Two years after it made its India entry through Hyderabad, the world’s biggest furniture retailer IKEA is coming to Mumbai later this week. The Swedish company, known for its minimalist Scandinavian design and budget prices, will launch its store in Navi Mumbai on December 18.
Per Hornell, Market and Expansion Manager, IKEA India, says the company has big designs on India’s financial capital—its Navi Mumbai store is the size of 10 football fields and the company plans to have two smaller city-centre stores in 2021. It wants to give its customers more than the famed BILLY bookcases, it wants to offer them home solutions, he says.
The coronavirus outbreak has done little to change its plan, as IKEA is betting big on India’s expanding middle class and young population. In an exclusive interview to Moneycontrol’s Vandana Ramnani, Hornell says the company is targeting 100 million customers in Mumbai, Bengaluru and Delhi over the next two years. Edited excerpts:
What are IKEA’s plans for the Indian market? What will be the size and investment in stores?
Globally, IKEA has decided that India is a priority market. We see a big potential in India when it comes to peoples’ passion for the home, high density and a fairly large young population. We have set a short-term objective that IKEA will be accessible to at least 100 million people in India by 2022.
The way to become accessible to 100 million people is to have an additional focus on the three main cities—Mumbai, Bengaluru and Delhi—in that order. IKEA is not just about selling individual BILLY bookcases. It is about providing solutions for a better everyday life and in order to do so, we need to understand peoples’ lives at home and to focus on each of the markets with an omnichannel approach. We will like to have a strong online approach for these markets and also have a strong logistics setup with good service offerings.
In all these three markets, we will be using the full portfolio of our retail format to be accessible and will be opening one flagship store in all of these three locations. All our flagship stores across the country will between 300,000 and 500,000 sq ft. We will also be launching city stores in these areas, which would be spread across 80,000 sq ft to 100,000 sq ft.
Have you zeroed in on the locations for these stores?
It is an ongoing process. In some cases, we have identified the locations and in some cases, we are currently in discussions with the developers. Going forward, we will continue to announce additional store openings in Mumbai linked to the city store format. We are currently also having ongoing discussions in other markets as well.
Tell us more about the Mumbai store.
IKEA will be investing Rs 6,000 crore in Maharashtra in the next couple of years. The Navi Mumbai store located in Turbhe is spread across 5.3 lakh sq ft, which is large enough to accommodate 10 football fields. It is an extra-large store from an IKEA perspective. It will have two floors of parking to accommodate 2,000 cars and two floors from the retailing perspective. It will also have the largest 1,000-seater restaurant like the Hyderabad store—the biggest in Asia.
The Mumbai store will be somewhat larger than the Hyderabad store. It will showcase 7,000 articles, have 50 different rooms built up with home furnishing inspiration, six homes representing how people live in Mumbai and additional areas to arrange a presentation. It will also have the largest children’s area in IKEA globally called Småland.
The store is equipped to handle heavy footfalls but in the present situation, we are mindful of the protocols put in place on account of the COVID-19 situation. We have come to Mumbai to participate in a marathon and not a sprint. We will be focusing on providing a safe customer experience to shoppers for which we will be having a registration based on invitation, which would ensure that the number of footfalls are low during the pandemic.
Customers will be allotted a day and time slot to visit the store. We have consciously tried to do that so that both, IKEA and the customers, together can take responsibility for providing a safe and good shopping environment. IKEA continues to develop its omnichannel presence with e-commerce, physical stores and additional services as “click and collect”, “click and deliver” and remote planning. After the Navi Mumbai store, two more city center IKEA Stores will open during 2021 to reach many more people in Mumbai.
What about Noida and Bengaluru stores?
Both these cities will have flagship stores similar to the Navi Mumbai and Hyderabad stores. The Bengaluru store will also have a two-level parking and a two-level shopping floor that will extensively reflect how people live in the IT city.
Our stores to come up in Noida and Gurgaon will be part of a shopping-centre solution. That means that the store layout plan in Delhi would be slightly different because the customer behaviour is different when it is part of a shopping centre compared to a standalone IKEA store. We are in the process of acquiring land both in Noida and Gurgaon. While the land parcel in Gurgaon has been acquired, we are in the final stages in Noida.
Delhi is a prominent market with a huge potential good location and IKEA will continue to work to find additional locations for IKEA stores in Delhi. We are in the phase of completing the land acquisition process for the Noida store. Once we have all the permissions and licences in place, that’s when we will talk about a timeline to start construction.
As for now, we are working on these two Delhi-NCR stores and looking for at least as many more. We will be putting emphasis on the online approach. Having said that, today we are not working with a set number of stores for any market. Our plans will continue to evolve based on customer behaviour and feedback.
With the work-from-home concept here to stay, is the company bullish on online sales? How has the response been during the pandemic?
The home has always held a very special place for Indians and the focus on work-from-home during the pandemic has only accelerated the trend. Both the home and the family concept are very strong in India. During the pandemic, we have all spent more time at home, which has meant that we not only work from home but also study from home. When it comes to workplaces, when it comes to office space, when it comes to lighting, anything which has to do with creating a workplace at home is something that is significant.
Along with this, food, too, is central in the Indian context due to which there is a massive demand for cooking products. It is because of this reason that our online sales have grown three to four times during the pandemic and we expect this trend to continue.
China is one of the major markets that manufactures and supplies products to IKEA India. How is the company planning to handle this challenge? Is it working on identifying local suppliers to meet its strict quality benchmarks?
In India, we are working with close to 50 suppliers and that represents over 20 percent of our total sales. We are working with new categories— ceramics, glassware, wood, natural fibres, bamboo, etc categories other than textiles (mattress, sofas, and chairs have started). This number will grow significantly over the coming years.
Suppliers in India continue to develop, we have a large retail base and we continue to create new demand. We will be working with more Indian suppliers going forward. We seek to offer solutions/ products that meet the needs of Indian consumers. Besides, IKEA has been sourcing from India for more than 35 years for its global markets. This is our way of contributing to the Atmanirbhar Bharat Mission.
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