In Conversation: Online will never fully replace omnichannel, says Kohler

/ 6 min read

The CEO of the $10 billion revenue global leader in bathroom and kitchen fixtures discusses the latest trends, particularly that of sustainability.

K. David Kohler: “Local supply chains have given us flexibility. We will continue that in future.”
K. David Kohler: “Local supply chains have given us flexibility. We will continue that in future.”

This story belongs to the Fortune India Magazine December 2024 issue.

India is the fastest-growing market for Kohler, the $10 billion revenue global leader in bathroom and kitchen fixtures. The CEO of the 151-year-old company, K. David Kohler, discusses the latest trends, particularly that of sustainability.

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The smart home market is expanding rapidly. How is the industry dealing with convergence of traditional hardware with advanced IoT technologies? How does the home solutions industry stay ahead of the tech curve?

You have to have a passion for design. You need a passion for engineering & technology, for the craft and artisan aspects of the craft. We love high artistry as much as we love high technology. We can play with colour and texture, even break our colour palette for India. We also push boundaries of technology for providing low-consumption, sustainable flushing for water closets. We use technology to create a personalised showering experience that allows you, at the touch of a button, to create exact temperatures and spray patterns. It comes from our background of playing in different domains of design and technology and being able to bring the two together. We are not focused on just sustainability, technology or design. We believe in merging them to deliver design, form and function in harmony with nature. If you have a beautiful tech product that has no design and emotion, it will be boring. In a personal space such as home, consumers want a product that has design characteristics that create emotion and functionality that makes life easier. Sustainability is also something people care about.

In last few years, there have been many supply chain disruptions. What are the structural changes happening in the industry for building more resilient and decentralised supply chains?

Companies are reducing reliance on any one region or supplier. They’re building regional capabilities. That’s been our strategy here and in China. But not because of the pandemic. We wanted to build capability for the country within the country. That has served us well. Local supply chains have given us flexibility. We will continue that in future.

How will sustainability impact companies?

The cat is out of the bag. Sustainability is here to stay. Companies globally, including in India, are making it a priority to meet consumer demand as well as environmental needs. They have made efforts to reduce environmental footprint in design, manufacturing and water and energy consumed. This is here to stay. But the biggest gains are behind us. There is incremental improvement every year. The key is to ensure sustainability benefits without compromising performance or user experience. In 2008, we made a commitment to reach net zero by 2035. We’ve reduced our environmental footprint by over 50% since then.

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CONSUMER CONNECT

There’s been a shift in consumer expectations post-pandemic. Has this altered the landscape for premium fixtures? How will this shift towards premium, luxury and customisable solutions evolve?

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If you look at rising middle class and per capita income, you see consumption patterns following, which means people want the best brands and designs the world has to offer. Premiumisation is here to stay. You’re seeing it across markets, from automotive to fashion to home solutions.

How are you responding to increasing competition from new-age tech-driven companies focusing on digital home solutions?

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One of our guiding principles is living on the leading edge of design and technology. As technology entered bathrooms and kitchens, we pioneered its use in a smart and user-friendly way. We keep an eye on competitors and emerging technologies but are at the forefront of how to best use technology in different spaces, from digital showering to smart toilets to touch-less or intelligent faucets.

INDIA CONNECTION

How have Indian consumers evolved? How are they different from consumers in similar markets?

Indian consumers have always had a high appreciation for design. They have always cared for colour and products with more personality. We started with that as the base. Additionally, post-pandemic, we’ve seen an increase in interest in sustainability. I also see an interest in technology and smart products you can personalise. Post-pandemic, people have realised the importance of investing in personal spaces, particularly homes, and ensuring they are equipped with latest technologies. There has also been an evolution of sophistication. If you look at spaces 8-10 years ago, there was a lot of white and chrome in simple finish.

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Today, you see a strong colour palette. In faucets, you see beautiful finishes with our PVD (physical vapor deposition) coating that lasts a lifetime in rose gold and different shades of gold and bronze. There’s a shift toward technology and richer finish. The market is shifting in a pretty healthy manner.

What is the sentiment in the Indian market? What excites you the most here?

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India is our fastest growing market. Its GDP is among the highest. We are seeing that in our business. We’ve been here for 18 years. We design in India. We engineer in India. We manufacture in India. We leverage some of our global design platforms, products and technologies. But we’ve also succeeded in developing products, colours, finishes, textures for the Indian market.

How can a luxury premium brand target this price-sensitive market? What expectations do you have from India for the next couple of years?

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The market will continue to be strong. We’ve been meeting developers, designers and architects all over the country. We think the next two years, five years and ten years look excellent for India. Although the country has been performing well, this is the time for India as its growth rate diverges from China. Historically, China had been growing at similar high growth rates, but that’s changed now.

We also love the diversity of culture, cities and tastes. Just like food differs across regions, tastes in design vary as well. Hyderabad, for example, has larger apartments than other cities. These subtle differences and diversity make India a beautiful and exciting market. It blends itself well with our most extensive product line. Nobody brings as many designs, colours, styles, materials and finishes in every category.

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Do Indian consumers differ in colour or material preferences from consumers in other markets?

The use of colour and finish is higher here than China and other Southeast Asian countries. In finish, it’s similar to the U.S. We are seeing a big diversity in finish. But India’s desire for rich colour hues on fixtures stands out. We’ve reintroduced more colour options for Indian consumers, harking back to a period when colour was popular in bathrooms here.

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Are Indian consumers and market influenced by western markets in any way?

A little bit, certainly with technology and sustainability. But I believe the Indian market is creating its own path in terms of design and sensibility. India, unlike many other international markets, has its own attitude, character and personality around design. You can put five European countries or Southeast Asian countries up against each other and not see any difference. But if you look at India, there’s uniqueness; and we’ve catered to that.

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How do you assess the China-plus-one strategy?

China has reached a more mature phase in economic growth and development. It will see moderate growth over the next five-ten years. Meanwhile, India will continue its trajectory of high growth. It will continue to be a great location for international and export manufacturing.

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What’s still untapped in the Indian market?

First, there is remarkable potential and endless imagination. Wellness is a hot trend globally. Everybody is spending more time on products such as steam showers and saunas that promote self-care and wellness. There is huge potential in this space. That’s one of the biggest trends of our time. Younger as well as older generations want to live longer. People are interested in health. Wellness is an area that will expand the market in the coming years.

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One thing booming in India is e-commerce. Is it challenging to replicate the high-end retail experience online?

You can never fully create the immersive retail experience online. But consumers want to shop for different things in different ways. For small replacements or certain elements, online may meet your needs. But when you get into full bathroom collections or remodelling projects, it makes sense to meet experts in a showroom and explore the full array of options. The complexity of product configurations requires professional assistance. There will always be a need to use an offline environment for larger projects.

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That said, with AI and digital selling and design tools, there’s a good runway (for online sellers), but online is never going to fully replace omnichannel.