With the imminent entry of Swedish giant IKEA, existing online players are strengthening their retail presence and omni-channel strategies.

Online home décor and furniture players such as Pepperfry and Urban Ladder have been experimenting with new formats backed by funding from big-ticket investors.

“We will be competing with IKEA. But our USP will be solid wood furniture which IKEA does not have at its stores. But we will co-exist with IKEA, just like smaller stores like Crate and Barrel and Pottery Barn in other markets,” says Ajit Joshi, the newly appointed COO and President of Urban Ladder.

Segregation

Having raised ₹102 crore from existing investors such as Kalaari Capital and SAIF Partners, this year, five-year-old Urban Ladder is building its offline business with new formats.

It is segregating its furniture business under experience centres (7,500 sqft) sofa lounges(750 sq ft) and interiors (2,500 sqft) to signify new formats under furniture retailing.

“We are strengthening our retail presence across the metro markets. After Bengaluru, we intend taking our stores to Hyderabad, Delhi and Mumbai. Today, we have a ₹3-crore turnover for our first experience centre store in Bengaluru,” he added As for Pepperfry, it is trying its hand at renting furniture to garner volumes and fortify its customer base, which will involve renting out beds and wardrobes to cater to a younger audience primarily in the metro markets.

The new rental business will be adding to its existing online and offline formats. Backed by investors like Goldman Sachs, Pepperfy is also planning to offload some of its less-moving stock through the rental channels.

Besides, it is also planning to take up its offline store count from the current 22 ‘experiential’ studios to 46 by 2018 through the franchise route.

Welcome entrant

Being a managed marketplace, Pepperfry has crossed a GMV of ₹1,000 crore and is looking forward to IKEA’s entry despite being a competitor. “IKEA sells online through its own site in the existing markets, but we will be more than happy to have it on our managed marketplace. A new entrant can only help in growing the category which is just 10 per cent organised in the country,” says Hussaine Kesury, Vice-President, Pepperfry.

However, furniture retail will not be easy in India since the largest retailer, Future Group, is already struggling to sell its own format of HomeTown, having merged it with the acquired online business of FabFurnish.

“IKEA’s entry may help in expanding and giving a fillip to the furniture category, but the existing players realise that it will eventually lead the category and are thus strengthening their presence,” observed Saloni Nangia, President, Technopak, a retail consultancy. “At the same time, such furniture retailers must take a good look at the cost-benefit analysis in the buy- and rent-based furniture business since some of the big retailers and even online players are yet to make money in this category. But considering there will just be a handful of organised players, consolidation is not likely to happen very soon.”

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