Focus: IKEA accelerates services drive as competition stiffens (updated)

home24 SE

11/02/2019 22:19

* IKEA bought odd-job site TaskRabbit in September 2017
    * Goes after online clients with after-market services
    * Expands into interior decoration and other areas

 (Adds Crate and Barrel and Handy partnership)
    By Anna Ringstrom and Melissa Fares
    STOCKHOLM/NEW YORK, Feb 11 (Reuters) - Jessica Reznik likes
IKEA's 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
https://www.taskrabbit.com in September 2017 as part of a drive
to offer a range of services complementing its trademark
flat-pack furniture.
    The world's biggest furniture retailer's focus on services
is a major strategic shift it has been forced to adopt 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 percent of the tasks were furniture assembly, up from 2
percent previously.
    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's customer data could help IKEA
come up with new ideas for furniture.
    "As this community grows, it's not only about fixing one or
two things but actually to add professionalism in interior
decoration, into 'life at home' practicalities," Brodin said at
TaskRabbit's San Francisco headquarters.
    "TaskRabbit is a super interesting business case because it
is scalable, not only geographically but also into services at
home," 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.  
    
    AFTER-MARKET BATTLE
    Winning the battle for online shoppers is crucial for IKEA.
While online furniture retailing was relatively slow to take
off, the market is now flooded and the battle is increasingly in
after-market services.
    The United States is IKEA's second-biggest market behind
Germany, with 14 percent of its sales.
    GlobalData Retail analyst Neil Saunders put the overall U.S.
home furnishing market at $282 billion in 2017. But he said
IKEA's share was 2 percent, down from 2.2 percent in 2014 and
well below Germany, where it has as 12 percent share.
    Pure online furniture retailers such as Germany's Home24
 H24.DE , Britain's MADE and Wayfair  W.N  in the United States
have been growing rapidly. Online generalists such as Amazon
 AMZN.O  are pushing furniture while some hypermarkets are also
branching out into home furnishings.
    Walmart  WMT.N  and Wayfair have also started offering
inexpensive assembly services in the United States through
TaskRabbit rival Handy https://www.handy.com.
    On Monday, home furnishings retailer Crate and Barrel
announced a partnership with Handy, offering furniture assembly
and home decor installation across the United States.
 urn:newsml:reuters.com:*:nL1N2060UZ
    "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 euros ($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.
    More shoppers now 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 percent cut.
    Since IKEA's acquisition, the first in its 76-year history,
TaskRabbit has expanded to all 48 U.S. cities with IKEA stores,
up from 41. In Britain, it has moved beyond London to 11 more
cities and it launched in Toronto, Canada, in September. 
    
    FEEDBACK LOOP
    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
did not 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 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.
    Brown-Philpot attributes much of TaskRabbit's growth since
the deal to links on IKEA's website. 
    "Once we closed the acquisition, yes, the branding happened:
there was co-branding in the store, there's opportunity for
people to see TaskRabbit in the catalogue, we've been on a
couple of commercials," she said. "But what's really happened is
the seamlessness, the integration." 
    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 https://www.airtasker.com in
Australia and UrbanClap https://www.urbanclap.com in India.
    But TaskRabbit is the only platform it has bought, and
executives say that brings IKEA another benefit: it has access
to TaskRabbit's customer data.
    "The knowledge of the taskers and their interaction will be
some sort of asset for us in the future for feedback for product
development," said Brodin. "That was not part of the strategy,
but that's something we are going to explore."
   ($1 = 0.8816 euro)

 (Reporting by Anna Ringstrom in Stockholm, Melissa Fares in New
York and Heather Somerville in San Francisco; editing by David
Clarke and Dan Grebler)
 ((anna.ringstrom@thomsonreuters.com; +46 8 700 1134; Reuters
Messaging:
anna.ringstrom.thomsonreuters.com@thomsonreuters.net))