IKEA India has plans to expand in multiple cities using different format stores within the next two years. The Swedish furniture brand plans to add physical stores in Delhi, Pune and Chennai along with Bengaluru over the next few years, said top officials. 

IKEA India launched its second small format store in Mumbai earlier this week. This is the fifth Ikea store in India.

Speaking on the sidelines of the launch of Mumbai store at R-City Mall, Susanne Pulverer, Chief Executive Officer said, “For IKEA, India is an important growth market. However, it is also a very complex market, one size doesn’t fit all, hence, we need multiple formats in different cities to meet the needs of different types of customers.”

Offline store in Pune

IKEA is already scouting for a property in Pune for an offline store. Adosh Sharma who was recently appointed as IKEA India’s Country Expansion Manager, said, “Today Pune comes third amongst all markets. We see great potential for more presence in India. We are studying the market for what type of a format (large or small) it actually needs. When we’re done, we’ll soon make an announcement on it.”

Currently, with a a mix of online and offline presence, IKEA  caters to consumers in Mumbai, Delhi, Ahmedabad, Bangalore, Chennai, Pune, Surat and Vadodara.

Murali Iyer, Chief Financial Officer (CFO) at IKEA India, told BusinessLine that IKEA has plans to expand into all the cities it is present in. “Delhi has an online presence, we have formats coming up in Delhi already. However, Delhi is a huge market. We see a lot of potential for more presence in Delhi. Over the next two years, we will have at least two-three more formats.”

Malls coming up

IKEA has plans for two malls that are anchored by its stores - in Gurugram and Noida. The furniture brand recently got its first offline store in Bengaluru.

Iyer said, “We will have more formats in Bangalore and we will also look at Chennai in the near future.”

Offline stores

According to Iyer, today 45 per cent of the offline sales come from Hyderabad, followed by Navi Mumbai which takes up a large chunk whereas Bangalore and Worli stores take up smaller chunks.

But the global inflationary pressures has had some impact because IKEA imports a large chunk of its products. Pulverer said that it had absorbed some costs but IKEA India also had to pass on costs. “Yet, we have managed to keep it affordable,” she said..

When asked if there’s a possibility to reduce costs, Iyer explained, “Absolutely. When you have an objective to be affordable, you have to have lower costs, so we need to have a sustainable model. We are not isolated in challenges of raw material, and rates are higher but I can tell you that the group is very committed and India is one of our growing markets. ”

Reducing costs

Iyer said that in two aspects he saw a possibility to reduce costs—localisation of products and increase in volumes.

He said that he was aware that IKEA India had spends and the net profit was hit “but it was a part of the plan and there were learnings too.” For example, he said, the marketing costs that were approximately 10 per cent could taper in the future. “We are now establishing ourselves better, which will reduce our needs to spend more on marketing. This fiscal is looking far more better”

Pulevaer said that the focus was on omnichannel expansion with a focus on digital enhancements. “Online did very well for us during the pandemic. However, now it is at 28-30 per cent. With markets opening up, it has rolled back a little but but the growth is intact,” she said.

Iyer explained that with the opening of more stores, the overall share of online sales reduces. “However, the online volumes have grown by 1.5x to 2x on a year-on-year basis,” he explained.