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IKEA accelerates services drive to stay in the game as competition stiffens

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STOCKHOLM/NEW YORK: 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 www.taskrabbit.com 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’s 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’s activity since IKEA bought it, executives said 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’s customer data could help IKEA come up with new ideas for furniture.


“As this community grows its 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.


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’s second-biggest market behind Germany with 14 per cent of its sales


GlobalData Retail analyst Neil Saunders put the overall US home furnishing market at $282 billion in 2017. But he said IKEA’s share was 2 per cent, down from 2.2 per cent in 2014 and well below Germany, where it has as 12 per cent share.


Pure online furniture retailers such as Germany’s Home24, Britain’s 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’s more, Walmart and Wayfair have also started offering inexpensive assembly services in the United States through TaskRabbit rival Handy www.handy.com. — Reuters


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