- Swedish furniture retailer Ikea has opened its online for the residents of Mumbai, India's financial capital.
- The company's launch in India's financial capital comes a year after its debut in Hyderabad.
- That would pit the company directly in competition with the likes of Amazon, Flipkart, and Urban Ladder.
With the entry of Ikea into one of the country's biggest consumer markets, competition is heating in the furniture space between a host of retailers both online and offline including the likes of Urban Ladder, Pepperfry, Home Town and Home Centre. However, organised retail is only a small portion of the total furniture demand, for which these players will battling each other.
Going online first is not the only thing different about Ikea’s entry into Mumbai. Even after its online debut, the iconic stores of gargantuan size, roughly half a million square feet each, will be absent at least to start with. “The smaller stores can be 50,000 sq. ft - 150,000 sq. ft., large depending on what locations we are able to find," India Managing Director $4 in an interview earlier this month.
While Betzel didn’t elaborate on the rationale, the smaller stores may make sense in a crowded place like Mumbai where real estate is available at an exorbitant premium and travel can be cumbersome even for interested customers.
The New York experience
Even in New York, Ikea has a ‘planning studio’ in the upscale Manhattan area and not the standard blue-box store. It seems to have a similar plan for Mumbai too. “In addition to ecommerce and the Navi store, IKEA will also open smaller city center stores. This will make us more accessible and bring us closer to where customers are,” Betzel said.
Ikea calls these smaller stores ‘touch points’ for the customer to get an experience before making the purchase. “Currently the decision is to open two city center stores in different parts of Mumbai. There could be more online and offline touchpoints in the future based on the learnings from the market,” Ikea’s top boss in India explained.
The race is hotting up
While both Pepperfry and Urban Ladder may have a headstart, they are going up against a giant in Ikea. The two startups put together have received investments worth less than $300 million in the last six years. On the other hand, “Ikea has committed to invest 1.5 billion euros ($1.68 billion) so far. Three Indian cities are in the fast speed expansion markets namely Mumbai, Bengaluru and Delhi/NCR. Our focus on India will only increase in the future,” according to Betzel.
Even Flipkart, India’s largest online retailer, now owned by Walmart, is looking to set up experience centres. It unveiled an $4 on July 29.
With the likes of Walmart and Ikea throwing in their hat, running against smaller but more agile and homegrown players like Pepperfry and Urban Ladder, furniture retail in India is certainly set for exciting times.
That would pit the company directly in competition with the likes of Amazon, Flipkart, and Urban Ladder, who have spent years and billions in building a customer base in India. But Betzel is more sanguine than many others would be. “With more players, the whole category will grow even more. There is place for everyone,” he said.
The furniture market in India is expected to be worth $17 billion in the next three years but the big shops, malls and snazzy online retailers with discounts and offers sell $4 bought in India. The trend is changing, especially in urban areas, and there is enough headroom for growth for the organised segment.