Daybreak - How Wooden Street is challenging furniture giants in India with its Goldilocks game plan

Episode Date: February 27, 2025

Ten years in the business and the custom furniture maker Wooden Street has left its older peers far behind. If you ask the company’s founder and chief executive Lokendra Singh Ranawat, he will tell you that the Covid pandemic was when the company's fortunes changed. Within two years of the pandemic, the company’s top line nearly quadrupled to Rs 130 crore. It also claims to have closed the 2024 financial year with a revenue of Rs 340 crore. The company has also managed to attract global investors, including the likes of Premji Invest. In December 2024, Wooden Street raised a little over Rs 350 crore in a series C round – which happens to be one of the largest investments into India’s home and furniture segment in a long time. The founder says, around this time, everyone became a Pinterest-inspired interior designer.  Ranawat noticed people were  constantly thinking of new ways to spruce up and upgrade different parts of their homes. And it’s that newfound obsession with home improvement that proved to be the wind beneath Wooden Street’s wings. And what set Wooden Street apart from its peers was its customisation strategy that it calls the ‘Goldilocks zone’. Tune in.Daybreak is now on WhatsApp at [phone]. Text us and tell us what you thought of the episode!Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.The Ken is hosting its first live subscriber event! Join two long-term and contrarian CEOs, Nithin Kamath of Zerodha and Deepak Shenoy of Capitalmind, as they discuss the mental models, decision making frameworks, and potential outcomes related to a very real possibility: an extended stock market winter that lasts 24 months or more. Click here to buy your tickets. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Ten years into the business and the customer furniture maker Wooden Street has left its older peers far behind. If you ask the company's founder and chief executive, Locendra Singh Renawut,

he will tell you that the company's fortunes changed during the COVID-19. pandemic. In his words, people went a little crazy back then. Suddenly, everybody was a Pinterest-inspired interior designer. He noticed that they were all constantly thinking of new ways to spruce up and upgrade different parts of their homes from their bedrooms to their balconies. And it is that newfound obsession with home improvement that proved to be the wind beneath Wooden Street's wings. You see, what sets Wooden Street apart from its peers is something that it calls the Goldilocks zone. Now, I'm sure you're all familiar with the age-old fairy tale about a little girl who arrives at the family home of three bears and keeps looking for just the right thing to eat,

just the right place to sit, and the right bed to lay down on. Wooden Street's approach to customization draws from that little girl's experience in a sense, because they don't want to offer too much or too little customization, but just the right amount. So they allow their customers to play around with design, fabric, color and paint in a way that most of their peers don't. But at the same time, it won't let you alter things like dimensions. And this customization strategy has really worked for it over the years. Within two years into the pandemic, the company's top line nearly quadruble to over 130 crore rupees. It has also claimed to have closed the 2024 financial year with a revenue of 340 crores. The company has also managed to

to attract global investors, including the likes of Premji Invest. In December 2024, Wooden Street raised a little over 350 crore rupees in a Series C round, which happens to be the largest investments into India's home and furniture segment in many, many years. This is even more impressive when you consider the state of the Indian furniture market today. Let me put it this way. This particular sector is a lot like a stubborn piece of hardwood. It is difficult to work with and even more difficult to shape into a successful business model,

which is why most of the early movers, the likes of pepper fry and urban ladder have struggled to grow beyond a point. In contrast, by limiting customization to the visible and tactile elements and standardizing the invisible stuff, Wooden Street has managed to nail a growth formula that eludes most of its competitors. But that does not change the fact that this is a tough. business and scaling it beyond a point is very difficult. It also does not help that there is another Goldilocks in town. IKEA. Welcome to Daybreak, a business podcast from the Ken. I'm your host Nick Dar Sharma and I don't chase the news cycle. Instead, every day of the week, my colleague Rahil Filippo and I will come to you with one business story that is worth understanding and worth your time.

Today is Thursday, the 27th of February. Wooden Street's furniture outlets are like any other store. Everywhere you look, you're greeted by beds, sofas, coffee tables, the works. The catch is, you can't actually buy any of it. The company does not sell any of its display pieces. And yet, nearly 80% of its sales happens through offline channels. The idea is for customers to get a closer look at the product in store and then customize it as required.

For example, if you want to add a drawer or a wardrobe or say even a specific kind of fabric to the sofa, wooden street will source the material for you and then make the furniture. But there is a line beyond which the company does not venture. Shrikan Thayer, the co-founder and CEO of Home Lane, a Bangalore-based home interior and renovation platform, put it quite well. He said trying to accommodate all of the customer's requests is like running a fine dining restaurant. There are a lot of options to choose from and the chef cooks the food the way a customer wants it, no matter the time and the money that it takes. Iyer explained that is why customization often is the enemy of scaling one's business. He would know because he learned that lesson

the hard way. Home Lane took the full customization route when it launched in 2014. It completely renovated apartments and even customized TV sets and other furniture. Soon the company realized that it needs to strike a balance between personalization and scalability. Unfortunately, this only happened after it reported over 70% of losses in the financial year 2017 and 18. That also explains why pepper fry does not offer customization other than perhaps colors in certain cases. It is satisfied being just a marketplace. Even urban ladder has opted out of that model.

But companies that actually still follow that model strongly believe in it. Take IKEA for example. Susan Palvara, the CEO and Chief Sustainable officer at IKEA India said that the idea works when implemented in a limited variety. She said that is the key to scaling a furniture business in India. And that belief is shared by wooden street. And the fact that it has a team of designers and an in-house manufacturing facility is just the cherry on top. More on this in the next segment. Hi, daybreak listener. Are you enjoying this episode so far? If you are, then could you please spare a few seconds to rate daybreak on your preferred

streaming platform, Apple or Spotify, and also please hit follow? We've been trying really hard to beat the algorithm gods and a little help from you will really, really go a long way and help our podcast grow. In its early days, Wooden Street was partnering up with several artisan factories and selling their products online. But somewhere down the line, they realized that this would not work. For For starters, the segment was complex and lacked any organization. But on top of that, the company was working with thousands of individuals with varying quality standards. And that is when it decided to set up research and development unit in Jodpur Rajasthan.

Today, it serves both as a quality control center and an innovation hub, allowing Wooden Street to standardize its products. over 1.5 million square feet of area, the unit supplies furniture to over 20 warehouses that the company has across the country. The biggest advantage is that now this way it has absolute control over wastage and inventory. So something as simple as extra wood that is left over from making a coffee table can be used to make some sofa legs. The people taking these calls are the designers. The company has a solid team of 30 designers. who sit in the Jaipur head office.

Their job is to predict trends and design furniture. And they make it possible for Wooden Street to add 30 to 40% new products to its catalog every three to four months. Most other furniture companies like Pepperfry don't make all their furniture in-house. Instead, they have a combination of in-house and external windows. But that comes at a cost. For instance, if you're trying to sell a teacolored bed and matching site, table, it becomes hard to match the two if they are being made in two different factories.

Another big reason for this is also because this particular sector isn't the most tech forward. Renavut, the founder of Wooden Street explained to us that the Indian furniture manufacturing sector is lagging in investments into modern automated machinery. But Wooden Street has consistently been breaking all the rules. It is clear that it is in it for the long haul, and it is expecting some big returns. Stay tuned. Off late, Wooden Street has been on a mission to expand its brick and mortar stores. At present, it has over 100 experienced stores nationwide, and the largest one is in east of Bangalore and is 7,000 square feet in size. And now it is planning to open even larger stores. The founder Renawatt claims that people are going to realize

that his company is even better than IKEA. The store size is a central central part of his plan. He believes that bigger in the furniture market case at least is indeed better. Having stores that are about 800 to 1,000 square feet is just not enough. But it is important for there to be more space for people to touch and feel products. But more square footage comes at a premium. Especially considering how on average renting a 1,000 feet square space in a prime location in Bangalore can cost at least $60,000 a month. And this is why most of its competition cannot beat it in terms of store size. Even IKEA, with its huge warehouse style walk-around stores, has suffered,

which is why the company is now looking to invest into smaller-sized stores across the country. But that does not solve all of its problems either. Because with small stores, while the rent is lower, you are not able to display all your products. Also, it ruins the shopping experience very often. Another problem area is logistics. Most of the time, a product gets damaged during transit. It is here that IKEA's concept of replaceable furniture takes precedence. The company's strategy, its CEO said, aligns with the wants of Gen Z and millennials.

You see, here's the thing. At least three out of the four companies that the Ken spoke to foresee a future where furniture will sell a lot like fast fashion. This is because of a confidence of factors, increased competition, rising material costs and shorter product lifespans. But Wooden Streets Renawath is clear that the best way to disrupt this particular industry is not by reshaping it entirely, but rather by sanding down the rough edges while preserving what works. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras.

To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv CN.