Urban Ladder readies to take on Ikea with offline stores

Expects explosive growth with reversal in real estate sector's fortunes

Online furniture brand Urban Ladder has drawn up plans to stay closer to its customers by rolling out smaller retail stores across cities ahead of global furniture major Ikea's big-bang retail foray in places like Hyderabad and Bengaluru. 

"Over the next twelve months, we want to establish a completely different way of doing physical retail. It should set the standards for how people will be thinking about physical retailing in terms of quality and the experience, revenue utilisation of the premises, of what sheer excitement that retail space can create. That is our goal," Urban Ladder Chief Executive Officer Ashish Goel told Business Standard.

The five-year-old Indian furniture start-up is giving the final touch-ups to its very first 7,500 square-foot retail store in Bengaluru for a possible launch on June 1, 2017. It had decided to enter the off-line market last year. 

There will be 20 stores in the next two years as it plans to open four smaller stores as an answer to one big store in each city, according to Goel, who founded the company along with Rajiv Srivatsa in 2012.

According to Goel, the advantage of being a local company, which expects to have better insights and focus on local customers' needs, as well as the experience gained in the past five years in finding solutions to the local challenges gives Urban Ladder the necessary confidence.

In addition to that, the company is planning to invest in product development, as it seeks to coordinate with a lot of famous designers, and in technology. It is also investing in retail distribution as it gears up to offer a range of products matching the competition in quality, innovation and price through the upcoming off-line stores.

All this comes as Urban Ladder is looking to reach new milestones in size and financial parameters during the course of the next two years. "We are six months away from becoming the largest furniture brand in India. The current 65-75 per cent growth will take us close enough to the $100 million (Rs 650 crore) revenue mark in financial year 2017-18," Goel said, adding that they have the resources to meet the investment needs in the next 18-20 months.

So far, Urban Ladder has raised $90 million, including the very recent round from its existing investors Kalari Capital, SAIF Partners, Steadview Capital and Sequoia, at a 20 per cent higher valuation compared to the time of its previous fund raise. 

The management believes that additional fund raising would not be required before the business turns self-sustaining. "We have $20 million in hand and another $20 million is all that we may need to reach free cash flow positive stage," said Goel. The company expects to turn profitable in financial year 2018-19.

According to Goel, the next five years are going to be a very exciting and explosive journey for Urban Ladder: "In the past five years, we have built the business against the force of nature, when the real estate sector was going through a prolonged down turn. As the real estate sector expects to turn the corner and the cycle starts going up in the next two years, we will see the real boom for our business," said Goel.