Recently, Indian exporters have turned their attention to the burgeoning domestic home product market. They are now tailoring their offerings to the local market, devising distribution strategies, and even opening their own stores. This shift has been primarily due to international markets, particularly Europe, becoming less enticing.

Short- and Medium-term Perspectives

European consumers are spending considerably less in real terms as inflation erodes their purchasing power. In this context, wages are not keeping pace with rising consumer prices. Furthermore, there’s a distinct shift in consumer behaviour. Throughout the COVID-19 pandemic, consumers’ interests largely revolved around home improvements and lifestyle upgrades. However, these interests are dwindling, with travel and outdoor activities taking precedence, relegating home-related preferences to a lesser priority.

Also, consumers face an immediate need for significant expenditure on new energy-efficient cars and household heating infrastructure upgrades, prompted by intense encouragement from the EU and national governments of major countries like the UK, Germany, and France.

The European construction industry’s downturn is another major factor. The decrease in new buildings means less demand for home products, in stark contrast to the previous decade. This slump results from:

a) higher interest rates,

b) stricter credit worthiness requirements to avoid banking crises,

c) skyrocketing costs for building and renovation materials, and

d) a scarcity of skilled labour.

Long-term Perspective

In the long term, textile preferences for housing are still on the decline. Carpets and textile wall coverings are not expected to regain popularity any time soon, with rugs being the preferred option for many consumers. On the other hand, certain home textiles, like tablecloths and curtains, are seeing a consistent rise in preference in Europe and the US.

Most notably, Europe’s aging population is resulting in fewer young households, leading to reduced budgets for home textiles and other goods. Hence, the already low growth rates compared to other countries are likely to decrease further.

Another critical factor for Indian and other Far East suppliers: European distributors are seeking shorter, more reliable supply chains, which require larger European stockpiles.

The Inward Focus: Why it Matters for India

Several crucial factors explain why Indian home textile exporters are focusing on the domestic market.

Population Growth: India recently surpassed China as the world’s most populous nation, thanks to a relatively high fertility rate. This growth, coupled with rising disposable incomes, will inevitably lead to an increase in household numbers and a consequent surge in demand for home products over both the medium and long term.

The Indian domestic market for home textiles has seen rapid growth in recent years, fuelled by increasing urbanisation, rising disposable incomes, and evolving lifestyles. Hence, many Indian home textile exporters see a significant opportunity to tap into this market.

Logistics and Supply Chain Disruptions: The pandemic has wreaked havoc on global supply chains, hampering Indian home textile exporters’ abilities to reach international markets. By focusing on the domestic market, exporters can mitigate these supply chain risks and maintain a steady flow of business.

Government Initiatives: The Indian government has launched various initiatives to bolster domestic manufacturing, including the ‘Make in India’ campaign, aimed at promoting local manufacturing and exports. These initiatives have created a conducive environment for Indian home textile exporters to concentrate on the domestic market.