India’s Rs 10,000 crore mattress industry is witnessing a continuous challenge from foreign brands. The irony of this market is that as these foreign friends are making a beeline to a market which promises a huge slice the market is growing only at a rate of 8.2 percent.
That the Indian market is able to absorb both Indian brands and the foreign ones is a testimony to the size it offers. “It is not easy for an international brand to make foray into the Indian market,” says Raghav Menon, CEO Mattress Division at Sobha.
International players soon discover that the game in the Indian market is more of managing real estate in terms of the retail stores than the sales of the sleeping products. One of the key strategies adopted by international markets is opening of sleeping experience stores which makes it difficult to penetrate in India since this requires significant investment in buying retail space. Indian real estate scenario is not the best, at least at the moment, to adopt this strategy, say experts.
There is indeed a silver lining in the dark clouds for international brands. E-Commerce is coming to their aid. With online convenience store and shopping hungry Indian consumers, many international brands hope to hit it big. Be it Casper or Amerisleep, the Indian consumer can easily reach out to the best brand out there.
Industry experts are quick to point out that international brands need to adopt a India centric game plan. India’s market is mainly made up of the unorganised sector which accounts for 60 percent of the total market. The international brands makeup a mere 10 percent share.
“When the local brands have been finding it tough to break the grip of unorganised sector in the sleeping products industry, it is not easy for international brands to simply walk in and take over the market,” says an industry expert.
Look at how long it took the big brands that entered India including KFC, McDonalds, Kellogs for instance. Food brands are similar to the sleeping product brands, both cater to personal needs of the consumer and both industries have significant presence of unorganised players.
All the brands mentioned earlier went through a long winded learning process understanding the Indian consumer, the culture and sub-culture which varies from region to region. Studies have found that culture is among the biggest factors for brands to survive and thrive. The second, most important factor is the understanding of the value system of the society which informs how an individual or group reacts to a product. As Matthew Eyring in an HBR article says, most companies struggle “not because they can’t create viable offerings but because they get their business model wrong” (2011). Many international brands have tried to simply import their global offerings into Indian market and hoping to sell. Without establishing a firm foothold by investing in local manufacturing, localization of components or fine tuning their product offerings to suit every micro-market preferences, international brands do not stand a chance, says a report. Getting the business model ♥right, identifying a fundamentally strong profit formula which is backed by a flexible operating model is what is necessary for international brands to thrive.
The advantage the local brands have over the international brands is that most of these come as second nature. For instance, McD’s had to adopt paneer tikka burgers after much thought while the local fast food joint has been thriving on this formula for decades.
Take for instance the case of Paper Boat, while the packaging was innovative and appealed to the upwordly-mobile, the beverage could not hit it big until it found its sweet spot — using local fruit juices and naming convention and sold during local events. Today, Paper Boat features in Navaratri festivals, local town and village gatherings and weddings. Same goes to the sleeping mattresses, identifying the cultural artefact that influences sleep will inform the right product attribute.
Some international brands such as the Emirates and Serta are indeed following this formula. With the opening up of the single branded retail chain for 100 percent FDI more action is expected in this segment.
Some international brands thriving in India
- Therapy mattress
- Sleep number
- King Koil
- Sleepy cat
- Boston mattress
- Emerates sleep systems
Indian brands have an edge over their international brands at home. There are several ways a local brand can respond to an international brand invasion. One, work on micro-markets that have specific product attributes. For instance, sports people require a mattress that can help their muscle relax and recoup while they sleep so that they are fit as fiddle for the next day’s workout. What works best for them, foam, gel, or hyper elastic polymer.
Tweaking their distribution system and reaching out to the remotest part of the country with their sleeping products, offering the brand experience before a foreign brand invades is another opportunity. Or a little variation where tailoring a product that appeals to the cost conscious consumer.
As they say, sometimes offence is the best mode of defence. What if Indian brands take their brands abroad. There are several advantages that an Indian brand will immediately have. First, most western markets are well educated about branded mattresses, the unorganised sector is marginal to zero. Second, the cost of production gives it a cost advantage in foreign markets. Third, Made In India is respectable now thanks to Make In India. One does not have to sell India when it comes to sleeping products.
In a way, the advent of international brands is making Indian brands rethink their value propositions and competitive advantage. The question of what we can do when brands from outside come in or how can we make our base stronger and grow in the light of this new entrants are the questions one can hear in private conversation among business owners.
The answer to this is simple. Go back to the basics and identify your competitive advantage. Look at what Coca-Cola or Ikea did when they entered India. What lessons do they provide. The time to sit back and think that nobody can beat us in our backyard is gone. What is your strategy? Are you a contender, or a defender. Or are you an extender or dodger? Each of these defines how you will respond to the foreign brand’s entry. More international sleeping mattress brands will enter Indian market. This should be seen as a positive change by the Indian brands.