IKEA's plans to launch Mumbai store may get delayed

Forum Gandhi Mumbai | Updated on March 28, 2020 Published on March 28, 2020

The Coronavirus pandemic and the 21-day lockdown in India may delay IKEA India’s plan to launch its Navi Mumbai store and two small-format stores in Mumbai.

The Swedish home furnishings giant was also supposed to launch a new line of products in April, but it looks like that too will be delayed, said sources.

Earlier this week, IKEA temporarily suspended its operations at its flagship store in Hyderabad along with delivery through its online portal because of the coronavirus pandemic.

Last month, at an event, India Managing Director, Peter Betzel said that the world's largest furniture retailer will open its store in Navi Mumbai this summer.

However, two people told BusinessLine that there was going to be an indefinite delay in the launch. One of the two people said that “Globally and in India with the spread of the coronavirus pandemic, IKEA is facing issues. The launch was scheduled for May-end or June, but it may get delayed. We are hoping to launch it this year, but, we’ll have to wait and watch how the situation pans out.”

Betzel had said Mumbai would be the first market in India to have the retailer’s ‘hybrid’ model, along with the offline large-and small-format stores and the online store, which was launched in August 2019 in Mumbai. “In the coming 12 months, we will add two smaller formats of Ikea in the city,“ he had added.

But it looks like the small-format stores might get delayed, too. While confirming that there could be a delay in the launch of the Navi Mumbai store, the other person said that “there might be a possibility that IKEA may launch one of the two small-format stores before the launch of the Navi Mumbai store. There is no firm decision on that yet.”

IKEA India did not respond to an email questionnaire sent by BusinessLine.

Likely location

According to sources, the small-format IKEA stores are set to be located in Mumbai’s central suburbs, probably RCity Mall and a residential area such as South Mumbai. Navi Mumbai’s proximity to Mumbai because of the city’s Eastern Express Freeway along with the smaller stores in Mumbai will help IKEA penetrate Mumbai's large potential.

IKEA had invested in 23 acres of land in 2016 and had planned to launch a whooping 40,000 sq. ft. store in Turbhe, Navi Mumbai.

At the event when Betzel was asked why it took so long for IKEA to launch the second store, “We have to make sure we get all the licenses, it’s environment and customer friendly.” He added that there were some challenges in the construction of the building and it had to be reworked.

They launched their first retail store in India in Hyderabad in August 2018. Since then, the company has catered to 6 million visitors and made a revenue of Rs 400 crore.

According to another person, IKEA was supposed to launch a ‘sustainability product line’ at its store in Hyderabad in April-May but that too has been pushed by at least three months.

BusinessLine had reported that the outbreak of Coronavirus had impacted the global supply chain for several brands. IKEA had shut all its 30 stores in China after the outbreak.

IKEA imports approximately 35 per cent of products from China. Earlier this month the Swedish furniture maker started reopening its stores again in China. Betzel claimed that their supply chain had not been disrupted due to coronavirus.

To add to the woes for IKEA’s delay in launch and its operations in India, the import duty on furniture was hiked to 25 per cent from the current 20 per cent and tripled on toys to 60 per cent during the union budget. IKEA currently imports 75 per cent of its products.

Though IKEA had said that it was disappointed with the government’s decision, and was in conversation with the government to review the hike, it would hold product prices in India despite the hike in import duty on toys and furniture proposed in the budget.

Published on March 28, 2020

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