In line with its fresh focus on omni-channel retail, Ikea has also started online sales in Pune, Mumbai and Hyderabad as it tries to reach shoppers across multiple-formats
The store that opens on Friday expects to attract 5 million shoppers once normalcy returns post covid
Swedish retailer Ikea on Thursday announced opening of its second store in India, in Navi Mumbai, backed with an investment of Rs1,500 crore for Indians with “big dreams and thin wallets" lifting the lull that the pandemic cast on its expansion. The company also plans to open two smaller format stores in Mumbai within a year, said top executives at the company.
The furniture, kitchen appliances and home accessories retailer has, so far, invested Rs7,000 crore in the country opening two stores and several fulfilment centres.
In line with its fresh focus on omni-channel retail, Ikea has also started online sales in Pune, Mumbai and Hyderabad as it tries to reach shoppers across multiple-formats.
The 5.3 lakh sq feet Mumbai store will offer the largest shopping section for children that the retailer has in the world—drawing from its success that the category saw at its first store in Hyderabad launched in 2018. The Mumbai, store, over two floors, will also have a 1,000-seater restaurant serving both Indian and Swedish cuisines.
Roughly 2,000 of the 7,000 products sold at the store will be locally sourced, the company’s top management said. Jesper Brodin, CEO of Ingka group, said that the Mumbai store was like a milestone and that Ikea was part of modern India both in good and bad times.
To be sure, by 2030, Ikea plans to invest Rs6,000 crore in the state of Maharashtra. It counts Mumbai as one of its biggest and most important markets in India, the retailer said.
The store that opens on Friday expects to attract 5 million shoppers once normalcy returns post covid. For now, the number of visitors to the store will be capped owing to social distancing.
The store has already hired 600 direct plus 300 indirect workers.
The store opening comes as Ikea pans to reach 100 million people in India by 2022.
“India will be one of our priority markets and the investment will follow to enable that," Peter Betzel, chief executive officer, Ikea India told Mint in a virtual interview.
Despite the challenges thrown by the pandemic Betzel said its store in Bengaluru is under construction and will open in the coming 12 months. In Delhi-NCR it will open multiple format stores including a combination of a shopping centre, small stores and big centres.
Ikea’s top management said that the pandemic has magnified consumer needs for products at home as shoppers the world over spent more time indoors.
“The home is getting even more important. We see that the home is becoming the new office…it is becoming the new school, the new playground, the new restaurant. We are sharing due to the pandemic several challenges—we are living in small spaces; we are living with the entire family. We also sharing that many people have big dreams in their life at home but then many people also have thin wallets," said Betzel.
The pandemic, said Betzel, has also accelerated the need for multiple shopping points for retailers as consumers switch between shopping online to picking up products from stores. “…We see that online plays a much bigger role than it had before, the need for more online or digital services so we introduced click-and-collect in Hyderabad. We will introduce that also from the beginning here in Mumbai," he said.
Betzel said the share of online sales is increasing. “It might go up to 25-30% but the hub of inspiration will be created in our physical spaces," he added.
Meanwhile, in a market like India, that is already value conscious, affordability remains a key driver. Demand for value-for-money products was strong in India, Betzel said.
Ikea has been sourcing (primarily textiles) from India for over three decades mostly for its global stores. It, however, has a mandate to increase local sourcing for its stores here in line with government rules on foreign investment in single brand retail.
The retailer is now expanding its supplier base to include other categories.
“We have been opening suppliers for the comfort category—for example mattresses, sofas. We have been opening suppliers for decoration and storage. Today, we are sourcing close to 2,000 articles from our range of 7,000 articles already in India. Our ambition is to increase the share. Today we are at 20% and maybe in the future that can be 30% or 40% or 50%. So this is our ambition but we cannot reach there alone," he said, adding that Ikea needs more sustainable suppliers here.
For the year ended March 2019, Ikea reported a total revenue of ₹407.95 crore. It posted a loss of Rs685.4 crore for the same period, according to Tofler.
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