“We focus on attention to detail while blending unique manufacturing techniques with contemporary design to deliver a truly distinctive product experience and offer luxurious offerings to customers. Almost all products under Stanley Level Next and Stanley Boutique brands include handcrafted elements,” says Shubha pointing out the craftswomen at work.

“Over the years, we have developed long-standing relationships with our vendors which allow us to source quality raw materials, including leather and Forest Stewardship Council (FSC) certified timber used in our operations,” says Suresh. The company uses premium quality leather sourced from green certified tanneries across Europe while timber is sourced from vendors across South-East Asia.

Stanley stores are the first step towards entering the world of luxury furniture for its customers. Over the years, it has significantly expanded its network of stores and as of 30 June, 2023, it has 34 ‘company owned and company operated’ or COCO stores all located in the major metro cities such as Bengaluru, Chennai, New Delhi, Mumbai and Hyderabad and 21 ‘franchisee-owned and franchisee-operated’ or FOFO stores in 22 cities across nine states and Union Territories.

The company has also experimented to include different store formats – Stanley Level Next and Sofas & More by Stanley – at a single location at Hosur Road, Bengaluru. This provides potential customers with an opportunity to experience the complete Stanley brand experience under one roof.

The increase in national GDP and the growth witnessed by the Indian economy in the last decade has created a new upper middle class with demands for luxury and premium housing, says the RedSeer report. This has led to an increase in demand for high-end furniture. The increasing demand for housing, interior design services, furnished options, renovations, and evolving housing trends all contribute to the expansion of the furniture market as it caters to the furnishing needs of properties in the real estate sector.

Ultra-luxury homes (priced at Rs40 crore each) have had an unprecedented bull-run in 2023, with both the number of sales and sales value of such assets hitting new peaks. The latest ANAROCK Research data finds that till the end of November 2023 there has been a staggering 247 per cent yearly surge in terms of total sales value of ultra-luxury homes against the whole of 2022.

Anuj Puri, Chairman – Anarock Group, says: “A total of 58 ultra-luxury homes have been sold across the top 7 cities in 2023 to date, for a collective sales value of approximately Rs4,063 crore. In contrast, the whole of 2022 saw a total of 13 ultra-luxury homes sold in these cities for a total sales value of approximately Rs1,170 crore. In terms of ultra-luxury property sales, 2023 has already made Indian real estate history even before it is over.”

The FOMO factor 

“Demand for both luxury and ultra-luxury properties has surged since the pandemic, with HNIs and ultra-HNIs buying such homes for investment, personal use, or both,” says Puri.

The upsurge in demand for ultra-luxury homes can also be traced to the reshuffling of HNI investment portfolios amid the anticipated volatility in the stock market due to the existing geopolitical tensions. Not surprisingly, leading Grade A developers have also been scaling up their new supply in the ultra-luxury category. “Among wealthy Indians, there is a very distinct FOMO – fear of missing out – aspect to securing the most desirable options before someone else does,” says Puri.

Of at least 58 ultra-luxury properties sold across the top seven cities until November, Mumbai alone sold 53 units priced at Rs40 crore each – a 91 per cent share of the total deals across the top cities. At least four separate ultra-luxury home deals worth at Rs40 crore each were closed in Delhi-NCR – two apartments in Gurgaon and two bungalows in New Delhi. Hyderabad witnessed one residential deal worth Rs40 crore at Jubilee Hills, says Anarock.

Of the PFCE – Private Final Consumption Expenditure – in 2022, luxury accounted for 3 per cent and super-premium 5 per cent. Luxury consumption grew at a CAGR of 26 per cent over the last 5 years whereas super-premium consumption grew at a CAGR of 21 per cent over the same time, says the RedSeer report.

Affluent households are the drivers of luxury/super-premium consumption in India. These households, characterised by their high levels of disposable income, often seek exclusive luxurious experiences. Affluent households accounted for approximately 70-75 per cent of the total luxury/super-premium consumption in 2022.

Suresh says home buyers with these kinds of budgets typically set aside about 20 per cent of the cost of the house for furnishing “and it is a good market for us”. Being the data-oriented person that he is, Suresh keeps his tabs on research firms and keeps his marketing teams on their toes.

Affluent households are projected to experience a growth rate of 10 per cent annually between 2022-27, reaching a total of 13 million by 2027. This growth is attributed to various factors, including rising income, access to quality education, increased opportunities, and significant investments. As per RedSeer estimates, affluent households drive approximately 55 per cent of the consumption towards luxury/super-premium goods and services, estimated to be $130-140 billion.

Furthermore, the number of ultra-high net worth individuals (UHNWIs) (individuals with a net worth over $30 million) will reach approximately 19,000 individuals by 2027, up from 12,000 in 2022. The population of high-net-worth individuals (HNIs) (with asset values over $1 million) in India rose from around 0.79 million to 0.83 million between 2021 and 2022, whereas the global HNI population experienced a decline of 3.3 per cent in the same year.

As incomes increase, upward mobility towards higher income groups is witnessed among households, which indicates high consumption that in turn augurs well for companies such as Stanley. Pradeep Kumar Mishra, CFO of Stanley, says over the last three fiscals, the company has consistently grown its revenue from operations. The gross profit has also been increasing over the same period. The company has been consistently profitable over the last 10 years. “We believe this is a result of our ability to address customer requirements, our wide product portfolio and the Stanley brand recall,” he says.

For the Fiscal year 2023, the consolidated revenue from operations increased 43.39 per cent to Rs419 crore against Rs292.20 crore a year ago, primarily due to an increase in retail sales, Mishra says. Net profit increased by 50.65 per cent from Rs23.22 crore in fiscal 2022 to Rs34.98 crore in fiscal 2023. EBITDA was Rs82.72 crore in Fiscal 2023 compared to Rs59.01crore in Fiscal 2022, while the EBITDA Margin was 19.74 per cent in Fiscal 2023 compared to 20.19 per cent in Fiscal 2022.

Stanley has strong after-sales support and services teams in order to resolve issues that customers may encounter in a seamless manner. This customer satisfaction leads to valuable word-of-mouth publicity, as positive experiences are shared with friends, family, and colleagues. “We believe that these endorsements serve as testimonials, further enhancing the appeal of the Stanley brand and attract potential customers,” Suresh explains.

Stanley’s product portfolio includes sofas, cabinetry and furniture for living rooms, dining rooms, family rooms, kitchens, bedrooms (including bedding products), and home offices, offering complete home solutions including installations.

300 colours of leather

Customers can select Stanley products from across multiple catalogues, designs, configurations and SKUs with options offered in 10 different types and over 300 colours of leathers and fabrics that can be used in various combinations. “Show me another company that offers you 300 colours in leather,” says Suresh and points out that “we have developed this expertise with painstaking work over the decades”. And that’s how, he says, “we offer a diverse range of furniture and home solutions”.

He adds that the growing shift in consumer behaviour towards established branded stores will further help the company to grow its market share and target new customers.

There has been a rapid increase in the millennial population (anyone born between 1981 and 1996 ages 25 to 40 in 2021) and Gen Z population (anyone born between 1996 and 2010). These groups embrace luxury/super-premium products as they prioritise the value offered by these products. Also, the rise of accessible luxury/super-premium brands and entry level luxury/super-premium products has made luxury attainable for millennials and Generation Z (Gen Z).

Millennials and Gen Z populations are also digital natives and continuously engage with online content and expect highly sophisticated digital experiences. Luxury/super-premium brands have been able to rise to their expectations and always offer experiences that are worth the costs that are associated with the products, the RedSeer report says.

India has the largest population base of Gen Z and Millennials in the world. They offer unprecedented opportunities for brands and will significantly drive the luxury/super-premium market in the country. The consumer landscape has witnessed a notable trend of premium products being purchased with greater frequency. Consumers place a greater emphasis on quality, durability, and the overall value proposition of their purchases. They are increasingly inclined to invest in premium products that offer superior craftsmanship, advanced features, and enhanced performance.

With the growth of the organised retail market, Indian retail is moving towards premiumisation. The discretionary (excluding the essential categories like food, grocery, and pharma) portion of the retail market was sized at approximately $220 billion in 2017. The discretionary retail market saw a sharp decline in 2020 due to Covid as spending decreased on non-essential goods.

However, discretionary retail has already begun recovering and is projected to grow at a rate of 18 per cent, reaching approximately $381 billion by 2025. With the rise in discretionary spending, consumers will exhibit a shift towards luxury/super-premium goods. This shift will be driven by several factors, including the need for high-quality products, an affinity for well-established brands, and a desire for personalised and customised goods. As consumers seek enhanced product experiences and exclusivity, the demand for luxury/super-premium items is expected to further grow.

According to experts, luxury/super-premium spending in tier 2 cities in India has grown 30 times more than tier 1 cities. The luxury/super-premium market has expanded beyond the major metros such as Delhi, Mumbai, and Bangalore. Automobiles, fashion apparels, and jewellery are the prominent categories witnessing significant luxury/super-premium spending in tier II and tier III cities.

The luxury/super-premium car market India witnessed an upsurge in the growth of luxury car sales in 2022 when compared to 2021. Approximately 35,000 units of premium cars (cars costing above Rs40 lakh ex-showroom) were sold in 2022. The sale of true luxury cars (costing Rs2 crore and above) also experienced a 50 per cent increase over 4 years. In 2022, approximately 450 units were sold, compared to 300 units in 2021 and 325 units in 2018. Despite the rise in inflation and recessionary concerns, luxury cars have observed an increase in the units sold in the first quarter of 2023, indicating extensive demand in the market.

According to industry experts, approximately 9,500 luxury cars were sold in the first quarter, representing a 10 per cent increase compared to the same quarter of the previous year. Luxury/super-premium watch market demand for luxury/super- premium watches also soared in India in 2022. As per the Federation of the Swiss Watch Industry, watch distributors in India imported luxury watches worth $200 million rising from $105 million in 2020.

Kapoor Watch Co, the Indian retailer of Audemars Piguet, Rolex, Bvlgari, Cartier, Omega, and Tag Heuer brands, among others, also saw a 50 per cent jump in revenue from pre-Covid days, in 2022. The company reported revenue of Rs340 crore in Fiscal 2022 compared to Rs246 crore in Fiscal 2020.

Expanding product portfolio

In Fiscal 2021, the organised market accounted for 23 per cent of the total furniture and home goods market, which increased to 26 per cent by Fiscal 2023, according to the RedSeer Report. By Fiscal 2027, the organised market is expected to contribute to 35 per cent of the total market share, exhibiting an annual growth rate of 36 per cent, which surpasses the growth rate of the traditional market.

“We will target these opportunities and we are committed to expanding our product portfolio at our stores,” says Suresh. Mishra explains the company has witnessed growth in its average billing size per customer. For instance, at the store located at Sadashivnagar in Bengaluru where it has introduced complete home solution products over the years, the average billing size per customer (combined over the financial year) has grown from Rs3 lakh in Fiscal 2021 to Rs4.9 lakh in Fiscal 2022 and further to Rs6.6 lakh in Fiscal 2023.

Stanley retails its furniture products primarily through three store formats, each catering to a specific segment – ultra-luxury, luxury and super premium. Stanley Level Next targets customers seeking ultra-luxury home solution, Stanley Boutique caters to the luxury category, while Sofas & More by Stanley strives to attract customers interested in super premium price points.

Stanley Lifestyles Ltd is going public and it has already received final observation from the capital markets regulator, the Securities and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO). The company filed the DRHP for its initial public offering with SEBI in September last year. The IPO, with a face value of Rs2 consists of a fresh issue of up to Rs200 crore and an offer for sale (OFS) of up to 9.13 million equity shares by the promoter and investor selling shareholders.

As per the DRHP, the proceeds from the fresh issue to the tune of Rs90.13 crore will be used for opening new stores, Rs39.99 crore for opening the anchor stores, Rs10.04 crore for renovation of the existing stores, and Rs8.18 crore for capital expenditure requirements for the purchase of new machinery and equipment by the company and its material subsidiary, SOSL, and general corporate purposes.

A staunch supporter of Modi’s economics, Suresh is confident that as India’s growth zooms from $3 trillion to $5 trillion, the consumption pattern will also witness a sea change. “I am super optimistic about the country’s future,” he says as Stanley guns for the rapidly expanding luxury market.

The government’s Make in India initiative will further lead to an increase in demand for products such as Stanley’s. In fact, the Government of India is in discussions with the major players in the industry, including Stanley, to implement production-linked incentives for the furniture industry. “Our track record of providing high quality indigenously manufactured products makes us uniquely positioned to capitalise on these emerging trends and demands,” concludes Suresh.