About a year ago, the US $ 20 million worth Group Indigo, a Gurgaon based buying office working with buyers in the UK, France, Belgium, Holland and Scandinavian countries started its home division and within a year touched a turnover of US $ 3 million. Approximately, 80 per cent of the home business of Indigo is dedicated to textile based products in Bed, Bath, Table and Kitchen, the balance is of hard goods and handicrafts. With popular demand from its buyers for eco friendly home fashion, the company is making concentrated efforts to move towards sustainable products. Team Group Indigo in a one o’ one interaction with the Apparel Online team shares future growth strategy for their home division…
Established in 2004, Group Indigo has established a firm footing in the sourcing of apparel products for its European buyers, some of which were instrumental in starting the home fashion business for the company. “Earlier in 2008, we did try sourcing for the home fashion segment, but we failed because we didn’t hire the right people. I am basically a textile and apparel person with no background in home furnishing. So this time, before starting the home business, we thought of hiring the right people who understood the product and market. And despite all the talk of slowdown and the time not being right to initiate a new venture, I doubled my business since last year. It was US $ 10 million in the year 2010, and in 2011 we touched US $ 20 million, with the newly formed home division touching a turnover of US $ 3 million,” shares Manish Khanna, Director India Operations, Group Indigo.
[bleft]“We are not targeting the mass or run-of-the-mill market, our strength is high-end products, and we are now looking at more value added middle level markets. – MANISH KHANNA Director India Operations, Group Indigo [/bleft]
According to Nikita Khanna, heading the home division of Group Indigo, having tasted success, the buying office is now majorly focusing on its home textiles business. “Eighty per cent of our business is to European countries like the UK, France, Belgium and the Scandinavian countries, while 20 per cent of the products are going to the US market,” informs Nikita. As a policy, the buying office has always been catering to high-end buyers, however to get larger volumes it has now started penetrating into the medium segment of market. “We are not targeting the mass or run-of-the-mill market, our strength is high-end products, and we are now looking at more value added middle level markets. And with this expanded segment we are projecting a turnover of about US $ 8 million in the next 2 years from the home division,” adds Rishi Kant Sharma, Sr. Merchandiser – Homewares.
Group Indigo is rapidly moving towards sustainable products as a majority of its buyers are now demanding products which are eco friendly. “Our products are largely produced with 100 per cent cotton or linen. We try to find out the new natural fibres which we can use in our products. Besides this, we are also looking at recycled products. In south India, there are a few vendors who are doing recycled products, we are talking to them,” avers Nikita. Though in the linen segment, basically in bedding, Indigo is focusing on 100 per cent linen fabric for its high-end customers, however with the current market conditions, it is also trying out blends to give better prices. “We are working on 80-20, 70-30 blends of linen and cotton,” informs Rishi.
The buying operation also has an office in France to support its customers. “We have in-house designers in France who take inspirations from the fairs in Europe and then translate them according to our customer’s specific needs. These are then transformed into designs, which are customized for presentation to each customer,” says Nikita. This value addition in the buying operation has been one of the biggest reasons for success in the high-end market.
Talking about stringent European compliance norms, which are now percolating into home furnishing as well, like REACH and OEKO Tex, Rishi shares that earlier only fire retardant fabric was demanded by the US buyers, but now the European market is equally strict in this area. He adds that social compliance was and is a major concern for both the European and the US buyers; now they are also very particular about what dyes are being used in home furnishing; is the product eco friendly and so on so forth. “Any product, which we show to our buyers are legally compliant to that particular country’s desired parameters. US buyers are very particular about flammability factor and they do not accept any product which is not fire retardant. In floor coverings we do 100 per cent woollen rugs and a little of viscose blends. But, because of stringent norms, we are not offering viscose rugs to our US customers. High-end product would always have viscose in it but we are not even showing that to our US buyers,” avers Rishi.
To ensure that all compliances are adhered to, Group Indigo has an independent compliance company which does audits for them, besides maintaining in-house auditors in office as well. Ironically the hard goods and handicraft industry doesn’t carry a good reputation in the eyes of foreign buyers. Though majority of these factories have started adhering to social compliances, still the buyers are skeptical about their practices. “We are sourcing metal products from Moradabad and rugs from Panipat, Bhadoi and Mirzapur; and we make sure to source products only from those factories which are fully compliant. You’ll be surprised to know that there are a few very progressive companies in place like Mirzapur. We have a rug vendor whose each rug has a barcode attached at the back which carries all the data right from yarn procurement to every step of production,” asserts Rishi, according to whom they choose factories depending on their customer’s requirement. Though a vertically integrated factory is any day a preferred choice, but for smaller order they have to look for vendors who can execute smaller orders.
Group Indigo is now planning to have greater penetration in the US market and is also looking at entering into the Japanese and Australian markets. “We would love to cater the Japanese market as they require products which we deal in. We understand the Japanese standards of quality compliance, which is AQL 1, level 3, where the sample size from the shipments is increased by almost 50% but the tolerance levels remains as original sample size. This makes the quality level more stringent, which only could be achieved by European suppliers in the past. However, we are working with top five retailers in the world and they are present in Japan as well, so our products are suitable to Japanese quality standards. Even Australia is coming up well for us so in future these two would be our focus market,” states Manish.
The company is also looking at increasing its decorative products sourcing in metal and wood. There is a huge market for it. “I was in UK recently and my customers are pushing us for it; we do huge apparel business with them,” adds Nikita. While talking about the economic scenario in Europe and the US, Manish feels that 2012 is not going to be a good year as European market in particular is pretty down. “This year can be worse than 2008, but for us things are good; orders are flowing in,” concludes Manish.
