Though a recent entrant in India, Spanish furniture fittings specialist Indaux has been quick to build a distribution network. Indaux India Pvt Ltd has been working on a sustainable, step-by-step establishment process based on “smart and service-focused investment.” In an exclusive interaction with SH, Indaux’s foreign subsidiaries controller Pablo Arratibel, and Indaux India’s president Rajeev Okhandiar share their growth strategy and much more…
By Gyanendra Kumar Kashyap
It’s been over five and a half decades that Indaux started its operations in Spain; what do you do in terms of R&D, product customisation, network expansion, etc, so as to keep building on your ‘legacy brand’ status?
Indaux is today a leading furniture fittings manufacturer, thanks to 55 years of work based on product innovation, continuous manufacturing process improvement, and foreign market development.
In order to overcome today and tomorrow’s challenges, innovation and continuous improvement will remain essential; strategic business alliances will be even more important; and subsidiary network development will guarantee competitiveness, service and product adaptation in key potential countries. Today Indaux is present in more than 70 countries all around the globe, and through a combined network of owned subsidiaries and distributors we export over 85% of our turnover. However, all of our five plants are located in the north of Spain, in a region called the Basque Country which is a well know traditional industrial hub in Europe.
How has been the acceptability of the Indaux brand in India over the past three years, since you entered the market?
Indaux has been known in India much before the last three years. In fact it has been available earlier to Indian users through our authorised import agents. The idea of entering the market directly arose based on the customer response, and after estimating the potential available for us.
Indaux is the second European hardware manufacturing company in India which came on its own under a joint venture, to be close to customers, service them better and enjoy the fruits of a growing market. The last three years of our operation here have been very encouraging, and today we have a network of more than 120 direct dealers and distributors who buy from us repeatedly. All this is due to our unique range of products which clearly differentiate themselves before the customers.
You have opted for a strategic alliance with Vinay Kothari and Sudhir Mehta; what is the status of the partnership, and how has the experience of working with them been?
It is remarkable to see that this alliance is based on totally agreed goals and objectives towards the Indaux India project. Therefore, it has been an easygoing relationship where every partner has confidence, and is excited about the project, the team, and the ongoing strategy. It is remarkable as well to note the personal involvement and support of all the partners right since the beginning.
What is the potential of the Indian market, and what plans do you have for it?
India is a growing market. However, I would say the penetration of furniture hardware products in this market is only 15% so far, with the market size in our estimate being Rs 2,500 crore in the organised sector. We believe that nearly 75% of market is still unorganised and is using conventional hardware or techniques of making furniture.
As far as our plans are concerned, we are primarily focussed on expanding ourselves and understanding market needs. In the last three years we have grown more than 68% (CAGR) year-on-year, and are aiming to gain at least second position in the high precision furniture hardware segment in the next five years. Being encouraged by the growth, we are planning to bring fairly large investments into manufacturing here, to service not only the Indian market but also cater to SAARC countries and few markets in the South East Asian region.
We understand that the India project will be, strategically speaking, a strong pillar for the future of Indaux. Therefore, we believe in a sustainable and step-by-step establishment process based on smart and service focused investment in India, together with continuous support from headquarters in terms of product development and innovation.
How do you view the competition in India, given the presence of both domestic as well as global brands? What is it that differentiates Indaux from the rest?
We welcome the competition and certainly it is very much out here. However it is mostly concentrated in the metros and other big cities. But in tier 2 and tier 3 cities entry for new brands is really not that tough. As I have said earlier, the penetration level is very low and therefore there is enough space for everyone. The biggest challenge has been the Chinese products, which are coming through different means and they are dirt cheap because of various reasons. Thanks to the tax reforms(GST) brought by the government, this will restrict all illegal imports and transactions. This will give a genuine opportunity to all valid brands and they will grow on merit. Indaux is going to be benefited, and we have already started feeling it in our sales performance.
Besides this Indaux has the advantage of differentiation. With the widest range of drawer systems (Ariane, Europa, Attraction, Combi, Supraplex), sliding doors (Junior 6, Junior 4, Systema 4) and cabinet hangers; our range is unmatched and being repeatedly demanded by customers. Of late, some of the other leading brands have started imitating us and bringing in similar products. Our patented technology – Indamatic Soft Closing – is redefining styles and contributing in upgrading the furniture’s functionality. You need to understand that we are a manufacturing company with a strong background of engineering and innovation. These capabilities help to position us very strongly in any given market.
How are you positioning yourself?
Our biggest USP is our innovation in design. Our products are so designed that it becomes much easier for users to install them, so they are ideal for modularly designed furniture. Our multiple options of drawer systems help the manufacturers in making kitchen furniture available at various price points. All our hardware is soft closing with the patented Indamatic. Similarly in the case of sliding doors, hinges and runners, we position ourselves as a European brand with latest of technology at affordable price. And being present in India as a company, we are always close to our customers and can provide assistance and service as and when it is required.
How do you assess the market in terms of acceptance of quality, price? Do you find the user sensitive to high quality?
Our quality and price has been well accepted here. We have precisely identified the gap in the market. German brands are well known but they are very expensive, therefore they do not reach the aspiring customers who wish to have modern, high quality and functional hardware. That segment is really big and precisely what we are targeting, and we are getting a great deal of traction. As you may know, furniture manufacturing in the west is highly mechanised, unlike in India where it is still made by artisans and carpenters. These manufacturers need to be addressed differently and the route to the end-user is different. DIY may be a popular segment in Europe, but in India I feel it will take a few more decades.
How have you approached the market to gain share and brand recall?
Carpenters, contractors and interior designers are the key influencers who make brands like ours move forward. Initially our entire focus was on working with them very closely, and making our products available and visible through a wide network of dealers and retailers. We carried out various programs to interact with these influencers and make them confident about using and recommending Indaux solutions to their clients. This brought us success in generating sustainable demand. We also displayed our products at dealer showrooms, where customers can have a ‘touch & feel’ experience. For mind share and recall, we are now participating in important trade shows like Indiawood, Acetech, etc, and globally we have been regular participants at Interzum in Germany.
How do you assess the furniture market, and thereby the furniture components market?
As per our estimate India’s organised furniture market is worth approximately Rs 60,000 crore (including branded imports). This has a great potential to grow because of various reasons like growing urbanisation, changing living style, a young and aspiring population, restrictions in using hardwood, etc. These driving forces are instrumental in the growth of this industry, and of high precision hardware which will grow at a higher pace in the next 5-10 years.
What were the key challenges that you faced on entering India?
As you can make out and as would be applicable to any new brand, the primary challenge was to make each actor of the sales chain aware about our brand. The next was to quickly set up a network of retail outlets where these products can be made available. Most importantly, the task was to gain confidence of our customers to ensure repeat buying and referrals. We have been successful in this to a great extent, and as a result we are having a wide base of loyal customers and the sales are growing.
But of course, this is just the first stage and we have yet to achieve many milestones. Currently we have more than 120 direct dealers and distributors and we are gradually expanding in the southern and eastern markets with greater intensity. Our vision is to make brand Indaux widely available and visible in the trade and OEM segments. And we look forward that in 3-5 years it would be a household name.
In which other country outside of Europe has Indaux been successful? How have you approached each of these markets?
Indaux has different success examples in countries with totally different cultures and business models, like Russia, Brazil, USA, México, Australia, etc. Each of these countries has different challenges – lack of brand awareness in a branded market, lack of technical knowledge, unknown culture and habits, specific product requirements, difficulties to find correct partners, political instability, etc.
I could say there is a ‘standard’ guide that we have applied to overcome and be successful. First, objectively identify and define the challenges that we find in each country. Second, draw a mid-term strategy that we really trust will make us overcome these challenges. Third, make an action plan according to it, and find the correct people who will execute it. Fourth, continuously assess and adapt this action plan to the upcoming events. And fifth, work hard keeping the company’s objective always in mind.
At the recently concluded Interzum, Indaux had on display a range of innovative solutions. When can we expect their launch in India? Were any of these products developed in India?
Indaux has launched many new innovative solutions during the last Interzum and therefore, second half of year 2017 and first half of 2018 will be very interesting in terms of new product arrivals into the Indian market.
Before the end of this year we will have availability of the strong Delta x3 lift up system, together with the new super-safe anti-removal furniture hanging brackets, Traser 6 and Scarpi 4. The brand new and very expected Komplet under-mounted runner, which improves the usability and brings user perception one step higher, will be available in India by January 2018. The new Attractive drawer will come just after it. These are just some appetisers of the upcoming solutions.
As of now, all these products are designed and produced in Spain, but they have been developed and adapted based on the feedback provided by Indaux India.
What was the idea behind ‘reverse mission’ that you organised for Indian Indaux distributors?
The idea behind the reverse mission was to take our loyal customers to our facilities and reinforce confidence in them. Our distributors got the conviction and confidence, which they are now advocating. Besides that, they came to know of our capabilities and processes, and they will be better prepared in representing our company and brand before their customers. Most importantly, the company and the distributors became part of a family and the relationship got further cemented. This, we believe, will insulate us from losing loyal customers to competitors.