Friday, Aug 31, 2012

Dubai: There is a lot of value in used furniture, so much so it’s good enough to launch and sustain a full-scale business. Red Orange Event Rentals has built up a business model that rents out furniture for events or social gatherings.

“Buying large amounts of inventory is not logical as it blocks capital and is a pain for most people to store after it has been used,” said Sumedh Kothari, director. “If you need to seat 500 on luxurious sofas for three hours, it would make much more sense to rent rather than buy.”

But it has been quite a hard sell in a marketplace such as the UAE where the wealthy tend to purchase outright their requirements even if they are for one-off events. Kothari says as much: “We agree the UAE market has always been “purchase of assets” driven, but consumers are constantly looking for newer concepts.”

So, while the company makes the pitch for its leased furniture, it does so by emphasising the inventory and the many concepts that can be put together based on the clients’ fancies. This is where the 65,000 square feet warehousing facility in Dubai Investments Park and a showroom in Al Quoz come in handy. Turnaround times on orders placed can even be the same day.

The company’s inventory is predominantly made locally while some are imported from Europe and China. The range keeps getting added to when clients come up with bespoke requirements.

“Our typical clients are people looking for short terms rentals before they set up their own offices or even those who are in the country for a couple of months,” said Kothari. “We supply many event and exhibition organisers and hotels. In terms of hotels, we supply overflow banqueting furniture to some of the biggest names in the industry.

“We came up with this concept after identifying a white space in the events market. The UAE is known for its exhibitions and hosting social events; however hotels and trade centres were using the same furniture and accessories for all events which became monotonous.

Start-up investments were on the higher side given that the business required a significant amount of inventory to get going. Rental yields represent “only a small fraction of the cost and hence the breakeven period is very long,” Kothari added. “However, now, we are seeing the returns coming in.”

The next stop for the five-year old company is obviously Abu Dhabi, itself witness to a major expansion of its events calendar in recent times. The entry will take place “very shortly”, Kothari said.

Leasing furniture might be a relatively new fad in the UAE marketplace, but Kothari and his company intends to turn into a long-lasting one.

Gaining traction

The buying and selling of used goods is starting to get a lot of traction in the UAE. The local franchise of Cash Converters has just set up shop in Dubai, where customers can bring in their products to sell or buy pre-owned goods for their own needs.

There is also a consignment option whereby the store sells the item on their behalf and they receive the money once the deal is done. “The used goods business is not new in Dubai, however the concept of being able to buy and sell used goods through a store is,” said Fabrice Le Boulenger, general manager at Cash Converters Dubai.

The bulk of the merchandise tends to be furniture and white goods.

By Manoj Nair Associate Editor

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