Pepperfry and Urban Ladder’s ‘offline’ idea to ward off global brands

In early June, Pepperfry, which claims to be India’s largest organised furniture retailer, opened a 3,500 sq ft experience store in Ahmedabad, as the Goldman Sachs- and Norwest Venture Partners-backed etailer laid the ground to morph into an omnichannel retailer. Such a centre provides prospective customers a chance to browse through Pepperfry wares, without making any purchases.

The Mumbai-based venture hopes that people will go online — to the site or the app — when they make up their minds. If connected consumers are aware of the firm’s products — and of its rival Urban Ladder, backed by Kalaari Capital and SAIF Partners — many of them now say they want to touch and feel these pieces. To keep pace, both these companies are now tweaking their business models.

Pepperfry opened its first experience centre at Kanjurmarg in suburban Mumbai in late 2014 and has 20 such outposts across the country. Urban Ladder has two — a 3,500 sq ft centre at its headquarters in Yemlur, and a 750 sq ft sofa centre at HSR Layout, both suburbs of Bengaluru.

The latter provides a picture of the future for Urban Ladder: the centre is a fourth the size of traditional sofa sellers, yet stocking 60% of its sofa catalogue.

Initial reports suggest that consumers are buying the idea — the average offline basket size is at least thrice that of online purchases.

Meanwhile, in Pepperfry’s case, the firm is going from just experience centres to franchising its brand, with over 20 outlets expected to be opened by franchisees in the next year and a half. Ambareesh Murty, CEO and cofounder of Pepperfry, says, “We will expand by setting up offline franchisee stores in tier-2 and -3 towns and we are pushing to be profitable in 12 to 18 months.”

Urban Ladder wants to have at least four-five operational stores by this Diwali and 10-12 by the end of the financial year. To try to keep the cash burn down, the company is operating on the principle of less is more.

Both companies don’t have to look far back to be concerned. Fab Furnish, backed by the deep pockets of Rocket Internet, the German startup incubator, struggled to stay afloat for four years in a market that was driven by discounts and heavy cash burn. In April 2016, the firm was sold for under `10 crore to the Future Group.

Now, Fab Furnish as a brand may be shuttered entirely. “Compared with existing offline players, we have to be at least four times as efficient with our use of real estate to be as successful,” says Ashish Goel, CEO and cofounder, Urban Ladder. To do this, it will rely not just on clever architecture — creating multiple levels in a small space — but also leverage new technologies such as artificial and virtual reality to give consumers better insights on their options.

Urban Ladder expects to be profitable by March 2019, as it too expands aggressively offline. “We spent two years debating this offline push, but are now committed to this expansion.”

India’s largest furniture retailers (both bristle at the etailer tag) are making this strategic shift at a time when the industry itself is in transition. While unbranded and unorganised retailers may have held sway for decades, brands are now making a strong play for this market, online and offline.

(Source: www.economictimes.indiatimes.com)