Urban Ladder to invest up to $15 mn on first offline store in Bengaluru

Firm calls the move 'inevitable' given the existing size of the online market

After five long years of trying to champion the online-only model of selling furniture to Indian consumers, Urban Ladder has decided to break character by launching its first offline experience centre in Bengaluru.

The centre represents Urban Ladder's first big bet in offline retail where it plans to invest around $10-15 million over a period of one year. According to the company, its entry into the offline sector became inevitable as the size of the online market turned out to be smaller than what was predicted earlier.

"Last year, we received a lot of feedback from customers for whom engaging with the brand at a deeper level and beyond the online platform was a big differentiator. That really made us think about going offline," said Ashish Goel, co-founder and CEO of Urban Ladder.

Urban Ladder's key competitor in India, Pepperfry too arrived at the same conclusion and opened its first offline store in August last year. Both companies don't directly sell products in their stores but help customers in decision-making by offering them the experience to judge the quality of products before purchasing them online.

According to some industry experts, India's online furniture sector is seeing a big offline push ahead of the entry of the Swedish furniture retail giant- IKEA- in India. While IKEA has said it would look at the e-commerce sector only as a way to supplement sales in cities where it has stores, there is a clear threat to Urban Ladder and Pepperfry as both of them cater to the demands in the mass premium furniture category.

"When we started off everyone said 'who is going to go online to buy furniture?' But believe me, we have been able to overturn that. Today, if you have to buy furniture, your search starts online. That's what we've achieved," added Goel.

The 7,000-square-foot store in Bengaluru isn't Urban Ladder's first tryst with offline retail. The brand had opened a store within its own office in the city a few months ago, while also setting up a small outlet that exclusively showcased its sofas. The brand even had a store-in-store experience in partnership with furniture retailer Balini but this was largely a failure, said the company.

The confidence to open a large, consumer facing store showcasing a variety of its products, came from the fact that the company has seen conversion rates as high as 35 per cent at its other offline experiments. The new experience centre is a culmination of eight months of hard work understanding the offline world, said Rajiv Srivatsa, co-founder of Urban Ladder.

Unlike in the fashion space, where brands have to shell out upwards of Rs 4,500 for developing every square foot of retail space, Urban Ladder says it's investment is much lesser - in the tune of Rs 1,200 per square foot. This makes the stores a lot more economical, with the first centre in Bengaluru costing between Rs 1.2-1.4 crore.

In the next two to three months, Urban Ladder plans to open two more stores in Bengaluru's upmarket areas of Whitefield and Jayanagar. The firm will streamline its offline retail experience from feedback gathered from the first three stores, before moving into other cities, something it says will take six to eight months.

After the first ten offline experience centres are setup, which Urban Ladder plans to do by March 2018, Goel said the company might even consider a franchisee model to growing further. As for the expectation of sales being driven via the offline channel, the firm wants to see 25 per cent of its leads coming from offline in the next 18 months.

Using offline retail to augment its growth, Urban Ladder says it wants to move from being the number three brand in India's furniture space to number one within the next 18 months.