Ikea Embarks on Next Phase of Expansion in India, Increasing Retail Presence and Local Sourcing Efforts

04 Sep, 2023

Ikea Embarks on Next Phase of Expansion in India, Increasing Retail Presence and Local Sourcing Efforts

Susanne Pulverer, CEO of Ikea India, emphasized the company's commitment to expanding its reach across India. She revealed that Ikea had already earmarked a substantial investment of Rs 10,500 crores to construct five new stores in India. In addition to these stores, Ikea also announced investments in two expansive shopping centers in Gurugram and Noida, both of which will feature integrated Ikea outlets. This strategic move is part of the company's second-phase expansion plans, characterized by a swifter rate of growth compared to the initial five years of operations.

Pulverer expressed confidence in an "accelerated expansion" strategy, drawing from the insights and experiences gained during the first phase. During this period, Ikea successfully launched stores in key Indian cities like Hyderabad, Mumbai, and Bengaluru, while establishing an online presence in cities including Ahmedabad, Vadodara, Surat, and Pune.

The next significant market on Ikea's radar is Delhi NCR, where they intend to initiate online operations by the conclusion of 2024, followed closely by the ambitious Ingka Centres Gurugram project. Beyond Delhi, Ikea is actively exploring other potential markets, with Pune and Chennai being particularly promising. However, Pulverer emphasized the importance of approaching each market thoughtfully, with a robust omni-channel setup to ensure successful penetration.

Ikea recognizes that their full-size stores, particularly flagship outlets, have performed exceptionally well in India. To complement these successes, the company plans to establish a diverse range of service fulfillment setups to further support its growth.

Regarding investments, Pulverer hinted at a willingness to extend beyond the initially allocated Rs 10,500 crores, underlining their long-term commitment to the Indian market. As Ikea continues its expansion, they aim to reach many more cities, gradually expanding their presence and influence.

In line with their commitment to affordability, Ikea is focused on increasing local sourcing in India. The company is also exploring opportunities to diversify its manufacturing in the country, with a particular interest in wooden products.

Reflecting on their five years of operation in India, Susanne Pulverer highlighted the lessons learned during the pandemic, especially in terms of supply chain management, which will be invaluable moving forward.

Ikea also celebrated a significant milestone - 40 years of sourcing from India for its global operations. Initially starting with textiles and carpets, their sourcing activities have expanded to encompass various categories such as plastics, metals, mixed materials, decorating items, natural fibers, mattresses, and now, wood. However, there is still room for growth, as there is a need for more sustainably managed forests to provide the necessary raw materials.

Ikea collaborates with approximately 65 suppliers in India, contributing to production for Ikea stores worldwide. They view their role not only as a furniture retailer but also as a partner in India's growth story and a responsible business entity.

For the financial year ending on March 31, 2022, Ikea India reported a notable increase in net sales/revenue, surging by 77.07 percent to reach Rs 1,076.1 crore.