Burned by start-ups, Century Ply shuts Nesta furniture shops, shifts to e-comm

Century Ply is abandoning its four-year-old business of furniture retailing by closing down all its remaining showrooms under the brand Nesta. The company is now moving to an online model called Nestopia which has started operation in Mumbai. After studying the business there for a year, Century Ply would move to other cities like Pune and Bangalore.

"Before the end of the current financial year, we would be closing all the nine remaining furniture showrooms we have. The stores in the south have already been shut and those remaining in the east like Kolkata, Siliguri and Ranchi are being wound up," Century Plyboard director Keshav Bhajanka said.

Century Ply, among the leading plywood and particle board manufacturers in the country, in 2012 ventured into readymade furniture retailing, opening a chain of outlets under the brand Nesta, starting off with two outlets in Kolkata and Bangalore. By the beginning of the calendar year 2015, it was working on 20 such outlets under franchisee model. It also forayed into modular kitchens, a market that was seen as having a potential of Rs 6,000 crore.

However, the emergence of furniture e-commerce start-ups with loads of cash to burn played spoilsport.

"The chain of furniture showrooms is facing a big challenge from the e-commerce space. While we need to maintain a mark-up of 35%, the online retailers are managing with 5%-10%. None of the shops are making profits. We are now going for a design-your-own-furniture model popular in Europe and US," said Sajjan Bhajanka, chairman, Century Ply.

Century Ply forayed into online "interior design and build" business model a year ago, starting off with Mumbai through Nestopia.com owned by Century Infotech.

The outfit, which operates as a start-up model became a subsidiary of Century Ply in May 2015 with the parent company raising its investments, taking its stake from 50% to 75%.

"Nestopia has its own call centre, designers, contractors and partner vendors like Asian Paints. Our usual average ticket size is Rs 2-3 lakh going up a maximum size of Rs 30 lakh," Sanjay Agarwal, managing director, said during a press conference.

Once the business model proves to be successful in Mumbai, Century Ply would start looking at other cities.

"We want to be 100% sure about the workability of the business model before venturing beyond Mumbai. We don't want to keep on funding unless we are sure about handling the business. Once it happens, we would look at expanding to other cities like Pune, Delhi and Bangalore. But this year we would remain in Mumbai," Agarwal said.