IKEA looking for next phase of investment in India, aims profitable growth: CEO Susanne Pulverer
IKEA plans to open physical stores in Chennai and Pune in the next phase after having operational stores in Hyderabad, Mumbai and Bengaluru.
Swedish furniture retailer Ikea, which is starting online sales in Delhi-NCR and nine other markets this week, is looking for the next round of investments in India and will move to profitability after expansion, said its India CEO Susanne Pulverer.
Ikea is planning to have two full-size stores in Delhi-NCR—at Gurugram in 2026 and Noida in 2028.
It also plans to open physical stores in Chennai and Pune in the next phase after having operational stores in Hyderabad, Mumbai, and Bengaluru.
After entering these six key metro markets, Ikea will work on the next phase of its journey for the country, where it will expand with smaller stores and an omnichannel strategy.
Pulverer did not specify any timeline for Pune and Chennai stores but said Ikea would be there in a couple of years. In Pune, Ikea is already available through online sales.
"The physical expansion has to complement ecommerce at Pune, and Chennai is the market we have not opened. These are together with the continuing Bangalore, Hyderabad, and Mumbai, which are in the growth phase of the next four or five years," Pulverer told PTI.
Over its foray into Eastern markets as Kolkata, she said it is also an important market and Ikea would like to go there.
"We take it step by step. The logistical setup is important to open a market like in the East, and that we need to look further into it. So in the third phase, we can say. But for now, it's the six markets in focus," she added.
In 2013, the government approved a Rs 10,500 crore FDI proposal by Ikea to set up 10 stores with allied infrastructure in 10 years.
Ingka Centres, a part of Ingka Group that operates Ikea retail, is investing one billion euros to set up two centres—one each at Gurugram and Noida—under the 'Lykli' brand.
"So yes, we are in dialogue (with government ). The investments which we committed are booked up with the two big investments in Noida and Gurugram," she added.
Ikea India in FY24 reported a widening of total loss to Rs 1,299.4 crore and its revenue from operations was at Rs 1,809.8 crore, up 4.5% year-on-year.
The company now aims to have profitable growth after attaining a size.
"Every business needs to become profitable, and it's the same for Ikea in India. However, we follow the plan. So when we go into a new market, we invest heavily, we protect affordability, because we do not want to position Ikea as non-affordable, and then we take a route to profitability year on year. So in the coming years, we will move to a profitable Ikea in India as well," she said.
Moreover, adjusting to the high real estate prices in India, Ikea is also reducing the size of its new stores, by optimising the space utilisation. The size of stores in Gurugram and Noida will be 2-2.5 lakh square feet, much smaller than Ikea's traditional large-format stores.
"We came with very large size 4.6 lakh square feet stores like in Bangalore. We see that we can build the supply and the logistics in a different way, not fulfilling from the store, but a Customer Distribution Center (CDC) like here in Delhi, and we see we can optimise the space in the store to use it more wisely, and by that, also gain more lower cost," she said.
Currently, Ikea has large format stores in Hyderabad (4.8 lakh square feet), Navi Mumbai (5.3 lakh square feet) and Bengaluru (4.6 lakh square feet). It had also opened two small city centres in Mumbai, one of which was later closed.
"...when we look at Gurugram and Noida, we have taken the learnings and sized it a little bit less, but at the same time, have all components of the Ikea experience, food and the play area, all the parts of the home, having inspiration, having room sets, all of that we do, but on a slightly smaller size," she said.
Asked whether Ikea is witnessing a drop in the number of footfalls due to current high inflation, Pulverer said, "We see all types of customers coming. Some of them might not even buy anything. They look, they explore, they see, they might buy some food. There are some who come and buy smaller items, and there are some who buy, actually, for the whole home."