Blum, one of the world’s largest and most innovative furniture fittings maker, grew its global business by 8% during the last fiscal that ended July 2017, thereby notching sales of €1,788.08 million. While it operates in nearly 120 countries the Austrian company’s focus on India is steadily growing, says Blum India’s managing director Martin Herr.
In an exclusive interaction with Sourcing Hardware, Herr shares his insights about the Indian market and how consumers and trade are likely to consume furniture fittings, and furniture itself. He emphasises that in partnership with Hafele India, Blum is curating a network that has the ability to offer a rich experience to buyers. Here are the excerpts…
By Gyanendra Kumar Kashyap
Blum has reported 8% growth in revenue for FY’17. What has been the contribution of Blum India to this growth, and what are your expectations from the Indian business in the mid-term?
Over the years, we saw a much higher growth rate in India than in most other markets, and we expect this to continue. The trend for urbanisation, increasing buying power, and the fact that nowadays consumers do a lot of online research before buying, is impacting the way we plan our business growth. The Indian market is upgrading fast.
Blum has been present in India for nearly eight years; how has it been? What are your plans going forward?
In fact, we had our first shipment to India in 1984 as per our records. Regular business with a distributor, however, started in the late nineties. An important step for us was the start of the collaboration with Häfele India Pvt Ltd in 2003. Ever since we are working together, serving our customers and capturing the market. We are happy to continue on those lines, but we will also further expand our own team in order to be even closer to our customers. This helps us in understanding what the market really requires, and which next steps must be taken to keep being successful in India. The size and potential of the Indian market is just too big to keep sitting idle.
While you supply to over 120 countries, 64% of your revenue comes from the EU and US. How do you plan to increase revenue share from other emerging markets, particularly India?
Emerging markets have the potential to give us much higher growth rates than the more established markets. It’s important to be present in the market, understand the local needs, and ensure that at the end of the day all target groups are serviced as per our Blum standards.
Following the establishment of Blum India and a new premises in Mumbai, what more can be expected?
As we are growing fast in India we have decided that we need to take the next steps and invest in this market. Servicing our partners has always been a key element for our success globally. For that an effective local team is needed, for which of course the respective infrastructure has to be provided. With our combined new office and showroom in Andheri (E), located directly at the Western Express Highway which is easily reachable for our partners as well as for our team, we are well set for now. The 4,000-sft office-cum-showroom allows end users, furniture manufacturers, dealers, architects and interior designers etc to experience our full product range in a pleasant environment. We see our flagship showroom as an experience center; as for sales, we will keep doing it through our distributor and partners.
Are there plans to establish many more such centers?
At this stage, we don’t plan to open new showrooms in the near future. But I can say that through our partners we, indirectly, do have showrooms pan-India anyway.
Will the Blum network grow just as rapidly as Häfele India’s?
Our products need to be available all over India, thus a large dealer and franchisee network is essential. But it’s also important to support our partners by appointing a limited number of accounts only. Otherwise a healthy competition can very quickly turn into cannibalisation. With regards to that Häfele has always been very careful. We don’t need to be available at each and every corner.
Has Blum been able to make a difference to the Indian market with its innovations?
When we introduced soft-closing drawers in India many years ago, the initial feedback was that the market would not be mature enough for that. Surprisingly, in no time this feature became a standard. We want to be a trend setter in the industry and we are working hard to avoid stand stills. For example, our revolutionary TIP-ON BLUMOTION technology, a mechanical opening support combined with our adaptive soft-closing, supports the trend for handle-free furniture. It’s not only such innovations but also the extremely large product portfolio that we offer, as well as the services we provide, which will strengthen our market position.
How is furniture manufacturing in India likely to change in the coming decade? What would be the key drivers of consumption of furniture in India?
The professionalisation of the industry has already begun and the share of the unorganised sector is decreasing year by year. IKEA will also play an important role in this transition. However, we need to be realistic; India will continue being a trade dominated market for many years. As of now the furniture manufacturers are still very small in terms of volumes compared to those in more established markets like Italy, Germany or China to name just a few.
In FY’17 Blum invested 174.62 million euro (127.16 million euro in Vorarlberg); what investments are we likely to see in FY’18, more so in the Indian context?
In Vorarlberg, Austria we are just setting up plant number eight to keep up with the increasing demand for our products. It’s the biggest single investment for us so far. Also, at our headquarters the plant number two is seeing a massive expansion. Concerning India, we have no intentions as of now to produce locally, but rather invest in business development and service support.
As a development oriented company, what percentage of turnover does Blum keep aside for R&D? Apart from R&D on product development, what is the nature of consumer centric research that you focus on?
Innovation is the life insurance for our future. If we want to be ahead of our competition it goes without saying that one needs to keep investing. Approximately 4% of our turnover we invest into R&D.
Our efforts are more focused on two aspects, viz, requirement research and product development. It’s extremely important to do the homework right before developing a new product. Our concept is to follow, what is called “global customer benefit”; all parties which come in touch with our products need to have a clear benefit, be it the consumer, the installer, the manufacturer or the dealer. Our products need to fulfill the requirements of all of them. Only then a new product will become successful. We use various methods we invite consumers to test new products, we film them, we analyse the footage and find out what can be improved.
We also have been performing kitchen surveys in private households all over the world (so far, we conducted more then 500) to find out consumer requirements. Another tool we use is our in-house “Age Explorer” suit, it’s a suit one wears which simulates higher age by restricting movement, impairing eyesight and hearing. This is how we test new products and find out how convenient they really are. We have an “Age Explorer” suit at our Mumbai showroom; Indian customers can get the experience and test products and applications.
What global mega trends in furniture design are you expecting to see in the coming year?
I’m already curious to experience the latest trends to be revealed at Euro Cucina, the biggest fair in this segment, in April next year. I expect that apart from focus on handle free and neat designs we will see designers playing with new materials and thin shutters.
To what extent do you feel the global trends will be applicable to India? Does the Indian market have its own, unique trends and demands? Does Blum have an assessment of the local requirements?
From my experience, Indian designers do like to study and modify international trends. In our globalised world, new ideas keep spreading fast. Concerning us at Blum India, we are constantly monitoring the market to get a feel for local requirements first hand and we adapt the product portfolio accordingly.
In view of trend towards experiential retail, how should channel partners be presenting their products and concepts to customers in order to increase sales and build customer loyalty?
What was acceptable for customers five years ago might not meet their expectations today. To be successful, our channel partners need to create a wow effect. Hardware is just one part, and an essential part of furniture. It can enable the realisation of new designs and help create that wow factor, which ultimately is required to stand out from the crowd. We all love to experience innovative furniture.