Will India finally get to sleep well? Will the Billion Dollar Indian mattress industry get a leg up in much anticipated sharp V-shaped recovery? If the economic experts are to be believed, then India is set to grow its GDP at 11.5% in the coming fiscal year. This is not some happy-go-lucky economist pulling a fast one, but the prediction comes from the International Monetary Fund.
If this comes true, India will emerge as the only front-line nation to record a double-digit growth amid a crippling pandemic and claim the status of the world’s fastest-growing major economy, beating China.“India will be the only major economy to register double-digit growth this year, followed by China, which is expected to grow by 8.1% in 2021,” IMF report stated.
Riding on this strong recovery, consumer durables is expected to clock north of 20% growth rate in the coming year. This is great news for the mattress industry which usually follows closely, the growth trajectory of the consumer durables.
Consumer confidence is on the rise driven by growing brand awareness, easier access to products, online trend and fast-changing lifestyle. The government policies and regulatory frameworks on FDI in multi-brand and 100% in single-brand retail along with other frameworks are going to be the key factors in leading a growth.
In economic terms, spending in a close sector such as consumer durables will drive up spending in close neighbourhood sectors including the mattress industry. Wings of a sharp recovery are already visible if one were to factor in the numbers emanating from Department for Promotion of Industry and Internal Trade (DPIIT), between April 2000-March 2020, FDI inflow in the electronics sector stood at US$ 2.79 billion.
One of the biggest investor sentiment boosters is the November 11 Union Cabinet approval of Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods and textiles) to boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.
Thanks to the pandemic, most of the key mattress players in India can put into place profit-maximizing measures – impacting their PBIT and EBITA positively. The overall economic growth spending in key sectors will further boost consumer confidence, which will return as revenues for this sector.
In its report, IMF gave a huge thumbs up to India while estimating a global contraction of 3.5% in 2020, showing stronger-than-expected momentum in the second half of 2020. It also predicted global growth of 5.5% in 2021, citing expectations of a vaccine-powered growth in the year. In a separate report released by the United Nations Department of Economic and Social Affairs estimated India’s economy contract by 9.6% in 2020, while it is projected to rise at 7.3% in 2021.
Consumer Durable industry is expected to growth north of 20% in the coming year and the mattress industry, which usually follows the trajectory of the former, is also likely to grow at a faster clip
India’s Gross Domestic Product growth rate had shrunk by 7.5% in the second quarter (July-September), after contracting by an unprecedented 23.9% in the first three month period (April-June) of the financial year.
It is noteworthy that the Economic Survey 2021 has also pegged India’s GDP growth at 11% just behind the IMF’s projection.
FITCH SOLUTIONS PREDICTIONS
After a COVID-19 pandemic-led contraction in consumer spending in 2020, household spending will return to growth in 2021, expanding by as much as 6.6 per cent, Fitch Solutions says. Fitch Solutions said all of the main consumer spending categories will return to positive growth in 2021.
“We forecast household spending in India to return to growth in 2021 after the COVID-19 pandemic led to a contraction in consumer spending in 2020,” it said.
In its economic report released recently, the government said it is expecting the economy to rebound by 11 per cent in the coming fiscal year. With India now rolling out the world’s largest vaccination drive with plans to inoculate about 300 million people by August, most businesses are pinning their hopes on medical intervention to boost demand back to where it was before the pandemic hit. Overall it looks positive for all business sectors.
The growth acceleration in the mattress market is largely led by the rise in the income levels and health consciousness of the consumers, development of the medical and hospital infrastructure in the country and the expected growth in the real estate and hospitality sectors.
A visible shift is observed in the consumers’ perspective, where the main focus is on the comfort and Hygiene of the sleeping surface when it comes to choosing a mattress. Increased income levels and infrastructural developments, in terms of the increased number of residential units and hotels in the country, and the rising demand for construction in both residential and institutional is growing in India, also contribute to growing mattress needs.
In line with the changing times, mattress manufacturing companies that include both offline and online retailers, have adopted innovative strategies to ensure customer satisfaction. It is expected to witness several new trends emerging in the mattress industry. According to Mordor Intelligence report, the demand for customized and luxury mattresses is expected to increase, whereas companies may come up with new techniques to utilize their resources and technologies better. Mattresses are no longer considered as mere consumer durables, they are an indicator of the quality of life. With the rising awareness regarding mattress types and brands, comfort and hygiene are the most important factor for increased branded mattress preference. Now more than ever, people want a mattress, which boosts their sleeping experience, adds to their comfort, and provides luxury, enriching the entire sleep experience. Hence, the year 2021 will further witness a rise in the demand and production of luxury branded mattresses.
It is good news for the entire value chain of mattress manufacturing. Be it a raw material sourcing, manufacturing, fabric manufacturers, retailers, and logistic companies, mattress demand will provide growth opportunity. The Indian mattress industry ecosystem has to take note of this sudden surge in demand and gear up to meet the market expectations.
Demand for mattresses is driven by consumer confidence and disposable income. With post-COVID-19 era, the profitability of individual companies depends on efficient operations and effective marketing. All companies involved in mattress manufacturing can compete by offering new technologies or better customer service, or by focusing on regional markets. The year 2021 will be a major year for all these firms, and it is the best time to make it big. Are you ready?