Swedish furniture retail major IKEA is witnessing double digit growth in its e-commerce sales in India, despite an ongoing consumption slowdown in urban markets, said Bhavana Jaiswal, Country E-commerce Manager, IKEA India.
“We are still growing in an upward trajectory, despite the slowdown in consumption. So, we have not been impacted so far. There is also a tailwind of latent demand coming in and helping us. Our e-commerce sales are growing in double digits,” Jaiswal told Moneycontrol.
To be sure, this growth is coming on a lower base as it is still early days for the company in India. IKEA had entered India with its first major store in Hyderabad in 2018, later launching in Navi Mumbai, and Bangalore as well. It currently offers e-commerce services across 60 cities in south India.
Regardless, the company’s growth comes at a time when consumer-facing firms, across sectors, have reported weaker demand as consumer spending has taken a hit. This trend is especially prevalent in fast moving consumer goods (FMCG) majors, like HUL, ITC and Nestle, who posted weaker financials in the December quarter.
The impact has also been visible in new-age sectors like food delivery, where companies like Swiggy and Zomato have posted weaker growth in the third quarter.
Jaiswal was speaking at the launch of IKEA’s e-commerce operations in the north India market, starting with Delhi-NCR and nine satellite regions. Starting March 1, consumers in these markets will be able to shop from IKEA’s catalogue of over 7,000 products, the company said.
Following this, the company has outlined plans to launch two full-sized stores – in Gurugram by 2026, and Noida by 2028 – investing roughly Rs 7,000 crores to set them up. It currently has around 3,000 employees in India, and has cumulatively invested Rs 10,500 crore in the country so far.
Before its larger stores come up, IKEA will also set up smaller retail stores in NCR housing roughly 4,000-5,000 of its products, as the firm eyes its next phase of investments. Beyond this, the Swedish retail giant plans to set up physical stores in Chennai and Pune, the timelines for which have not been finalised yet.
Unlike other global markets, e-commerce has proven to be an effective channel for the company to enter and expand into India, said Jaiswal.
“India is one of the few markets where we are expanding digitally first. In a majority of our markets, our stores come first. India, being the third largest e-commerce market in the world, with the second largest number of users in the world, is a very mature market. We have adopted our strategy in India accordingly,” she said.
Online channels contribute to 30 percent of IKEA’s revenues in India, with the remaining coming from offline retail.
“It (India) is a market where we have a lot of potential (for e-commerce). We feel that we can hit upwards of 40 percent here,” Jaiswal added.
This comes as demand for e-commerce, as well as quick commerce, has been on the rise in India, particularly in urban markets where IKEA has a presence. However, Jaiswal said that the company is well positioned to fend off rivals.
“We always anticipate competition. Online home furnishing is still a growing category online. A majority of online sales in India are driven by electronics, fashion and beauty. So, e-commerce in home furnishing is still growing. So, there is space for all of us to grow,” she said.
Regardless, the company is working on cutting down its delivery time, to better compete with rapidly-growing quick commerce firms.
“We have always worked on cutting down delivery times…We started deliveries in Bengaluru with a seven-day delivery time in 2022. In Delhi, we are aiming to do next-day deliveries,” Jaiswal said.
“With quick commerce, we are always open to exploring opportunities, and we are monitoring the space. I don’t think we will look at quick commerce for furniture, but there are definitely accessory categories where demand could pick up,” she added.
Ikea India, which is a subsidiary of Netherlands-based Ingka Holdings, reported a widening of losses to Rs 1,299.4 crore in FY24, according to filings with the Registrar of Companies (RoC). Its revenue from operations stood at Rs 1,809.8 crore, marking a 4.5 per cent increase in the financial year ending March 31, 2024.
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