When Swedish furniture retailer IKEA entered India in August 2018, every possible prediction was made—smaller furniture retailers will shut shop; the furniture market will become more organised; furniture sales, typically slow-moving, will soar…
Almost a year since, none of this has happened.
Instead, IKEA has realised India is an anomaly. Famous the world over for its space-saving and trendy furniture, furniture isn’t even IKEA’s most popular category in India—mattresses and cutlery sell faster at its Hyderabad store. Furniture isn’t a high-frequency category in India; people wait 4-5 years between purchases and, as Jesper Brodin, IKEA group CEO, said in an interview: Indians typically buy furniture when moving houses or having a child. The Ken has covered IKEA’s entry into India extensively.
So, IKEA in India, with its $1.5-billion investment and 400,000-sq-ft, warehouse-like store, needs a wedge; one that could get it into new homes. IKEA thinks Livspace—one of the country’s better-performing interior decor startups—could be that wedge. After all, new homes are all about furniture and interiors, so budgets are usually higher. In May this year, Ingka Investments—IKEA’s investment unit—made a bet on the Bengaluru-based company. The company hasn’t disclosed the figure but sources put it between $10 and15 million.
This is a big moment for IKEA. It’s the company’s first investment in an Indian startup. It’s also a validation of the platform that Livspace has built, and a signal that IKEA feels the need for a partner.
“Convenience, personalisation and providing consumers with end-to-end experiences are becoming increasingly important. Livspace has created a digital platform that has the potential to transform a customer’s home furnishing journey,” says Krister Mattsson, managing director of Ingka Investments in an emailed response to The Ken.
Ingka, Mattsson adds, has been tracking Livspace for some time now. Livspace’s growth, a large part of which is courtesy internet-savvy, young, high-wage earners who want their first homes to look beautiful, is what caught its attention. The interiors market in India, across India’s top ten cities, is estimated to be worth $25-30 billion. There’s still a huge market to be tapped in tier-2 cities.
In India, home interiors are a hassle—chasing carpenters, plumbers, electricians, with little assurance of quality. Livspace solves this by offering both products and services. Today, the company is one of the best-funded startups in the interior decor space, having previously raised $70 million in a Series C funding round led by private equity firm TPG Capital.
But funding is no guarantee of success and Livspace has ample competition. Interior decor firm HomeLane, for instance, follows a similar model. But as Ramakant Sharma, the company’s co-founder, says, the real competition is the carpenter next door.
