The Ikea effect: How has it impacted furniture retail in Qatar?
Did Ikea’s entry into the Qatari furniture retail market disrupt the status quo? The widespread hype surrounding its arrival in Qatar is not a new phenomenon, as the furniture store received a similar response in many other countries. And as the brand marks its first year in Doha this month, The Edge’s Farwa Zahra explores how the giant retailer has impacted Qatar’s furniture retail sector.
We don’t believe the world needs another retailer; we need a better world,” Thomas Lundgren, founder of furniture retailer THE One, tells The Edge. In 1996, when he launched THE One, Lundgren had a very clear vision – “to save the world from Ikea and everything big box corporations stand for”.
Once an employee of Ikea, he says he saw an angel in his dream entrusting him with this responsibility. And it did not end there. About 18 years down the road, Lundgren still wants to recreate the dreams and dramas everyday at THE One, that has 16 theatres in Bahrain, Jordan, Kuwait, Lebanon, Qatar, Tunisia and the United Arab Emirates (UAE), with a current workforce of 650 employees. “We see our stores as theatres where dramas take place and dreams unfold,” says Lundgren.
With its arrival in Qatar last year, as Ikea aims to expand its Gulf region presence further into Oman, the obvious question is how what Lundgren calls the “big box corporation”, has affected the local markets. In the words of John Kersten, managing director for Ikea UAE, Qatar, Egypt and Oman, it is the Ikea experience.
“Ikea has brought choice and a theatre of experience to the Qatari retail scene.” – Anthony Ryman, managing director, Grow.
The hype surrounding Ikea’s entry into Qatar is not a new phenomenon. According to Ole Dahlsen, Danish store BoConcept’s master franchisee for the Middle East and North Africa region, Ikea had a similar impact in many other countries.
Ikea – a family affair
The sheer amount of space and the building’s design engage visitors, frequently lost to explore over 7500 products, 59 room settings, three homes, a 550-seat restaurant and a play area sprawling across 32,000 square metres. “The Ikea experience goes beyond shopping to create a day out for the whole family,” Kersten explains. The very idea, however, may lead to overspending, points out a respondent of an online survey The Edge conducted on the topic. “I believe it influenced people to buy unnecessary items. Ikea showrooms are even designed in a way so that people get lost, and buy items, which they never normally would. A lot of people now use ‘Lets go to Ikea’ as a weekend activity,” says a respondent.
Speaking about the notion of experiencing Ikea, managing director of brand consultancy Grow, Anthony Ryman says, “The idea of going to Ikea as an experience is novel for Qatar…it’s a day out, which is always a family affair.”
Ostensibly, it is this family-friendly nature of Ikea that has earned it a high level of visibility over a span of less than a year. According to The Edge survey, based on customer visits, Ikea and Home Centre showed the same level of visibility – both visited by 92 percent of respondents. When asked about preferred furniture outlets, 84 percent of these respondents chose Ikea followed by Home Centre.
While Ikea’s furniture reflects Swedish designs – simple, yet aesthetic. The conventional Arab furniture is embellished with fancy fabric and detailed carving. Add to this the number of non-Arab nationalities residing in Doha and the task or catering to the Qatari market seems more challenging for Ikea. “In Qatar, customer demand varies a lot. The expatriate community is big with a multinational taste in design,” says BoConcept’s Dahlsen.
“Qatar came with its unique challenges,” accepts Kersten, revealing Ikea’s extensive research on the local market, before the brand made its debut in Doha. “We created a majlis set-up using Ikea products to demonstrate how Ikea is relevant to local needs. We have worked on adapting our brand and our offering to our customers here and have been very successful,” he adds.
But Ryman has a different perspective, “Ikea appeals to a broad audience from a range of backgrounds and cultures. This can be seen when visiting the store in Qatar. Ikea is already popular among Europeans, who love the minimalist style that is the Ikea brand, reflecting its Swedish DNA.” For the Arab nationals, he says, “Qataris and Arab expatriates are becoming more inclined towards Ikea because it offers something different which hasn’t previously been available in Qatar.”
The inclination of non-Europeans towards Ikea shows the pace of changing consumer tastes and hence the changing nature of Qatar’s furniture market. Speaking about customer traits, general manager of Homes R Us, a furniture retailer with 14 stores across UAE, Qatar, Bahrain and Oman and a workforce of over 1500 employees, Ramesh Bulchandani says, “Consumer trends in the Gulf Cooperation Council (GCC) and Qatar tend to follow Western ones, in terms of designs and brands…The customer expectations are very modern, and the buying trends change very often.”
Catering to everybody’s tastes, however, is not on THE One’s agenda. “While Ikea targets the masses, our fans want unique, high quality furniture at value-for-money prices…We offer our fans truly unique home fashion pieces at affordable prices. You shop at THE One because you want to be an individual, not one of the masses, and you want that exclusivity without paying a fortune,” says Lundgren. This, perhaps, explains why the brand does not customise its products to any specific market.
However, within Qatar, and the Middle East, it is the furniture for masses that has proved to be more popular, explains Bulchandani. “While exclusive and luxury products are [popular] among top sellers, the market for traditional, classical products remains highly lucrative as a result of the tastes of different national populations,” he says.
According to The Edge’s online survey, many customers find furniture in Qatar overpriced. Ryman agrees saying that the key focus to build better customer relationship is by “reviewing prices to make them more competitive may also make some retailers more attractive”.
But is price the only factor governing customer preferences in Qatar? 84 percent of the survey respondents said they buy furniture only when there is a genuine need for it, as opposed to coming across better products to replace the existing items. An understanding of the prevailing mindset in Qatar suggests that most customers here see a furniture purchase as a combination of product and services provided by the retailer. When asked about the kind of services, home delivery showed highest demand, required by 92 percent of the respondents. 60 percent of the respondents said they required assembling services as a part of the purchase.
Contrary to these expectations, Ikea Qatar offers free home delivery and assembling services only for purchases above QAR2500. On a purchase of less than QAR2500, the customers are required to pay QAR100 for home delivery and QAR300 for assembling. “Do it yourself (DIY)”, according to one of the survey respondents, “is what Ikea has brought to Qatar. Customers, including myself, have been habituated to doorstep delivery and assembling. Ikea changed that.”
“While Ikea targets the masses, our fans want unique, high-quality furniture at value-for-money prices.” – Thomas Lundgren, founder, THE One.
But is it true for all? Arranging transport for large furniture items and later assembling them is easier said than done. That Ikea has moved all customers to DIY would be an overstatement as many still require these services, spurring a hidden economy. Strolling around the store’s warehouse and parking spaces are opportunists offering their assembling services for a fee.
Explaining the rationale behind DIY, Ikea’s Kersten says, “As part of the Ikea concept of “you do your part, we do our part and together we save money”, we encourage our customers to take home their products and assemble the furniture themselves for that feeling of instant gratification. This allows us to keep our costs low and offer customers low price, value-for-money products throughout our range.”
For Ryman, the concept of services attached to a furniture item starts even before a purchase has been made. Speaking about some features that can win better customer relationships for retailers in Qatar, he believes that retailers need to invest “in better training for staff, inspiring them to be more knowledgeable about their products to help inform customers make the right decisions in a friendly, natural way. This is a challenge for all retailers in Qatar and not just the furniture ones”. The knowledge, he says, should go beyond the prices and visible features of the products to include information about provenance of the furniture, who made it and where the materials are sourced from, etcetera. Speaking about this aspect of pre-sales services, Dahlsen says, “All BoConcept staff has gone through detailed training in BoConcept University, in order to offer the optimum service to the customers.”
Customer assistance was also pointed out in the survey as one of the top three areas of improvement for furniture retailers in Qatar. The highest number of respondents (75 percent) identified furniture quality as an element of concern followed by variety (mentioned by 67 percent of the respondents). “There is a general lack of quality and customer service when buying furniture in Qatar, especially compared to buying pieces in the UAE,” says a respondent. Other areas of improvement included delivery services, assembling services, furniture designs and price. The overall services provided by furniture retailers, according to Ryman, should aim at “moving from transaction to relationship as a concept to retain customers and influence them”.
Strong, but not so strong
Speaking about the difference in quality of furniture materials such as wood and fabric, Dahlsen does not see Ikea as a rival, “Ikea is a strong brand but not our competitor.” Within Qatar, he says, “The consumer behaviour was not affected since we are trading on a different level and type of clientele.” In fact, based on his experience of Ikea’s entry in other countries, Dahlsen says the giant retailer has positively affected BoConcept’s sales in many of the 61 countries in which the brand operates with its 264 stores. “Being a Swedish brand, Ikea’s design is somewhat Scandinavian-inspired, as is ours.”
The customer expectations are very modern, and the buying trends are changing often.” - Ramesh Bulchandani, general manager, Homes R Us.
Because of the hype created with the arrival of Ikea in many countries, Dahlsen says the brand often results in the taste of the consumers being more tuned towards this type of design. He admits that in some cases, Ikea did affect BoConcept’s sales negatively, but only in the short term. “In general, we often see Ikea’s entry in a market, where we are already operating, as an advantage…In the medium and long term, Ikea’s presence has almost always been an advantage for BoConcept,” concludes Dahlsen.
The statement is seemingly true for other furniture retailers in Qatar as well. The entry of Ikea into Qatar has triggered interest among customers. Drawing attention towards service quality and product range, the brand has ostensibly brought healthy competition to the market, as Ryman concludes, “Ikea has brought choice and a theatre of experience to the Qatari retail scene.”