We will open much more than 25 stores in India: IKEA’s Betzel3 min read . Updated: 12 Dec 2019, 06:22 AM IST
We have sites in Delhi where we will open stores including our shopping centre and meeting place
IKEA India chief executive Peter Betzel was in New Delhi to attend a Business Sweden event last week. He spoke of the impressive consumer response to the furniture giant’s Hyderabad store, future expansion plans and the need to remain affordable in India. Edited excerpts from an interview:
IKEA in India has done business worth ₹400 crore in FY19. Is that standard for the company?
You cannot say it is standard. I think it is fantastic for India because it is right on the way of our expectation in a brand new market. We have worked for a long time to get here. There are many people who know IKEA because they have been living abroad or are generally interested, but we would like to create a better everyday life for many people who have not known IKEA so well. So, we need to introduce them to IKEA, build the brand and explain what we stand for. From that perspective, we had almost five million visitors in one year—which is amazing. It’s a fantastic number, something we don’t have in many other countries when we open our first store.
When IKEA came here, you spoke of 25 stores. But globally, you are pivoting to smaller stores and e-commerce. Does that change your India strategy?
The world is changing fast due to digitization. While India, one of the fastest-growing countries in the world, comes with the excitement, it has its own challenges in terms of society, affordability, shopping habits and accessibility. From an IKEA perspective, we decided one-and-a-half years ago that we need to transform our business model. We need to be much more accessible to many people, which means adopting a true omni-channel approach. This means the big stores and small formats in the big cities of Mumbai, Delhi and Bengaluru and then also having an online approach. This is exactly what we need in India.
Will you still have 25 stores as promised?
I said we were changing when we talk about accessibility. If we look at how many physical meeting places we will have, may be in 8, 10 or 15 years, it would be much more than 25. Whether it will be 25 big stores, I cannot say today. We will open (the big store) in Mumbai next year and then Bengaluru will happen in one-and-a-half years. We have sites in Delhi where we will open stores including our shopping centre and meeting place. So, we have plans for the big store but we have many more plans for smaller store formats in the city which will range between 5,000 sq.m to 10,000 sq.m. So, there will be many more opportunities for our consumers to meet IKEA, and there will be many more meeting places than just 25.
What sets Indian consumers apart from their global counterparts?
We visited more than 1,000 homes in India before opening the business here. Let’s start with the commonalities. Many people around the world have similar challenges—normally, they don’t have enough money, they have smaller rooms, they are living with family and children and they are organizing the space on a smaller scale. This is maybe more extreme in India. Mumbai is one market with small living spaces. It is fantastic for us because our product range is meant for people who are living in small spaces as it offers unique storage opportunities and flexible furniture options. From a consumer perspective, affordability in India is different than in the US. Customers here demand affordability more.
Also, the demand for services is very unique in India. We have established brand IKEA on the do-it-yourself (DIY) principle, which we would like to bring in India. We would like to show our Indian customers how to assemble their furniture because then, they will have a personal relationship with it. But assembling furniture by oneself is not common here. That is why we need to have these services in place. In Hyderabad store, we offer this service partly in-house, and we are also working with UrbanClap.
Besides, Indians like colour and design. The range here is less of heavy wood and the collection itself is very colourful.
Will you change your price points as you enter Mumbai?
No, we need to be affordable for the many people we try to service. I learnt that if you are a foreign brand in India, people think you are expensive. We would like to turn it around. We would like to really tell the people that our ranges are affordable, functional and sustainable. We will not change price points—we need to be for the many people and not for the last 10% of the people.