We expect 25-30% demand growth in furniture selling space during the festival season: Piyush Agarwal, Pepperfry

Even as there have been inflationary pressures over a few quarters, India’s furniture selling space is optimistic of a turnaround in demand during the ongoing festival season. There are expectations of around 25-30% growth in demand in furniture sales during the season, says Piyush Agarwal, Vice President-Supply Chain, Pepperfry.

Agarwal also says how the company has leveraged various technologies to enhance customer experience and optimise cost. Pepperfry has employed technology to make its supply chain more efficient, with tools helping it to improve vehicle utilisation, last-mile route optimisation and last-mile vehicle mileage improvement, says Agarwal. Edited excerpts:

Economic Times (ET): How is the ongoing festive season turning up in terms of recovery for the furniture selling space after quarters of muted demand?

Piyush Agarwal (PA): The ongoing festive season marks a pivotal moment for the furniture selling space, particularly after experiencing several quarters of subdued demand. Once we emerged from the pandemic, there was a significant surge in demand for three to four quarters, with all discretionary categories performing well. However, in the last 9-12 months, we observed a shift in consumer behaviour, with demand for discretionary categories becoming subdued.

The dynamics of the market during this period have been influenced by several factors. Consumers, especially those working in the IT or consumer tech space, faced budget constraints due to curbs in bonuses and increments. This financial stress led to a preference for either entry-level or basic products or, conversely, ultra-luxury items. Notably, mass prestige and premium categories experienced subdued demand. Additionally, the cohorts of consumers who were traditionally aggressive online buyers faced a significant impact.

In addition, there have been inflationary pressures. Despite these challenges, we are optimistic about a turnaround in demand trends during the festival season. Approximately 65% of our business occurs in the second half of the year, and we are projecting growth rates of 25-30% during the festival season.

Key to facilitating higher ticket purchases during this period is consumer financing. We have established tie-ups with nearly all banks for high-value discounts on Pepperfry.com. Approximately 18-20% of purchases are facilitated through financing schemes.

ET: What are the trends in the furniture supply chain? How is technology and AI shaping the future of the supply chain globally?
PA: Technology plays a pivotal role. We have made direct investments in technology, launching an application that signifies a paradigm shift in how consumers interact with our offerings. This application incorporates cutting-edge features backed with augmented reality (AR) and virtual reality (VR). The integration of AR and VR brings a new dimension to furniture shopping, allowing customers to visualise products in their own spaces before making a purchase. This not only streamlines the decision-making process but also significantly reduces the likelihood of post-purchase dissatisfaction.

When it comes to backend, we have leveraged various technologies to enhance customer experience and optimise cost. One such technology is demand sensing which helps us keep the relevant stock at relevant locations. We have partnered with solution providers and the initial results are quite encouraging. We are also using technology to make our supply chain more efficient with tools helping us improve on our vehicle utilisation, last-mile route optimisation and last-mile vehicle mileage improvement

ET: In your opinion, has there been a heightened emphasis on sustaining operations within the supply chain industry throughout the current year?
PA: Absolutely, sustaining operations has been a paramount focus within the supply chain industry this year. The global disruptions caused by the pandemic have underscored the importance of building resilient and adaptable supply chains. Companies are investing in technologies, diversifying sourcing strategies, and implementing robust risk management protocols to ensure the continuity of operations. The heightened emphasis on sustainability and resilience is a key learning from the challenges faced in recent times.

Our supply chain model has always been a little different from conventional supply chains as we are managing most parts of the supply chain on our own. This gives us much better control and visibility on our processes and operations. This also gives us an edge in terms of having a sustainable and resilient supply chain, so while the industry was trying many new ways of sustaining operations, our strategy was to reinforce our systems, keep tight control on people and processes and maintain a fine balance between resilience and efficiency in our supply chain.

ET: What kind of impact do you think higher interest rates are having on supply chain durability?
PA: Higher interest rates undoubtedly pose challenges to supply chain durability. They can result in increased borrowing costs, affecting capital-intensive industries like ours. However, it is crucial for businesses to adopt prudent financial strategies and adapt to changing economic conditions. Proactive measures, such as optimising working capital and exploring alternative financing options, can mitigate the impact of higher interest rates on the durability of the supply chain.

ET: What’s your outlook for the industry, and the plans for expansion?
PA: Our outlook for the furniture industry remains optimistic. We anticipate sustained growth driven by recovering consumer confidence and the continued evolution of e-commerce. As for Pepperfry, we are strategically planning offline and global expansion. Offline, we aim to enhance our presence through strategic partnerships and experiential stores. Globally, we are exploring markets to broaden our footprint and bring our curated furniture offerings to a wider audience.