Ikea wants to assemble your furniture for you as it tries to fend off competition
|National Post 11 Feb 2019 at 08:58|
STOCKHOLM/NEW YORK ‚ÄĒ Jessica Reznik likes Ikea‚Äôs prices but not do-it-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‚Äôs 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‚Äôs activity since Ikea bought it, executives told Reuters the number of jobs done by TaskRabbit handymen had more than doubled and 10 per cent of the tasks were furniture assembly, up from 2 per cent before.
Jesper Brodin, chief executive of Ingka 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‚Äôs customer data could help Ikea come up with new ideas for furniture.
‚ÄúAs this community grows its not only about fixing one or two things but actually to add professionalism in interior decoration, into ‚Äėlife at home‚Äô practicalities,‚ÄĚ Brodin said at TaskRabbit‚Äôs San Francisco headquarters.
‚ÄúTaskRabbit is a super interesting business case because it is scalable, not only geographically but also into services at home,‚ÄĚ he said.
Using TaskRabbit to bundle same-day delivery and assembly for Ikea is another service being rolled out, TaskRabbit chief executive Stacy Brown-Philpot said.
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 after-market services.
The United States is Ikea‚Äôs second-biggest market behind Germany with 14 per cent of its sales
GlobalData Retail analyst Neil Saunders put the overall U.S. home furnishing market at US$282 billion in 2017. But he said IKEA‚Äôs share was 2 per cent, down from 2.2 per cent in 2014 and well below Germany, where it has a 12 per cent share.
Pure online furniture retailers such as Germany‚Äôs Home24 , Britain‚Äôs MADE and Wayfair in the United States have been growing rapidly, online generalists such as Amazon are pushing furniture while some hypermarkets are branching out into home furnishings.
What‚Äôs more, Walmart and Wayfair have also started offering inexpensive assembly services in the United States through TaskRabbit rival Handy.
‚ÄúAnyone who sells furniture will have a delivery service,‚ÄĚ Kantar Retail analyst Ray Gaul said. ‚ÄúThe difference will be that instead of having just a delivery service, Ikea are trying to give some assistance in designing your space, and that‚Äôs where TaskRabbit can be helpful.‚ÄĚ
Ikea, which had global sales of 39 billion euros (US$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‚Äôs case, she paid US$81 to have her furniture built, with TaskRabbit taking a 15 per cent cut.
Since Ikea‚Äôs acquisition, the first in its 76-year history, TaskRabbit has expanded to all 48 U.S. cities with Ikea stores, up from 41 before. In Britain, it has moved beyond London to 11 more cities and it launched in Toronto in September.
Since it was founded in 2008, TaskRabbit says its vetted ‚Äútaskers‚ÄĚ have assembled 545,000 pieces of furniture, moved over 340,000 households and mounted more than 190,000 TVs ‚Äď though it didn‚Äôt give a breakdown for before and after the Ikea deal.
‚ÄúWe are convinced this is a way to access new customers in our cities,‚ÄĚ said Brodin, who aims to take TaskRabbit to more countries. ‚ÄúThe convenience customer today has so many more choices, and they are used to getting a quick answer.‚ÄĚ
But having TaskRabbit freelancers associated with the Ikea brand also brings new risks, even though they are vetted.
‚ÄúYou don‚Äôt know if they are a good person or not. And, like it or not, it‚Äôs associated with your brand. So if they steal something, or worse, it‚Äôs back on Ikea,‚ÄĚ Kantar‚Äôs Gaul said.
Brown-Philpot attributed much of TaskRabbit‚Äôs growth since the deal to links on Ikea‚Äôs website.
‚ÄúOnce we closed the acquisition, yes, the branding happened: there was co-branding in the store, there‚Äôs opportunity for people to see TaskRabbit in the catalog, we‚Äôve been on a couple of commercials. But what‚Äôs really happened is the seamlessness, the integration,‚ÄĚ she said.
Besides TaskRabbit, Ikea is rolling out accessible inner-city stores with staff on hand to advise on planning, as well as apps and digital tools to help customers tailor living spaces.
Ikea has offered assembly across its markets for more than four years, mostly through service partners. It has also entered partnerships with Airtasker in Australia and UrbanClap in India.
But TaskRabbit is the only platform it has bought, and executives say that brings Ikea another benefit: it has access to TaskRabbit‚Äôs customer data.
‚ÄúThe knowledge of the taskers and their interaction will be some sort of asset for us in the future for feedback for product development,‚ÄĚ said Brodin. ‚ÄúThat was not part of the strategy but that‚Äôs something we are going to explore.‚ÄĚ
¬© Thomson Reuters 2019
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