household spend per Furniture is 80% of the TV in that house with 2 times longer repeat purchase cycle. The last option is the most reasonable because you can approximately get two Furniture items for the cost of the TV in a particular household (as per the household’s lifestyle). For a TV costing Rs. 17000-32000, one can typically buy two major furniture items in proportion to the purchasing ability of the household, meaning a household buying a TV at Rs.17000 or Rs.32000 would also typically buy two major furniture items with a similar choice of furniture products as that of the TV.
Repeat Purchase Period
With all the technology changes and size changes and brand changes that happen at rapid pace in the television industry, it is fair to assume that an average household might change their television every 4-5 years (the actual number a few years ago in 2016 was 5 years). This means an average household is repeat purchasing the furniture every 8 to 10 years. This is a pretty long period of repeat purchase for any category.
Well, one might counter that the 8 year period of repeat purchase for Furniture is an All India average. And it is possibly being skewed by the Rural India households who are keeping their furniture for long periods of time, say 20 years. But, that is not the case, as we arrived at this number top down from market value and more than 70% of the value is contributed by Urban India.
But, yes the 8-10 year period of repeat purchase is All India average across demogrpahics. Therefore, it is fair to say that the younger group (below 32 years old) might have a better repeat purchase cycle of say 5 years, while the middle aged group and higher aged group might be having an average repeat purchase of 8-10 and 12-13 years.
On the overall, what this shows is Indian households are not spending a lot more on furniture in comparison to a television and not buying as frequently as they buy televisions.
Some of the reasons why both the spend and repeat purchase is low in Furniture is:
- Furniture’s essential features didn’t change much over the period: Furniture doesn’t change much in its technology or in its core essential features. A bed is a bed and it is used to sleep. It is great “good to have” if the bed does some other stuff too, but it is not a “must have”. On the contrary, if you look at a phone user in India, the essential feature in 2005 was calling, in 2009 was larger screens, in 2012 was internet browsing/chatting and in 2015 was email/docs/short video experiences and 2021 is multiple processing of all of it. Phones have replaced a good part of stuff that we used to do only on PC/Laptops before. Similarly, a TV of 2020 is very different from a TV of 2010 in what is an essential feature in the product. What is essential changes a lot in products such as Televisions and Mobiles, whereas what is essential didn’t change much in Furniture.
- Furniture is not a conscious and emotional experience, usually. Let’s say I tell you to do this, “After you go home everyday from office, you have to sit on the same couch and watch the same movie and eat the same food everyday for the next 30 days in your home. Which part of doing this would be the most difficult thing for you? Let it sink in once.” My guess is: the most difficult thing will be to watch the same movie everyday, and followed by eating the same food everyday and the last spot of bother would be to sit on the same couch everyday. Movies are a high emotional experience and you don’t want to see the same movie everyday. Your brain asks for novelty in the experience. Whereas, Furniture is not a product category that you experience consciously and emotionally everyday. Your brain doesn’t ask for a new couch to sit on every few months. If you can have it, it is great, but it is not a great pain-point if you don’t change your couch or bed every few months. You don’t mind to sit on the same couch for many many days and even years. It is not a category that you directly experience consciously every day, it goes into the background while everything else happens in your life. Therefore, consumers don’t feel a strong pain-point in having the same couch for a long period and they don’t feel a need a to change for a “good-to-have”. Remember most consumers only pay for must-have” pain-points not for “good-to-have” pain points.
- Furniture has low damages in its life-time and is more repairable. Domestic furniture doesn’t get damaged much. Most furniture is based out of wood and is reasonably sturdy if you don’t move the furniture around much. Even if it gets damaged, most people will usually call for a carpenter and get it fixed within a reasonable cost. Whereas devices such as TV or a Mobile usually need to be completely replaced with a new device when you face any issue, as the performance or the experience gets impacted in a big way.
- More than 85% of India lives in Own Houses: Honestly, this stat was quite counter-intuitive to me, but it is true. According to the 2011 Census, out of the 200 regular households, 68% of the households are from Rural India and 32% are from Urban India. Out of this 136 million households in Rural India, over 95% of Rural India lives in own houses. And out of the 64 million households in Urban India, about 70% live in their own house. This means more than 180 million households live in own houses in India. Even if I take this realistic report, and I assume only 50% of Urban India lives in own houses, it still means 168 million (close to 85% of India) lives in own houses. So, there is not much movement for about 85% of the population living in own houses.
On the other hand, in televisions, 24 inch screens are totally outdated from 2016 to 2020 and the meatier 32″ segment is also getting outdated very quickly. Even as recent as 2016, in India, it was not common to have internet connected TVs. But, that has changed very quickly in the last 4 years. With more of 4K content from OTT platforms, it is now an absolutely essential to have an internet connected TV in the house with high screen resolution and a large sized screen in the drawing room.
Televisions market can outgrow Household Furniture market in India very soon
At this pace, even if only most of Urban India replaces 32″ with 43″ TV screens, the market size of TVs can surpass the market size of Furniture despite being 1:4 in the average number of SKUs ratio in an average Indian household as true domestic furniture demand is only about 65% of the total Furniture demand. As we move into 2021-22, the overall Televisions market is going to surpass the pure domestic household furniture market (65-70% of the $20 Billion).
Earlier in the article, I said to ignore the Furniture domestic market size of $13 billion vs $20 billion. It is because, Furniture in India is still largely unorganized and it is believed that there is unaccounted revenues at a large scale. So, there is a possibility that the domestic furniture market size is even $20 billion. Nevertheless, in either case the wallet share between television to furniture is either 50:50 or it is 40:60. An average Indian household in a lifetime is going to spend the same amount of money on buying Televisions and on buying Furniture, which shows that Furniture has atleast 2x longer purchase cycles than televisions. With all its innovations, the Television industry has successfully reduced the repeat purchase cycle and it is winning in the wallet share of the Indian household big and fast.
Hope this is useful, thank you.