IKEA Plans Network Of Smaller Store In Indian Cities To Close Retail Gap

SUMMARY

IKEA is planning to open small stores in major cities

IKEA had recently switched its plans for Mumbai expansion to online-then-offline

It will launch ecommerce operations for Hyderabad soon

Swedish furnishing retailer IKEA has decided to divert its strategy for growth in India to open smaller stores in major cities. This is expected to cut down travel time to the outlets and help the company be closer to its customers’ homes.

Peter Betzel, managing director, IKEA India reportedly said that the company is planning to have more formats including an ecommerce platform. The company wants to reach 100 Mn customers in the near future.

IKEA launched its first India store in Hyderabad in August last year. The company invested $108.6 Mn (INR 800 Cr) so far to set up its 400K sq ft store in Hyderabad. It has the biggest Ikea restaurant anywhere in the world, with seating for 1,000 people.

However, with much-awaited second store launch in Mumbai, the company had plans to start with an online launch first. This would be followed with smaller outlets, pick up centres and customer service stations across the city. These would be around 50K-150K sqft stores. The omnichannel and multi-format model is expected to help the company reach out to a younger customer base.

An IKEA spokesperson had said at the time, “Customers will be able to shop online quite soon in the coming months in Mumbai followed by Hyderabad and Pune and then other cities. Land sites have been acquired in Bengaluru and Gurugram and we continue to look for suitable sites in other cities across India. The ambition is to be present in as many Indian cities as possible through different channels.”

IKEA is now looking to launch its ecommerce operations in Hyderabad in the coming months. This would be followed by other cities like Mumbai and Delhi where it is slated to open new stores. The smaller outlets will be run in cities with limited products.

It also purchased 10 acres of land in Gurugram and plans to build another 400K sq ft store with parking for 1,000 cars. IKEA also planned to start online retail operations in India.

In India, IKEA challenges players such as Urban Ladder, Livspace, Furlenco etc. An IBEF report said that the Indian furniture industry is gradually transforming into a more organised and competitive sector. The entry of global brands in the sector, the emergence of large retail players and the resultant consolidation, are trends that highlight this transformation.