Ikea’s India entry may quicken shift to organised furniture
BENGALURU:Swedish giant Ikea Group’s entry into India will likely accelerate expansion of the country’s organised furniture market. But the company will have to rely heavily on after-sales assembly services rather than the do-it-yourself (DIY) model it uses elsewhere if it is to become really successful, experts said.
Ikea is scheduled to open its first store in India in Hyderabad in mid-2018. And everyone, including analysts and executives at other furniture companies, agrees that its entry will prove beneficial for the industry.
“That Ikea will play a very important role in helping the market organise faster is a fair assumption. It’s not just its size, it is an incredible company and will do great work,” said Ashish Goel, chief executive of Urban Ladder Home Décor Solutions Pvt. Ltd.
Ikea is expected to bring standardisation—in terms of quality, raw materials, product dimensions, supply chain and inventory stocking—to an extremely fragmented furniture market and thus provide consumers with more reasons to turn to the organized space.
Analysts also list the Swedish company’s vast array of products—its global portfolio has around 9,500—as an advantage. Indian consumers still have it tough when it comes to finding satisfactorily diverse offerings for the home at a single store or location.
“In India, 90% of the unorganized market mostly comprises small and medium businesses. If Ikea works with them, it will ensure the market gets more organized and small businesses will benefit in the process,” said Ambareesh Murty, CEO and co-founder of Pepperfry.
India’s indoor furniture market grew at a compound annual growth rate (CAGR) of 10.9% between 2012 and 2017, and is forecast to grow at a 3.8% CAGR between 2017 and 2022, according to research firm Euromonitor International.
Although the pace of growth is likely to slow down, Euromonitor predicts that demand for economically-priced products will remain high in the country.