IKEA in India- What it means for other players?
Although some furniture makers maintainthere’s no threat in the long run, some agree that there has been immediate response to IKEA’s launch in India and the sales of other players have significantly reduced.BY Shwetha Satyanarayan | Aug 29, 2018 | comments ( 0 ) |
Twenty days after Swedish retailer IKEA entered the Indian market with much hype and chaos in Hyderabad, it seems like its ‘desi’ counterparts are leaving no stone unturned to take on the home furnishing giant. Although some furniture makers maintainthere’s no threat in the long run, some agree that there has been immediate response to IKEA’s launch in India and the sales of other players have significantly reduced.
For instance, RaghunandanSaraf, owner of online furniture store insaraf.com says their offline store Saraf Furniture in Hyderabad has been impacted due to the launch of IKEA and the entry of the retail giant did not begin on the right note for Saraf.
“There are usually two kinds of impacts on business for any player. One, that is immediate and affects in the first two-three months of the launch of a brand or a product. Another, a long term impact that stays for quite some time and impacts the business in the longer period. So what happens when brands like IKEA launch in India, customers put their immediate purchases on hold and wait for the brand to make an entry. This process will affect the business for other players,” says Raghunandan.
He maintains that many customers were charmed by the brand name and wanted to enjoy the feeling of buying from an ‘IKEA’ store that led to less customers visiting the store.
However, Raghunandan thinks after the initial excitement and curiosity settles down, customers will streamline their buying preferences and he is positive that many of his regular customers will go back to the online player. “The buying patterns differ and so do the shopping experience. For instance, our products are purely Sheesham wood-made and there’s more awareness about the quality of this product. People buying from us will know they have to come back to us if they want only Sheesham furniture. Similarly, people liking IKEA products will not come back to us,” he maintained.
In their bid to take on the competition, Raghunandan maintained that they have shifted their focus from price point strategy to material quality strategy that will give them an edge over the products.
Change in strategies
At Wakefit, although the founders feel there is no unique value or wow-factor to IKEA products, they have still managed to find a perfect solution to keep up with customer expectations and even increase their product supply, at low cost shipping rates. For instance, the makers are manufacturing a roll-pack mattress that can easily fit into the size of a TV box bringing the shipping cost down by 70 per cent. This way, the founders say, they will be able to ship more products at low cost across India and the waiting period is less than 3 days.
“The thickness of the roll pack mattress is 1/6th of a normal mattress and we are shipping about 300 of them per day, pan-India. What cost us Rs 1,000 to ship earlier is now costing only Rs 200 or Rs 300 and is sometimes delivered within 2 days. Our target is to deliver within one day across India. This we way, we are bringing down the cost and waiting period,” said Ankit Garg, co-founder, Wakefit.
In a first, the startup has even opened an experiential centre in Hyderabad where customers can go sleep for 30 minutes before buying the product and make an informed choice.
“The centre gives privacy to customers, especially women who are uncomfortable sleeping in public. The centre is one-of-its-kind,” says Garg.
It’s all about customer connect
Further, Garg says what gives startups like Wakefit an edge over their competitors is that the makers visit the homes and share close ties with their customers, while brands like IKEA may fail to do. Garg says he has visited more than 200 homes himself, listening to customer pain points, understanding their expectations from a brand and reviewing their experience.
“We want to build what customers want and not sell whatever we make,” he says.
Step towards organized retail
While players like Saraf furniture feel there’s immediate impact from IKEA, YashKela, chairman of interior design startupArrivae says the entry of IKEA will only benefit the industry in the long run.
According to industry estimates, the country’s furniture market is projected to cross $32 billion by 2019.
Kela hopes that with big brands in the market, the furniture industry will become more organized. “Currently, less than 1 per cent of the industry is organized and I hope IKEA’s entry will create new roadmaps.
“I hope there is a huge value shift from unorganized to organized and the industry players like designers and carpenters will also adapt themselves to different platforms to survive,” he says.
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