In today’s Finshots, we tell you why TCC Concept, an unpopular realty services firm, is acquiring Pepperfry, a once popular omnichannel furniture retailer.

The Story

In 2011, two friends and ex-eBay colleagues, Ambareesh Murty and Ashish Shah, decided to quit their jobs and chase a bold dream — to revolutionise how Indians bought furniture. And that’s how Pepperfry was born, an online marketplace for furniture and home goods.

The launch was an instant hit. On day one alone, they racked up 1,400 orders.

And over the next few years, Pepperfry grew rapidly. It wasn’t just an online brand anymore. They launched Studio Pepperfry, physical stores where customers could see and feel the designs before buying. They even dabbled in the franchise model, spreading to 500 cities and opening physical stores in 20 of them. At one point, nearly 40% of their business came from these offline ventures. No wonder they had their eyes set on Tier II and Tier III cities next.

But this was all before the pandemic hit.

Then came Covid. And surprisingly, it felt like a blessing. People who once used balconies to dry clothes suddenly wanted to convert them into cosy reading corners and chic coffee nooks. Furniture got an upgrade in urban homes, and Pepperfry rode the wave. By 2022, it was one of India’s leading online furniture retailers, valued at over $300 million and backed by big names like Goldman Sachs, Norwest Venture Partners, Bertelsmann India Investments, and even Fevicol-maker Pidilite.

Sure, the earnings weren’t great. Revenues stood at about ₹264 crores that year, with losses of nearly ₹194 crores. But the founders were confident. They believed that Pepperfry could soon turn the corner, go profitable, and even hit the stock markets. The company even rebranded itself to Pepperfry Limited to get IPO-ready.

But wait before you Google its share price. Because the story’s not quite how you’d expect.

The IPO never actually happened. In fact in 2023, Pepperfry shelved its plans after losses barely narrowed by just 3%, despite revenues climbing 10%.

And a few days ago, the big twist arrived. Pepperfry signed a term sheet to get acquired. Not by a flashy tech giant or a private equity fund, but by TCC Concept, a small-cap listed real estate company you’ve probably never heard of. The entire buyout is said to happen at a valuation far below the $352 million Pepperfry commanded over a year ago.

And many news reports are calling it what it seems to be — a distress sale.

So, how did one of India’s hottest online furniture retailers slow down, and end up in the arms of a realty firm? And what does TCC Concept really gain from buying a loss-making furniture player?

To understand that, let’s rewind to the time when Pepperfry was still dreaming big about its IPO.

Now, it wouldn’t be fair to say that the troubles began during the pandemic. But that period didn’t exactly help either. At the peak of Covid, Pepperfry went all-in on physical expansion. More stores meant more rental expenses. And while the franchise model meant they didn’t have to bear the cost of setting up studios, they still had to handle inventory, assembly, last-mile delivery, and even marketing campaigns for those outlets.

The numbers tell the story. Rental expenses jumped from ₹80 lakhs in FY20 to ₹6.8 crores the very next year. That’s a 750% surge at a time when customers were shopping online and avoiding stores. You could call it bad timing or maybe even bad luck.

But this “bad luck” streak really began years earlier, almost soon after it took off. Selling furniture has never been an easy business. It’s bulky, needs installation, and isn’t something you can deliver overnight. Logistics is a nightmare. Storage costs can pile up and deliveries can go up to weeks. That’s partly why Pepperfry ventured offline in the first place.

By then, though, the competition was already heating up. Urban Ladder, Wakefit, Ikea, Wooden Street, Amazon, Flipkart, and even apparel chains like Westside and Fabindia wanted a piece of India’s furniture market. And suddenly, Pepperfry was just one player in a very crowded room.

Then there was customer satisfaction. Buying furniture isn’t like buying clothes. You want things that fit your exact needs. Maybe a cupboard with a solid lock, wheels under a heavy piece for easy moving, or even a secret drawer or two. But Pepperfry didn’t really offer that level of customisation, beyond picking colours. On the other hand, its competitor, Wooden Street, spotted this gap early and leaned hard into customised furniture. It wasn’t the easiest way to scale, but it did win customers. Pepperfry, meanwhile, missed that bus.

And in furniture, keeping customers is everything. People don’t buy new sofas every year, so loyalty is key. But instead of adapting to market needs, Pepperfry doubled down on advertising — burning nearly a third of its funding on marketing campaigns. It was almost like a dead investment, bringing back hardly any returns.

Add to that the fact that Pepperfry’s price points were premium than competitors like Wakefit, which offered standard designs at lower entry points. For context, while Pepperfry’s best-rated dining tables and sofas started at ₹50,000, Wakefit was offering solid alternatives from ₹30,000. And in a price-sensitive market like India, customers often jump ship for a better deal, even in the urban segment.

But just as the company was grappling with these challenges, the most unexpected blow came. The sudden death of Ambareesh Murty in 2023, which triggered a management reshuffle and changes in how the business was run.

All of this showed up in the numbers. By FY24, Pepperfry’s revenues had slumped to ₹209 crores, a 40% drop from the previous year. Losses narrowed, but only because they cut back hard on employee costs and marketing spends.

Which brings us to the last piece of the puzzle — What does Pepperfry even bring to the table for TCC Concept? And who on earth is this company?

Well, TCC Concept wasn’t even in real estate to begin with. Until 2023, it was a cotton textile trading firm called Aaswa Trading and Exports Limited. And if you peek at its books back then, the numbers looked tiny. In FY23, it clocked operating revenues of just ₹1.2 crores. Profits, funnily enough, were a hefty slice of that at ₹81 lakhs, giving it eye-popping operating profit margins of 91%!

Then suddenly, the very next year, revenues shot up to ₹77 crores and profits ballooned to ₹20 crores.

That looked strange. So we dug into the annual reports and found out that the name change wasn’t just cosmetic. FY24 was the first full year that TCC Concept included the results of its subsidiaries — Brantford India, which offers flexible office spaces, and Altrr Software Solutions, which helps real estate players generate leads, engage customers, and make data-driven decisions. These new-age businesses opened up revenue streams that didn’t even exist a year earlier like data centre leasing and AI-powered digital services. So the company had quietly pivoted into high-growth markets.

And that tells you what TCC Concept is really chasing. It wants to grab every fast-growing segment it can get its hands on. Like India’s furniture market that’s projected to grow at a solid 15% each year, climbing from $1.6 billion today to nearly $5.5 billion by 2033. This surge is being driven by a mix of urbanisation, rising disposable incomes, more people shopping online, and the convenience of e-commerce platforms that promise variety and personalisation at the click of a button.

And yeah, buying Pepperfry, likely at a bargain price, could help it stitch together real estate and furniture marketplaces, sectors that actually complement each other. Just think about it. Cross-selling property and home furnishings, sharing warehouses and logistics, tapping into Pepperfry’s customer base. And if you add TCC’s AI-driven tech platforms into the mix, it could even boost Pepperfry’s supply chain and customer experience. On paper, at least, it looks like a neat fit.

What’s worrying, though, is that TCC Concept’s stock barely trades. Low trading volumes mean low liquidity, and that’s never a great sign. Add to that its sudden foray into multiple sectors, and the business model starts to look a bit fuzzy. So things could go upwards or downwards from here. Sure, TCC Concept’s stock has been climbing since the news of its intention to acquire Pepperfry, but whether this move can really turn the tables for the furniture retailer or not, is something only time will tell.

Until then…

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