Ikea to open small city outlets along with mega formats in India supported by online channel

Swedish furniture retailer IKEA plans to open small city outlets along with its mega format stores in India supported by online channel, tweaking its strategy in the wake of changing consumer behaviour, according to a senior company official.

The company,which had in 2013 received government approval for its Rs 10,500 crore investment for opening stores in India, had envisaged setting up 10 furnishing and home-ware stores as well as allied infrastructure in over 10 years in India. Subsequently, it planned to open 15 more stores.

So far it has set up three mega format stores in Hyderabad, Navi Mumbai and Bengaluru and two city centres in Mumbai.

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"A little bit slowed down during the Covid period but we are also learning from the first markets we have opened," IKEA India CEO Susanne Pulverer told PTI in an interview when asked about the impact of the pandemic on the company’s expansion plans in the country.

On the way forward, she said, ”We need to be close to where people are. So that's when we also looked at smaller formats that are still relatively big for Indian retail.”

When asked if that meant tweaking of the company’s strategy in India, Pulverer said, ”Yes, it is. Not only in India, it's also a global phenomenon that we see. It's not enough with the big store outside (city). People don't have time, maybe not having a car, they are not always willing to take all the things home, they want it delivered. Then we can be closer to people and have different ways of meeting them.”

So, it will be omni channel, she said adding, “It's the big IKEA full experience and it's smaller formats, maybe even smaller, where you can come and plan and get service for designing your home."

Pulverer said IKEA is still in the investment phase of its approved FDI and further investments have not been lined up although the furniture retailer is committed to the Indian market in the long term.

"We believe we will have many more stores and we will have omni channel because we see that is the future. The combination, and how many, what year I'm not ready to share yet. We are working with these plans,” she said.

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When asked about online expansion, Pulverer said, ”We want to go physical and online together, that's the best. We have done some pilots in the three cities in Gujarat with online only. We are evaluating but we know it is a full experience to get the inspiration and then you need to come to an IKEA store. So it's never as good just to put it online.”

She said the current contribution from the online channel to the overall sales is around 30 per cent, having increased during the pandemic and staying high.

“We believe it will continue to be increasingly important, but we believe that physical experience will also stay. So the combination I think is perfect actually. People choose when to shop from home and when to come out and have the experience. So, it will be the mix for the future that will be needed,” Pulverer said.

Ikea is also offering products online through the website or App to its customers in cities such such as Bengaluru, Hyderabad, Mumbai, Pune, Ahmedabad, Surat, and Vadodara.