America’s DIY spirit is dying
STOCKHOLM/NEW YORK: Jessica Reznik likes IKEA’s prices but not doit-yourself. So when the Swedish furniture giant said a handyman on odd-jobs site TaskRabbit could assemble her new dresser and nightstand in her New York apartment, she jumped at the offer.
Reznik, a 24-year-old teacher, is just the kind of busy millennial IKEA hoped it would attract when it bought TaskRabbit in September 2017 as part of a drive to offer a range of services complementing its trademark flat-pack furniture.
The focus on services by the world’s biggest furniture retailer is a major strategic shift it has been forced to adopt to stay in the game as waves of new competitors in an increasingly online world erode its dominance.
It seems to be working. In the first readout on TaskRabbit’s activity since IKEA bought it, executives told Reuters the number of jobs done by TaskRabbit handymen had more than doubled and 10% of the tasks were furniture assembly, up from 2% before.
Jesper Brodin, president and CEO of IKEA Group, which owns most IKEA stores, said TaskRabbit was expanding into interior design and looking at services such as furniture repair to give IKEA an edge, while TaskRabbit’s customer data could help IKEA come up with new ideas for furniture.
“As this community grows its not only about fixing one or two things but actually to add professionalism in interior decoration, into ‘life at home’ practicalities,” he said. “TaskRabbit is a super interesting business case because it is scalable, not only geographically but also into services at home.”
Winning the battle for online shoppers is crucial for IKEA. While online furniture retailing was relatively slow to take off, the market is now being flooded and the battle is increasingly in aftermarket services.
The United States is IKEA’s secondbiggest market behind Germany with
14% of its sales
GlobalData Retail analyst Neil Saunders put the overall US home furnishing market at $282 billion in 2017. But he said IKEA’s share was 2%, down from
2.2% in 2014 and well below Germany, where it has as 12% share.
Pure online furniture retailers such as Germany’s Home24 , Britain’s MADE and Wayfair in the United States have been growing rapidly, online generalists such as Amazon.com are pushing furniture while some hypermarkets are branching out into home furnishings.
What’s more, Walmart and Wayfair have also started offering inexpensive assembly services in the United States through TaskRabbit rival Handy.
“Anyone who sells furniture will have a delivery service,” Kantar Retail analyst Ray Gaul said. “The difference will be that instead of having just a delivery service, IKEA are trying to give some assistance in designing your space, and that’s where TaskRabbit can be helpful.”
IKEA, which had global sales of €39 billion ($44 billion) last year, made its name selling inexpensive furniture mainly to people willing to travel to its vast stores, lug their merchandise home and assemble it themselves.
Now, more shoppers prefer the convenience of buying big-ticket items online and getting products delivered, assembled and installed. In Reznik’s case, she paid $81 to have her furniture built, with TaskRabbit taking a 15% cut.
Since IKEA’s acquisition, the first in its 76-year history, TaskRabbit has expanded to all 48 US cities with IKEA stores, up from 41 before. In Britain, it has moved beyond London to 11 more cities and it launched in Toronto, Canada, in September.
Since it was founded in 2008, TaskRabbit says its vetted “taskers” have assembled 545,000 pieces of furniture, moved over 340,000 households and mounted more than 190,000 TVs — though it didn’t give a breakdown for before and after the IKEA deal.
“We are convinced this is a way to access new customers in our cities,” said Brodin, who aims to take TaskRabbit to more countries. “The convenience customer today has so many more choices, and they are used to getting a quick answer.”
But having TaskRabbit freelancers associated with the IKEA brand also brings new risks, even though they are vetted.
“You don’t know if they are a good person or not. And, like it or not, it’s associated with your brand. So if they steal something, or worse, it’s back on IKEA,” Kantar’s Gaul said.