On my return to India from Canada in 2011, hubby and myself had to set up our home in our work city (Gurgaon) from scratch. I would have cribbed a zillion times when I had to run from local markets to malls for months, in search of furniture, furnishings, home-ware, kitchenware and decor. The only wish I had back then was that we have a big-box retailer like Ikea, Home Depot, or even Walmart (it's home section is pretty decent).
After 7 years, the wish has been granted (not by GOD but by GOI) and Ikea will be opening it's first store in Hyderabad (my current location) on July 19th. Just 100 meters from my office, the sprawling 4 lakh sqft premise is nothing short of an eye-catcher. Many people that I know are excited, specially the ones who have bought new residences or are planning renovation. Amidst the excitement of being the first few thousands of Indians who will experience Ikea India, I do have a few thoughts:-
- Furniture Assembly Service is Paramount - Indians have always had their furniture delivered and assembled by furniture vendors. It is a no-brainer that DIY (Do-It-Yourself) does not fancy us. Ikea has tweaked its business model in India and will offer assembly services (probably by own or third party vendor). How they manage this last touch-point in their customer journey is crucial as it may make or break the customer experience.
- Targetting few or many - As per my understanding, a few target customer segments in Hyd will be:-
- Educated, high-income, IT/ Pharma professionals (mostly immigrant so buying/renting property and setting up home in new city)
- NRIs returning from onsite assignments in US, etc. - habitual to big-box home retailers
- Upper middle class/ rich - looking for some non-furniture categories due to Ikea's international appeal
- Middle-class working population, aspirational -looking for value for money categories
- Food for Conversion- Ikea claims that 'Food is their best sofa-seller' as they feel that conversion is higher if customer is satiated and not hungry, though food business earns less than 5% revenue globally. Extending the tradition, it is opening a 1000 seater restaurant in the store. My apprehension is that just like food-courts in Indian malls get more footfalls than the retail stores, Ikea may soon realize that it was better to open a stand-alone restaurant than a store. And why not, it is customizing the menu for India and including veg options like idli, sambhar, biryani and samosa. (Hungry anyone?)
- Big-box Retail losing glory- Globally retail stores are shrinking in size and KPIs like Sales per sqft and GMROF (gross margin return on floor area) are more relevant than ever. How Ikea will be profitable in 4 lakh sqft of retail space has to be ascertained? Organized retailers like Future Group's Home Town (with revenues in the range of Rs 500 crore) have not been able to grow the category much in organized retail. Moreover, I hope they have enough parking and do not end up jamming their vicinity (the high traffic prone Hi-tech city area), resulting in negative customer experience (CX).
- Technology for Customer Delight - Ikea is way ahead in transforming customer experience, through emerging technologies like Augmented Reality (AR) and Virtual Reality (VR), than any organized Indian retailer. It's AR-enabled mobile app Ikea Place (using Apple's ARKit technology) enables users to preview placement of virtual furniture in their homes to visualize if the piece fits in, and it can subsequently be ordered on Ikea website. My view is that in short to medium term, if it is able to offer such global tech experiences to Indian customers, it will up the customer experience quotient manifold.
Ikea Place App (Pic Credit: IKEA)
(This blog's formatting in blue and yellow, is dedicated to Ikea's brand logo)
Disclaimer: The blog is based on my personal experiences and strictly reflects my individual opinion.
