Ikea to expand retail operations, local sourcing

Swedish furniture maker IKEA is looking for omnichannel expansion with diverse retail formats besides kicking off online operations in Delhi-NCR by the end of 2024 as it enters the second phase of growth in the Indian market.

According to company's India CEO, Susanne Pulverer, Ikea is now planning to expand its operations by adding more stores to its network. It is also considering new locations such as Pune and Chennai, as well as increasing local sourcing making products more affordable.

Ikea, which has completed five years of retail operations after opening its first store in Hyderabad on August 9, 2018, plans to increase its employee count to 10,000 from 3,000 in the coming years.

Besides, the company, which sources from India for its global retail operation, is expanding its scope and looking into a big category with wood-based products.

"Our next growth phase in India looks very promising and full of opportunities. IKEA is committed to India and here for the long term. We are looking at an omnichannel expansion in India with diverse retail formats to come closer to the many people in India," Pulverer told PTI.

She further said:" We have already booked an investment of Rs 10,500 crores in building five stores in India, apart from announcing investments in two large shopping centres in Gurugram and Noida with integrated IKEA stores."

In the second phase, Ikea is "looking at a faster expansion than the first five years".

It expects an "accelerated expansion" based on the learnings from the first phase. Ikea has opened stores in cities such as Hyderabad, Mumbai, and Bengaluru cities, and has an online presence in Ahmedabad, Vadodara, Surat, and Pune under the first phase.

"Delhi NCR is our next big market. We are planning to start online operations in Delhi by the end of 2024 followed by the Ingka Centres Gurugram project opening in 2025," she added.

After Delhi, Ikea is "looking at what are the next markets as well. Pune and Chennai are interesting. Of course, we are exploring more opportunities, but it is important to penetrate each market in a good way, with a good omni-channel setup".It is important to penetrate India with good omni-channel support, Pulverer added.

"What we have learned is that our full-size stores, flagship stores of IKEA work very well in India. So that's the base and then to complement we will have a different format services fulfilment set up to support it," she said.

Over investments, Pulverer hinted that it would not be limited to Rs 10,500 crore but would be expanded further in the long term.

"We are only in the beginning of reaching people in India. So we will have to invest much more this is as we say we are here for the long term. We have started with these investments and we are looking into the next phase based on what we have learned," she said.

"We will go to many more cities, one by one and really reach more people," she added.

Local sourcing

The company also plans to grow local sourcing share in India in the coming years, which will help IKEA become more affordable.

"As we diversify into newer categories to manufacture IKEA products in India, we are also exploring the possibility of manufacturing wooden products in India," she added.

On Ikea's five years of operation here, IKEA India CEO Susanne Pulverer said the company has learned during the pandemic about managing the supply chains, which will help them "into the future".

"We started with textile and carpets, but that has also expanded into other categories plastic and metal and mixed materials, decorating items, fibre natural fibres, mattresses and we are now looking into a big category with a wood," she said.

"There is some availability but not sufficient to really be a big sourcing market There is a need for more sustainably managed forests that can give the right sustainable raw material," Pulverer added.

Ikea works with around 65 suppliers in India where it also produces goods for its stores worldwide.

"We're not here just to sell furniture... We want to be part of the India growth story and be a good business partner in that," she quipped.

For the financial year ended on March 31, 2022, Ikea India's net sale/revenue was up by 77.07% to Rs 1,076.1 crore.