A store not only offering free goods, but also offering money to customers for buying goods from them!!! Well, that’s the feeling I got when I accidentally happened to visit Ikea’s first retail store in India.
This weekend, I was in Hyderabad for a couple of management meets. I am not an avid shopper and rarely resort to any such casual mall/shopping visits, especially on business trips. However, the rave reviews and feedback that I had received from my clients and acquaintances in Hyderabad aroused my curiosity. “Reach the store at the opening hours itself or risk the chance of really long waiting hours to enter the store later on” was the unanimous advise I received, at the end of the feedback on their personal experience at the store. With my meets done and time to spare the next day, I chose to heed their advise and reached the store at 10 am. Upon reaching, I couldn’t help but notice the fleet of cars waiting to enter the parking lot that early. Serpentine metal aisles were well laid out at the store entrance, to facilitate a smooth and organized entry into the mall. Bouncers and security personnel were manning these aisles to ensure discipline and prevent any chaos. 400,000 sq ft of shopping area, on a 13-acre campus, calls for a lot of endurance and stamina. What better way of getting the body warmed up for this than by dashing towards the entrance :-D. I too hurried along with the crowd, fearing a possible gate closure for late entrants. I wish I could have captured the look on the faces of customers successfully entering the store. It reflected a ‘sense of achievement’, something that one usually gets upon completing a daunting task.
Upon entering the store, an escalator transports you to their 1st floor which houses their showroom arena, numbered 1-11, which displays well designed sample apartments, in various sizes, designed with great details using only IKEA furnishings. The product code and details of where the products can be procured from are conveniently mentioned on the product’s tag. Customers intending to purchase products need to note down these details. This would then lead customers to a well laid out 1000-seater restaurant en route to the ground floor which houses their sprawling ‘market place’, numbered 13-21, where customers could purchase all the products they have identified and shortlisted at the showrooms.
As the day progresses, the number of people visiting the store swells up. And before you realise, the store gets flooded with people. Customers, with shopping bags and carts, can be seen everywhere. There are serious local shoppers who are already pushing a couple of large shopping carts full of goods. Curious to know whether this was a one-off or a regular phenomenon, I chanced to interact with a couple of fellow shoppers. Shikha had come from Delhi, with her friend, to just shop around as she was doing up her newly constructed apartment at Noida. She apparently had shopped the entire Weekend there and I noticed 5 huge shopping trolleys, in addition to a huge list of goods ordered which she had to yet pick up from the self-serve alley. “Apart from the type of goods one gets to buy here, the layout is amazingly convenient” she said. “Even though I spend on flight and stay, the savings I make on the quantum of goods I purchased more than makes up for this cost”. Then there was Joseph and Maria, a recently married couple I spoke to at the store. “This place is very affordable. We both are working here and don’t have time on weekdays to shop. The goods on display and friendly staff help us exactly understand how this would look at our place. This helps in our decision-making process, saving time and money as well” said Joseph. Then there was Mr and Mrs Reddy who had simply come there to spend time with their kids. “Our children keep playing in the kids’ area. And the food here is very cheap as well. We too get entertained by coming here” said Mr Reddy. “I wanted to come on the day it opened, but the 4 hour jam was too much for me to take” he lamented.
I was stunned to see the massive queue at the restaurant. The 1000-seater restaurant is touted to be its largest globally. That said, the massive queue of patrons at the restaurant was appalling. I too queued up to find out what makes the place tick. Thankfully enough, an hour of waiting got me hungry enough to actually grab a bite. Pick up a trolley, walk up the aisle to select the food you want to eat, walk to the payment counter and then look out for a table to seat yourself. A fixed menu, for veg and non veg customers, makes the entire process relatively quick. With a reasonably good quantity of veg biryani (for instance) priced at merely Rs 99 explains why some people visit IKEA. There’s an apparent strategy in this, to my mind. One has to traverse thru the home display area to get to the restaurant. This improves the conversion rate with even customers who possibly frequent the place for food.
At 5 pm in the evening, I had to step out for a smoke, only to realise that once a customer exits the store for whatever reason, he/she could reenter only from the entry gate. To my shock and disbelief, at the entry gate I saw a security personnel holding a placard informing patrons of the tentative wait time to enter the store, which was 2 hours!!! Are you kidding me. At 5 pm, a 2-hour wait time?? Wow. Showing my payment receipts, I somehow managed to convince the security in-charge to help me get into the store again without having to wait in that crazy queue. “We are estimating some 20,000 odd customers to be in the store today” he said. “Does this happen every day?” I quizzed. “Kind of” he replied “August 15th was a crazy day. We guess more than 50,000 shoppers would have visited the store and our entire staff had to stay back till 2 am to ensure smooth deliveries of goods customers had sought courier services for. At 11 pm, we had to plead people to leave as the store had to shut down for the day”.
Although I intended to make only a casual visit to the store, I ended up buying a lot of stuff. And I could see reason in what others were telling me since morning. I saw scores of people making frantic purchases. The number of customers with bags and carts far outweighed the no of customers moving empty handed, clearly. Despite the fact that there were more than 15 (I guess) efficient payment counters, at the check-out, the fact that I spent almost an hour to reach the payment counter only validates my observation.
It sure was an enthralling and enlightening visit, I must admit.
The Indian consumer exhibits a bi-polar behavior, at times. On one hand, they seem to dislike sales people attending to them fearing their persistence to hard sell products. On the other hand, consumers are not used to buy without assistance, buying flat-packs and installing/assembling it on their own later on. And yet this frenzy at IKEA.
Imagine the kind of consumer spend at this place. Even if one assumes 20,000 people visiting the store on a normal day, with only 25% of them ending up as actual buyers with an average ticket size of Rs. 1000, we are talking of some daily sales of Rs. 5 mln! This is in addition to the restaurant sales which possibly helps generate daily sales of ~Rs. 1.2 mln, assuming a similar number of people with average ticket size of Rs. 250. Not only that, but the trickle-down effect of this on the economy is also amazing. Shaida Sarpanch, my cab driver, confirms this. “From the day IKEA has opened up, every 2nd trip I get is either for a drop or a pick up from this place” he said. One can only try to measure this impact with the number of people such a store would provide employment to, to its warehousing requirements, to the supply chain arrangements that such sales would trigger, real estate demand and prices moving up etc etc. You get the drift.
Whether the initial novelty value is responsible for this at IKEA or this trend is here to stay only time will tell.
Whatever be the case, the Indian consumerism story is here to stay, in my opinion. Quality products offered at attractive price points and with interesting value propositions (like some mentioned above) will always find takers.