While discussing why Hansgrohe is expanding into ceramics & bathroom furniture, Gaurav Malhotra and I also talk about how the company is growing in India.
In the aftermath of Covid-19, there’s been a realisation that home is the safest place to be in. Our sanctuary, the home, has become much more meaningful to us during the past couple of years. We have started looking inwards for fulfilment, instead of at the outside world. Why Hansgrohe is expanding into ceramics & bathroom furniture is determined by this thought process.
“Covid has changed our perspective. We are now seeking holistic experiences which assure us of our wellbeing. As humans we crave to infuse wellness into our environment, whether we are at home or at work. This realisation will shape the way we henceforth look at our homes, and home improvement.” This is what Hansgrohe India managing director Gaurav Malhotra said to me, as we discussed the mega trends he foresaw for the bathroom space.
Hansgrohe, said Malhotra, recognises this mega trend: the desire for holistic experiences that add to our wellbeing. And it is responding by developing solutions that promise wellbeing in the privacy of the bathroom, which is more than just hygiene. For instance, its showers are enabling a feel-good experience with soft mist-like sprays that encompass the user, going well beyond the functional. Its faucets are allowing users to create personalised emotional experiences through interactive digital features. The AXOR MyEdition faucet collection offers a wood finish option, which injects emotions of nature, warmth and consciousness into the bathroom environment.
When I probed if the search for fulfillment is limited to the bathroom space, Malhotra said it would apply to all aspects of home improvement. “Bathrooms today are becoming a very holistic space for the person to be in. More than functionality, there is now a fulfilment of emotional needs in this space. Lighting is responding to the emotional needs with mood lighting and intelligent lighting and is quite ahead of the curve. In other categories, such as furniture and flooring, we can see elements of nature pandering to the senses of users. I believe the larger goal now is holistic experiences and not functionality.”
But my question remained: why Hansgrohe is expanding into ceramics & bathroom furniture instead of doing more in the bath fittings space?
Category Expansion: Ceramics & Bathroom Furniture
Since 1901, Hansgrohe has operated in the premium and luxury faucet markets globally. Malhotra says that having been a leader in this space, the brand has achieved a fair level of penetration in the mature markets of Europe as well as in some parts of China. Therefore, there’s a need to look for growth in newer areas.
“Our core DNA remains innovation and design in the premium and luxury space, therefore we will seek growth in new categories within these segments only. It is not for us to chase growth vertically down, unlike what many other in this sector are doing.”
He revealed that in March 2023 Hansgrohe will launch a range of ceramics (basins and toilets), bathroom furniture and mirrors, at ISH Germany. This would be a precursor to soft launches in 10 lead markets worldwide, with India being one of them. And by early 2024 a proper market entry is planned, when the full range of new categories will be introduced for the customers.
“Our growth will come from increased bandwidth. Coupled with the understanding that our customers are seeking holistic experiences in the bathroom, it is natural that we offer them more products that assure such experiences. We will take our leadership of innovation and design to these new categories, so that we continue to own the bathroom space. That’s the reason Hansgrohe is expanding into ceramics & bathroom furniture.”
Can Indian market provide the momentum that Hansgrohe needs, to grow in the premium and luxury space? Malhotra believes it can, considering the healthy clip at which the economy is growing. Premium accounts for 15-20 percent of the over Rs 10,000 crore faucets market in India, while luxury constitutes 3-4 percent. “India is the fastest growing economy and is expected to remain so in the coming years. Our industry too is going through a very high growth phase. The luxury segment has a very small base in nearly all categories, not just building and construction. Premium is already a mature segment and will continue to do well. So there’s considerable head room for growth, both as a market trend as well as a share shift trend.”
Market Presence: Visible & Differentiated
Hansgrohe, which entered India in 2012 through its subsidiary, is present in 58 cities through some 100 outlets. Malhotra informs that conventionally it is metro cities that drive the premium business and are the starting point for any marketer. But Hansgrohe has moved well beyond the metros, and is working to achieve higher penetration in the top 18 cities that are pockets of high growth.
“We are investing heavily in these markets so that we can scale up our operations rapidly. We are holding more events, increasing specifier engagements, building a larger projects pipeline, etc. We are building strong brand visibility, ensuring a deep trade footprint, and are now much more present in the institutional sales segment.”
Explaining the motivation for a customer to explore the premium category, Malhotra says that the bath fittings market is driven by a need for differentiation. “Once the consideration set is determined in the customer’s journey, it is essential to differentiate oneself from other brands. It is our understanding that the potential customer in this segment is attracted by solutions that are innovative, timeless, and genuine, free from gimmickry.”
The involvement of specifiers – architects, interior designers – in the premium segment is another aspect that needs to be nurtured. “We recognise the importance of assisted purchase, more so in the absence of DIY in India, and are deepening our engagement with the speficier community. At the macro level we work closely with them to evolve new ideas for the bathroom and understand the themes that they are interested in. At the micro level we constantly share knowledge about product features and solutions for their projects. This engagement also enables us to support our channel partners with meaningful leads and increased penetration in the markets.”
Speaking about the strength of the Hansgrohe channel in India, Malhotra asserts, “I’m willing to stick my neck out in saying that of the top 100 bath fitting dealers present in the country, 80 are our partners. We are proud of these partnerships. In fact, each of their showrooms are as good as an orientation centre in terms of display, technology and knowledge. They offer a beautiful display of the company’s capabilities and often integrate live showering, new product launch areas, and key messages via the branding they carry.”
Malhotra is of the belief that every touch point that the consumer has with the Hansgrohe brand should offer a similar experience, something that competitors are able to achieve only via owned experience centres. “This not only strengthens the commitment of our channel partners to the brand, but also our commitment in ensuring their corporate success.”
Hansgrohe India has a team of around 145 for building its business and growing market presence, which Malhotra says, “is highly motivated and talented. The success that we have achieved would not have been possible if everyone was not equally passionate.” He says that besides putting in place a streamlined supply chain to ensure fulfilment, the team has been delivering a consistent message in its communication to all stakeholders. This message is experienced at dealer showrooms, at events, in interactions with specifiers and contractors, and at any other touch point where stakeholders meet Hansgrohe.
“From customers to influencers, to service providers and the team, everyone is being addressed with company approved content that is uniform, meaningful, and reflective of the brand identity. The content speaks clearly about the key attributes of our brand, which are innovation and design leadership, as well as our 121-year legacy. It also speaks about our commitment to deliver fulfilment to customers in the privacy of their bathrooms.”
Malhotra rules out any plans of Hansgrohe starting manufacturing in India in the short and medium term. But he goes on to say that his aim in the meantime is to build a business that will get noticed and form the basis of future investments by the 1.36-billion-euro Black Forest, Germany-based parent company. “We have very aggressive plans for India and that is backed by making India a focus market at the group level.”