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“New Entrant Must Weigh Options before Committing to a Business Model,” Arjun Kainya, Kainya & Associates

We started as a manufacturer of kitchen hardware in 1996, and in the year 2000 diversified into the distribution of appliances, modular kitchens and hardware. One of the primary reasons for our diversification into the modular kitchen segment was the realisation that the value of overall hardware was relatively less when compared to that of the full kitchen. For instance, the average ticket size of a kitchen is Rs 5 lakh; whereas if we limit ourselves to hardware, the sale value would be between Rs 1 lakh to Rs 1.5 lakh.

In the kitchen business there are more possibilities, be it in terms of materials, hardware or appliances, and also more customer interaction. Take for example a kitchen priced at Rs 8 lakh; out of this around one lakh is accounted for by hardware, Rs 4.5 lakh by cabinetry, and Rs 2.5 lakh by appliances. A retailer can derive more benefits from a complete project. Discerning customers no longer hanker over price; all that they are concerned about is quality.

We, Kainya & Associates, are witnessing a growth in the kitchen industry, and I am optimistic about its future. Modular kitchen is on the rise, semi-modular kitchens and those prepared by carpenters are going out of favour. This trend can be attributed to the growing awareness amongst customers.

We have one store spread over 6,000 sft and have no plans to add more outlets. Apart from our brand of modular kitchens and hardware, we are also the distributors for BSH appliances, and in this segment, we are keen to penetrate tier II and tier III markets.

A new entrant in the kitchen business can think of either aligning with an existing brand or setting up one’s brand. The fundamental preparedness in both cases must be in terms of the level of expertise, sourcing know-how, material quality and investment. Only when questions related to these four parameters are addressed, can the decision of tying up or owning a brand be taken. In general, a showroom that displays two to three kitchens over 500 sft demands an investment of Rs 20 lakh.

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