Mumbai: Mumbai’s spends on home furnishings as a share of wallet is lower than any other city in Asia or Europe. It is lower than that of Delhi and even Bengaluru, according to a top executive from Swedish furniture maker Ikea.
Overall, India’s home furnishing spends as a share of wallet trail China and Japan at 2.0-2.5%, according to a study by Euromonitor. In China and Japan, home furnishing spends as part of share of wallet ranges between 2.5-2.8% and in Europe it’s 5%.
Within India, Mumbai’s home furnishing spends as a share of wallet is lower than those of cities like Bengaluru or Delhi, Per Hornell, market manager Maharashtra, Ikea India said over the phone, adding, a probable reason is the higher cost of living and rentals in the city.
According to Mercer’s annual Cost of Living Survey, 2017, Mumbai is the most expensive city in India for expatriates and is ranked higher than major global cities such as Paris, Canberra, Seattle and Vienna. Mumbai is placed 57th on the list while New Delhi is placed at 99. Chennai (135), Bengaluru (166) and Kolkata (184) were the other Indian cities on the list, said the report.
To appeal to the Indian consumer, the Swedish furniture maker is betting on lower prices. “We are very confident that we will enter the market with lowest possible prices. There will be 1000 products at prices below ₹ 200 when we open our store," Per Hornell said over the phone. These 1,000 articles will, over time, contribute a lot to Ikea’s turnover and future profit, he added.
Ikea will open its first Indian store in Hyderabad in July and Mumbai a year later in 2019. It will also allow consumers to buy online following the Mumbai launch.
With the Mumbai launch, the company will also experiment with new business models like home furnishing consultancy. Under this model, customers who become a part of the Ikea Family Members programme can request personal meetings with Ikea co-workers who visit their homes, understand their dreams and needs and get personalized recommendations.
Earlier this month, the retailer known for its Do-It-Yourself (DIY) concept announced a tie-up with UrbanClap, a services platform, as its furniture assembly service partner in Hyderabad. The tie-up will allow it to provide services at a low price, acknowledges Hornell.
Ikea has trained carpenters on UrbanClap to assemble its furniture. These trained professionals will reach a location in 90 minutes upon booking their services online, said Hornell.
India’s home furniture and furnishings market is expected to grow at a rate of 13% compounded annually from 2016 to 2021 to be a $49.5 billion market, according to consultancy firm Wazir Advisors. The organised market which includes retail chains like Home Centre, Home Town and online retailers like Pepperfry and Urban Ladder account for 15-16% of the overall market and is growing at a rate of 20-22% per annum, said Harminder Sahni, founder, Wazir Advisors.