IKEA to Focus on Local, Adaptable Formats to Boost its Growth in India
Swedish home furnishing giant IKEA is making a deliberate shift from its conventional large-format retail model by focusing more on localized and adaptable formats to boost its growth in India and make itself more accessible to both urban and growing areas.
According to Pooja Grover, IKEA India's Country Expansion Manager, the company plans to launch smaller-format stores, about 10,000 square feet, that may be located in high-street and neighborhood malls as it enters the next stage of its expansion in India.
IKEA, which has up until now been recognized for its expansive megastores that cover more than 40,000 square meters, is said to be making a big change with this multi-format strategy.
This is believed to enable IKEA to reach more customers more affordably, scale more quickly, and adjust to local catchment areas thanks to this move.
Although IKEA currently is observed to have a large physical presence in major cities like Hyderabad, Bengaluru, and Mumbai, with plans to open stores in Gurugram and Noida soon, Grover states that plans are in motion to introduce these adaptable formats into tier II cities, possibly with the help of real estate partnerships and Centralized Marketing Platforms (CMPs).
IKEA is expanding its omnichannel and digital capabilities in addition to its physical locations.
Although the small stores will only carry a small selection of goods, they will provide customers with access to IKEA's entire digital catalog, which has over 7,000 items, as well as a number of fulfillment choices, such as home delivery, collection locations, and third-party pickups.
A Plan & Order Point (PaOP) structure, which was just introduced in Bengaluru, is another component of the approach. It serves as a central location for tailored planning, consulting, and design services, fusing IKEA's shopping experience with individualized care. According to Grover, the board has authorized the expansion plan for the next four to five years, and talks are still going on with developers to find appropriate sites in various cities.
IKEA started selling products online earlier this year in Delhi-NCR and nine other regions before opening stores in Gurugram and Noida. It is anticipated that physical stores would open in Chennai and Pune. IKEA's commitment to India is further demonstrated by the €1 billion investment being made by Ingka Centres, a division of the Ingka Group that runs IKEA retail, to establish two enormous retail and entertainment complexes in Gurgaon and Noida under the Lykli brand.
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According to CEO Susanne Pulverer, the company is currently concentrating on profitable expansion and is negotiating with the Indian government to obtain approval for the upcoming round of foreign direct investment (FDI). The goal of IKEA's initial Rs 10,500 crore FDI request, which was accepted in 2013, was to open ten major stores over ten years.