‘We plan to have 200 studios by March next year’
Pepperfry, Ashish Shah says, has its goal set: to become a ‘high growth’ company. He talks to Vaishnavi Gupta about steadily increasing the furniture brand’s experiential store count, expanding to newer markets and categories, and enhancing its tech capabilities.
Pepperfry seems to have set an ambitious sales growth target. Is profitability no longer a priority?
We were close to profitability around August, 2020. We saw an upswing in business coming out of the first wave of Covid-19, from June 2020 to February 2021, before the second wave hit. We have seen profitability at close quarters through the last one and a half years, and, therefore, solving for that is not a big goal any longer. We have halved our losses two years in a row. The goal this year and beyond is to ensure that we become a high growth company. In pre-pandemic times, we were achieving 45-50% sales growth year-on-year (y-o-y). We are now targetting upwards of 50-60% y-o-y for the coming years.
With your IPO on the cards, what’s going to be the business strategy?
Ahead of the IPO, we are focussing on building our eight D2C private labels, including six furniture house brands, one mattress house brand and our modular house brand. These currently contribute 50% to our business.
The second goal is to get a sizable market share in the modular furniture market, which is a $7 billion opportunity. In September, we forayed into this business, primarily focussing on modular kitchens, wardrobes and entertainment units. This offering is available in markets like Mumbai, Bengaluru, Hyderabad and Chennai through exclusive Pepperfry modular studios.
What role will offline play in your retail strategy?
From the current 103, we plan to reach the 200 studios mark by March 2022. We will be targetting North India — places like Manali, Leh, and Chandigarh, and western UP.
In June this year, we launched a low-investment franchisee programme —franchisees can invest Rs 15 lakh and receive 15% of the total sale. We opened 20 studios a month since then, and crossed the 100 stores mark in September. These new studios have been launched in tier I, II and III cities, such as Aizawl, Raipur, Imphal and Bhopal.
What sort of tech enhancements has Pepperfry brought about over the past year?
We have doubled the size of our product and tech team this year. We opened a technology centre in Bengaluru in April, 2021. One of the goals is to enhance our catalogue by providing a ‘see it in your room’ AR experience. This is in the beta stage and can be experienced on a few products already on the Pepperfry mobile app. We will also foray into virtual reality (VR) which will allow customers to use a VR kit to virtually experience products in their rooms and make an informed buying decision. As the first step to this, we are converting our catalogue into 3D models, and launching our first VR room in the Indiranagar studio for Bengaluru customers by mid next year.
What significant changes have you observed in the way customers buy furniture?
During the peak of the pandemic, people spent a lot of time in their homes, and had to set up their small home offices. Due to this, we observed an increase in demand for study tables, chairs, etc. Dining tables and sofas also did well during that time as people started to spend a lot of time in front of the TV. The WFH range contributed 20% to our total business during the lockdown, and it will continue to do so.
The second major shift we observed was that earlier, people used to call carpenters to furnish their homes; but with the pandemic, they don’t have the confidence to do so. Consumers now prefer to buy readymade furniture, and that helps our business.
How are you gearing up for the festive season?
We have expanded our product portfolio by launching a Japandi furniture range, which constitutes chairs, benches and tables. We are also coming up with a Scandinavian furniture range soon. We have strengthened our distribution network by opening six distribution centres in the past four months. In the next three months, four more will be launched.
We are also working on starting a ‘Buy Now, Pay Later’ option on our website pre-Diwali. Further, we will introduce a new ‘furniture exchange’ feature. We want to double our sales this quarter.