Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Event-Driven

In a recently published interview, <a href="https://www.livemint.com/companies/news/ikea-finds-mattresses-score-over-bookcases-in-india-1554752934010.html" target="_blank">IKEA's chief executive confirmed </a>that offtake in furniture has been slow at its only store in India at Hyderabad and sales are mostly limited to low-value items and mattresses. Overwhelming crowds had thronged the store for weeks post its opening in August 2018 ( <a href="https://www.smartkarma.com/insights/consumption-diary-as-ikea-storms-india-gsk-wants-a-way-out-actionable-insights-from-smartkarma" target="_blank" data-smartkarma-citation="insights:23284">Consumption Diary: As IKEA Storms India, GSK Wants a Way Out; Actionable Insights from Smartkarma</a> ), suggestive of India's large pent up demand for quality affordable home products. However, during our ground check in the year-end holiday season, we were surprised to note that while visitors came in large numbers, shoppers were sparse in furniture segment and billing counter was nearly empty. Apart from the kitchen supplies area and a good turnout at the food section, shopping seemed lacklustre. Why isn't IKEA's attractive price-product proposition able to convert curious walk-in visitors to loyal customers?
In the detailed note below, we look into possible reasons why IKEA's furniture sales arent commensurate with high footfalls, based on the store visit and our analysis of Indian shopper's preferences/constraints with respect to home products purchase. We believe many shoppers are constrained by access to purchase than affordability, given lack of credit options. We also compare IKEA with existing large home products retailers in India and look at the scope of IKEA's opportunity/challenges as it expands presence across geographies and formats in India.

In a recently published interview, IKEA's chief executive confirmed that offtake in furniture has been slow at its only store in India at Hyderabad and sales are mostly limited to low-value items and mattresses. Overwhelming crowds had thronged the store for weeks post its opening in August 2018 ( Consumption Diary: As IKEA Storms India, GSK Wants a Way Out; Actionable Insights from Smartkarma ), suggestive of India's large pent up demand for quality affordable home products. However, during our ground check in the year-end holiday season, we were surprised to note that while visitors came in large numbers, shoppers were sparse in furniture segment and billing counter was nearly empty. Apart from the kitchen supplies area and a good turnout at the food section, shopping seemed lacklustre. Why isn't IKEA's attractive price-product proposition able to convert curious walk-in visitors to loyal customers?
In the detailed note below, we look into possible reasons why IKEA's furniture sales arent commensurate with high footfalls, based on the store visit and our analysis of Indian shopper's preferences/constraints with respect to home products purchase. We believe many shoppers are constrained by access to purchase than affordability, given lack of credit options. We also compare IKEA with existing large home products retailers in India and look at the scope of IKEA's opportunity/challenges as it expands presence across geographies and formats in India.

IKEA in India: Decoding the Case of the Curious Shopper & Slow Offtake for High-Value Items

Netherlands

IKEA of Sweden AB retails home and office furnishing products. The Company offers furniture, home and kitchen appliances, lighting, textile, carpets, decoration, and other products. IKEA of Sweden serves customers worldwide.

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IKEA of Sweden AB (4168877Z SS)

IKEA in India: Decoding the Case of the Curious Shopper & Slow Offtake for High-Value Items

In a recently published interview, IKEA's chief executive confirmed that offtake in furniture has been slow at its only store in India at Hyderabad...

Devi Subhakesan

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