The retailer of furniture, kitchen appliances and home accessories has, so far, invested Rs7,000 crore in the country by opening two stores and several logistics centers.
In line with its new focus on omnichannel retail, Ikea has also started online sales in Pune, Mumbai and Hyderabad as it seeks to reach shoppers in multiple formats.
The 5.3 lakh square foot Mumbai store will offer the largest children’s shopping section the retailer has in the world, drawing on the success the category has seen in its first store in Hyderabad launched in 2018. The Mumbai store , on two floors, it will also have a 1,000-seat restaurant serving both Indian and Swedish cuisine.
About 2,000 of the 7,000 products sold in the store will be locally sourced, the company’s top management said. Jesper Brodin, CEO of the Ingka Group, said the Mumbai store was like a milestone and that Ikea was part of modern India for both good and bad.
To be sure, by 2030, Ikea plans to invest 6,000 crore rupees in the state of Maharashtra. It counts Mumbai as one of its largest and most important markets in India, the retailer said.
The store that opens on Friday expects to attract 5 million shoppers once normalcy returns after the covid. For now, the number of visitors to the store will be limited due to social distances.
The shop has already hired 600 direct workers plus 300 indirect workers.
The store opening comes like Ikea pans to reach 100 million people in India by 2022.
“India will be one of our priority markets and investments will follow to enable it,” Peter Betzel, chief executive officer, Ikea India told Mint in a virtual interview.
Despite the challenges posed by the pandemic, Betzel said her store in Bengaluru is under construction and will open in the next 12 months. In Delhi-NCR will open multiple size stores, including a combination of a mall, small stores and large malls.
Ikea’s top management said the pandemic has amplified consumer needs for products at home as shoppers around the world have spent more time indoors.
“Home is becoming even more important. We see that the house is becoming the new office… it is becoming the new school, the new playground, the new restaurant. Due to the pandemic we share several challenges: we live in small spaces; we are living with the whole family. We also share that many people have big dreams in their life at home, but then many people also have thin wallets, ”Betzel said.
The pandemic, Betzel said, has also accelerated the need for more points of purchase for retailers as consumers shift from shopping online to taking products from stores. “… We see that online plays a much more important role than before, the need for more online or digital services, so we introduced click-and-collect in Hyderabad. We will also introduce it from the beginning here in Mumbai,” he said. .
Betzel said the share of online sales is on the rise. “It could be as high as 25-30%, but the focus of inspiration will be created in our physical spaces,” he added.
Meanwhile, in a market like India, which is already value conscious, accessibility remains a key factor. Demand for value-for-money products has been strong in India, Betzel said.
Ikea has been sourcing (mainly textiles) from India for over three decades, mainly for its global stores. However, it has a mandate to increase local sourcing for its stores here in line with government regulations on overseas investment in single-brand retail.
The retailer is now expanding its supplier base to include other categories.
“We have opened suppliers for the comfort category, for example mattresses, sofas. We have opened suppliers for decoration and storage. Today, we are purchasing nearly 2,000 items from our range of 7,000 items already in India. Our ambition is to increase the quota. Today we are at 20% and maybe in the future it could be 30% or 40% or 50%. So that’s our ambition, but we can’t achieve it alone, “he said, adding that Ikea needs more sustainable suppliers here.
For the year ending March 2019, Ikea recorded a total turnover of ₹407.95 crore. It recorded a loss of Rs685.4 crore for the same period, according to Tofler.