Consumption has come back across categories: Pepperfry founders
Office fitments became one of the highest selling furniture categories during the pandemic as people worked from home. As the pandemic eased and life returned to normalcy, the category, which grew by triple digits in FY21, posted a 40 percent decline in the following year, according to the founders of furniture retailer Pepperfry.
“Most consumers, who needed work-at-home furniture, bought it in FY21. The category is still operating on a high base but it is nowhere near the pandemic levels,” Ashish Shah, co-founder and chief operating officer of Pepperfry, told Moneycontrol.
Shah and co-founder Ambareesh Murthy also indicated that consumption has picked up across furniture categories and Pepperfry’s sales have surpassed pre-pandemic levels.
“Consumers are socializing more as we come out of the pandemic and inviting people to their homes so everything that guests can see is selling well. Categories like bar units, coffee tables, something that can be used in the living room, are doing phenomenally well,” said Shah.
Sales from the online channel, which picked up during the pandemic because of restrictions on physical stores, have also returned to pre-pandemic levels.
“Pre-pandemic, our mix used to be 35-40 percent from our studios and the balance 60 percent from the online channels. During the pandemic, it was 20 percent offline and 80 percent online. Post-pandemic, we have gone back to the pre-pandemic levels when it comes to business from online versus offline channel,” said Murthy, who is chief executive officer of Pepperfry.
According to the founders, the offline channel is an important category for their business, given the omni-channel behavior of consumers when it comes to buying furniture.
“Consumer shop across the channels and you have to engage with him or her across them. It is not a choice,” said Murthy.
“We operate in the mass segment and here consumers buy a piece of furniture not just for its function but also for its aesthetic value. They want to touch and feel the furniture before buying it. In fact, less than 10 percent of consumers, who visit our stores buy the product there. However, about 70 percent of consumers who visit stores end up buying our products from other channels,” he added.
The company is rapidly expanding its studios or stores as it eyes a larger share of the offline market. According to the founders, the company has opened about 100 stores since July last year as part of its expansion and is also making its way to small towns. Overall the company operates over 140 studios in the country.
“We open stores under two models – franchisee-owned and franchise-operated and company-owned and company-operated. Under the franchisee-owned and franchise-operated model, the company has already opened stores in over 90 cities,” said Murthy.
“Consumers in these towns would often visit the nearby large town to shop for furniture from Home Town and other brands but now we are making this range available in these small towns too,” he said.
The franchise model is also Pepperfry’s preferred route to expanding to small towns, where it claims to be seeing immense traction.
It has worked on a quick method of expansion under the franchisee model wherein only Rs 20 lakh of investment is needed compared to Rs 90 lakh previously.
Pepperfry, founded in 2011 as an online furniture retail platform, works on a marketplace model and claims to have over 10,000 sellers on its platform. The company is planning an Initial Public Offering (IPO) soon and is in the process of filing its draft share-sale prospectus.
The company competes with Urban Ladder, which was acquired by Reliance Retail in 2020, and Swedish furniture giant Ikea in the Indian market. Ikea, which has largely been dependent on offline retail in other countries, has tweaked its model for India, where it is launching smaller retail stores or city centres at various locations in the cities and e-commerce shopping apps, besides its large-format stores in the outskirts
Source: Devika Singh | Money Control