Home-improvement major Hafele India has made strong headway in the evolving new global business environment. The company is working ever more innovatively and integrating its key product lines across the segments it’s present in. These include door hardware, architectural hardware, furniture fittings, lighting, kitchen fittings, appliances, and more. In our latest edition of Expert Talk with BuildingandInteriors, we present a detailed conversation with Frank Schloeder, Managing Director, Hafele South Asia. He discusses India’s role in the global home improvement supply chain, the upcoming product ranges of Hafele, the future of home improvement solutions, and allied subjects.
B&I: Markets worldwide are going through a re-adjustment of supply chains. Many multinationals in the Indian home-improvement space are shifting their sourcing to India. How is Hafele looking at and responding to this scenario? Do you see India as an important global supply-chain player?
Frank Schloeder: India is at a significant point in its growth journey, supported by initiatives like “Make in India” aimed at enhancing domestic manufacturing. Hafele fully supports this vision and trusts the Indian government’s efforts to build a robust local supply chain to meet the needs of India’s large population.
We recognize that transitioning to local sourcing comes with its own set of challenges, particularly with the implementation of Quality Control Orders (QCOs). The current timelines for these regulations are relatively short, making it a challenge for industries to adapt from established supply chains. We understand that moving from a dominant supply source to India is a significant undertaking that requires careful planning and investment, often taking between two to five years to achieve fully.
To facilitate this transition, we believe it’s important to approach it with a well-considered and holistic strategy. This includes allowing adequate time to clear existing stock and fostering a supportive manufacturing ecosystem. Introducing Production-Linked Incentives (PLIs) for both large companies
and SMEs can play a key role in stimulating job creation and economic growth. Additionally, improving the business environment through streamlined regulations will be beneficial for industry development.
In line with these efforts, Hafele remains committed to “Make in India” and continues to invest in local manufacturing while collaborating with both international and local partners. We are dedicated to advancing India’s economic development and strengthening domestic manufacturing capabilities.
B&I: What would be your focus for the next 1-2 years in terms of product categories (more inroads with existing ranges, new introductions, or category expansions) and geographies (where you see more growth)?
Frank Schloeder: Over the next 1-2 years, our focus will be on leveraging our existing strengths while exploring new opportunities. At Hafele, we started with a foundation in furniture fittings and modular kitchen solutions, gradually expanding into related categories such as appliances, surfaces, and lighting. This approach has allowed us to build a comprehensive suite of products tailored to the Indian market.
Looking ahead, we plan to continue expanding within our core categories, ensuring that all products remain interconnected and enhance the overall interior experience. While we already offer a broad range of tailored home improvement solutions, there is potential for further growth in specific areas such as e-commerce and modern trade, particularly for appliances. Our goal is to enhance our presence in these channels and reach more consumers directly.
Geographically, we aim to deepen our footprint in tier two and tier three cities, building on our existing network of 15,000 touchpoints. We will focus on maximizing the potential of our current channels and expanding horizontally through new partnerships.
To support this strategy, we have recently introduced two products: the MatrixBox Premium+ and Free Space. The Hafele MatrixBox Premium+ drawer system, features a fully flushed design, enhanced soft-close technology, and a range of finishes to suit various applications. The Hafele Free Space fittings bring innovative flap mechanisms that offer greater flexibility and elegance in furniture design. Both products exemplify our commitment to innovation and quality, aligning with our strategic goals and enhancing our overall product portfolio.
Matrixbox Premium+
Hafele Free Space
Overall, our strategy combines strengthening our product offerings with expanding our reach in both existing and new markets, ensuring we continue to meet the evolving needs of our customers.
B&I: Hafele has a good recall/connection with the modular kitchen market in India. How do you see this segment in the short to medium term?
Frank Schloeder: The modular kitchens segment in India, which currently represents about 20% of the overall market, is expected to continue growing rapidly in the short to medium term. Hafele, having pioneered the modular kitchen concept in India 20 years ago, has witnessed significant market development since then. The segment is expanding at a faster pace compared to the total kitchen market, driven by rising consumer aspirations, increased disposable incomes, and a booming real estate sector.
Indian consumers still expect a high degree of customization and face unique challenges such as climate conditions and specific cooking practices. To address these needs, Hafele uses materials like marine ply and quartz, which are suited for the demanding conditions of Indian modular kitchens. Our focus on these specialized materials ensures durability and performance, aligning with local preferences and conditions.
In summary, the modular kitchen market in India is on an upward trajectory and Hafele’s expertise and commitment to addressing market-specific challenges position us well for continued success.
B&I: How do you see the market for premium home-improvement solutions performing over the next 1-2 years? Is there anything specific that catches your attention in this segment?
Frank Schloeder: The market for premium home-improvement solutions in India is poised for significant growth over the next 1-2 years. In 2023, India’s luxury goods market was the second-fastest growing globally, with a remarkable 33% growth rate, reaching approximately €7,750 million. The home appliances category is expected to continue its upward trajectory in the coming 3-4 years, aligning with broader trends in luxury and high-end home improvements.
Several factors are driving this growth:
- Rising Incomes: India is projected to see a significant increase in the population with higher incomes by 2034, which will boost demand for premium home-improvement solutions.
- Consumer Mindset: Indian luxury consumers are motivated by more than just price. They value legacy, high quality, design and aesthetics, expertise, and sustainability. These elements contribute to a strong value proposition and build trust in premium brands.
- Urbanization and Aspirational Trends: The trend towards urbanization and aspirational living further fuels the demand for luxury home improvement solutions.
A significant trend in this segment is the integration of lighting into architectural design. As architecture evolves, light is emerging as a new dimension of design. Hafele’s expertise in combining furniture and architectural lighting stands out, offering a synchronized approach that enhances both functionality and aesthetics. This focus on innovative lighting solutions provides a unique advantage, as few competitors offer such a comprehensive design approach.
B&I: The digital world is ‘democratising’ information in the home-improvement space, resulting in the entry of a large number of ‘end-customers’ in the traditionally popular B2B spaces. At BuildingandInteriors.com, we have always believed that this evolution/amalgamation of interests from B2B (say specifiers or retailers) and B2C will help quality brands. Your take on this?
Frank Schloeder: The digital world is indeed transforming the home-improvement space by democratizing information and bringing more end-customers into traditionally B2B areas. This shift creates new opportunities and challenges for brands.
At Hafele, we have increasingly embraced a B2C approach, especially with products like appliances and digital locks that are well-suited for direct consumer engagement. This strategy allows us to connect directly with end consumers, who are crucial in the final purchasing decision.
Integrating B2B and B2C approaches is key. By leveraging digital platforms and engaging directly with consumers while maintaining strong relationships with industry professionals, brands can effectively navigate this evolving landscape. Platforms like BuildingandInteriors.com are valuable in bridging the gap between B2B and B2C, benefiting quality brands in this dynamic environment.
B&I: After-sales service is a big differentiator for brands these days, more so since the average ticket price has gone up. Can you talk us through the service aspect of your business?
Frank Schloeder: After-sales service is indeed a crucial differentiator in today’s market, especially as average ticket prices rise. At Hafele, we place a high emphasis on providing a comprehensive and effective service network to support our products and ensure customer satisfaction.
We have established an extensive service network that is unmatched in the industry. This includes over 125 Hafele service centres and more than 300 service engineers across India, enabling us to deliver timely and efficient service. Our network covers a wide range of services, from installation to maintenance.
When we entered the appliances market, we significantly enhanced our service capabilities to meet the high expectations of Indian consumers for immediate resolution. We prioritize rapid and efficient service, including weekend support when necessary. Our service network spans Tier 1, Tier 2, and Tier 3 cities, with the capacity to handle up to 30,000 service calls per month. We also offer an extended warranty of up to 4 years on selected products, providing added assurance to our customers.
Our commitment to quality extends beyond service. We have proactive measures in place for product testing and quality assurance to ensure top-notch product performance. Additionally, our dedicated spare parts department specializes in managing and supplying spare parts, ensuring that we can quickly address any post-purchase needs.
Our customers’ working environments are becoming increasingly complex, and their markets are becoming ever more demanding. This drives our motivation to do everything in our power to help our customers be successful in these challenging times. To address these evolving needs, we’ve introduced an initiative called Service+, which adds value by building expertise, increasing productivity, providing customized solutions, and assisting with post-purchase requirements.
We view customer service not just as a function but as a core part of our business culture. Our goal is to move beyond basic customer satisfaction to achieve customer delight. This involves continuous improvement, investing in training, and scaling up our service capabilities to consistently meet and exceed customer expectations.
We measure our performance using global KPIs, including customer satisfaction and Net Promoter Scores. While there is always room for improvement, the feedback from our customers is generally very positive. Our dedication to after-sales service sets us apart, particularly as we integrate B2C approaches and strive to deliver exceptional experiences in a competitive market.
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