File photo of an IKEA store
Entry of the world’s largest furniture
retailer, IKEA, into Mumbai, its second city after Hyderabad, may force organised players such as HomeTown (from Future Group), Homestop (from Shoppers Stop) and Home Centre (Landmark group) to revamp their offerings. On Monday, IKEA
launched its online store in the financial capital, ahead of the roll-out of its large-format physical outlet on the outskirts of the city for which it had begun hiring people earlier this year.
The online store will offer almost 1,000 products below Rs 200, with deliveries arranged to most locations in Mumbai and Navi Mumbai within 4-7 days, IKEA’s India Chief Executive Officer Peter Betzel said on Monday. Betzel also said the retailer would launch smaller-format physical stores in the future, complementing its online presence in the city.
In response, HomeTown and Homestop will expand their product portfolios, sources from the two companies
said, tapping a wider set of consumers with furniture
at affordable price points. The two players already have stores across Mumbai and have a presence online as well. The plan is to integrate the two channels to ensure maximum convenience and ease of shopping, persons in the know said.
Executives at Home Centre were not immediately available for comment. But, Home Centre is expected to follow in the footsteps of HomeTown and Homestop as furniture
retail slowly but steadily begins to get organised, especially in urban areas.
“Busy lifestyles and smaller apartments in cities are forcing people to rethink how they furnish their homes,” says Ankur Bisen, senior vice-president at retail consultancy Technopak. “The entry and expansion plans of players such as IKEA
will open up the organised market for furniture retail, which stands at only 3 per cent now. We estimate that it will touch 5 per cent in about three to five years,” he says.
The total market for furniture retail in India, according to industry estimates, is pegged at Rs 70,000 crore. This includes organised as well as the unorganised markets. At 5 per cent, the organised market will touch Rs 3,500 crore from Rs 2,100 crore now, Bisen says.
In 2017, Future Group had merged its online and offline furniture and home retail operations under Praxis Retail and had decided on pushing one brand HomeTown under it. The move was intended to bring focus to the business across channels as Indians increasingly get exposed to global trends in furniture retail.
A just-released Euromonitor International report says consumers are demanding more from furniture retailers today.
“The entry of IKEA
has changed the dynamics of the market,” the report says. “The Swedish retailer offers products across segments such as furniture, textiles and mattresses at competitive prices. Other branded players have therefore started changing their offering and pricing in order to stay in the game. As more consumers realise that they can buy better products while being price-sensitive, they will most likely move to branded players,” the report says.