Ikea plans to introduce smaller stores in India, around 30,000 to 40,000 square feet, to increase accessibility and cater to a broader audience. This move follows successful experiments in other countries and contrasts with its larger store formats in India, such as its 400,000 to 500,000 sq ft outlets. The company is considering Delhi and an existing market (Mumbai, Bengaluru, or Hyderabad) for the initial rollout by 2025. This strategy aims to maintain Ikea's growth momentum, adapting to diverse consumer needs in India's competitive market.
Ikea, the world's largest furniture retailer, is planning to introduce smaller stores in India, targeting a more compact format of around 30,000 to 40,000 square feet. This strategic move is aimed at increasing accessibility and reaching more consumers across India, where convenient store formats are essential. Adosh Sharma, Country Commercial Manager of Ikea India, explained that while destination stores are important, the introduction of smaller stores will help Ikea cater to a broader audience by making its products more accessible.
Ikea has successfully experimented with smaller stores in countries such as the United Kingdom, the United States, Sweden, Spain, Japan, Hong Kong, and Taiwan. However, in India, the company has primarily introduced larger formats over its six-year history. These include significant big-box outlets ranging from 400,000 to 500,000 square feet in locations such as Hyderabad, Navi Mumbai, and Bengaluru, as well as city-center stores ranging from 72,000 to 80,000 square feet in Mumbai. The Ghatkopar store in Mumbai closed earlier this year, while the 80,000-square-foot Worli location remains open. Additionally, Ikea maintains an online store in India.
Since the launch of its first store in Hyderabad in 2018, Ikea has attracted approximately 180 million visitors to its outlets, averaging about 30 million visitors annually. The company aims to reach over 200 million people by 2025, necessitating the rapid opening of new stores. Sales in India rose by 61% year-on-year to INR 1,768 crore in FY23, although the net loss increased to over INR 1,134 crore, based on available filings. Figures for FY24 have not yet been released.
India is a unique market for Ikea, particularly because of the significant contribution of its food offerings to overall revenue. Experts highlight that the menu offerings attract at least 20-30% more patrons who visit the stores to dine in addition to shopping.
The company is considering two locations for the initial deployment of its smaller stores: one in Delhi and another in one of its existing markets-Mumbai, Bengaluru, or Hyderabad. These smaller stores will specialize in specific product categories, accessories, and planning services, as opposed to larger outlets that offer a one-stop shop for shopping, dining, and even a children's playroom. Although Ikea has not provided a definite date for the launch, industry insiders suggest that it could take place by 2025.
By introducing smaller stores, Ikea aims to maintain its growth momentum in a highly competitive market like India. The company's strategy reflects its understanding of the need for diverse store formats to reach a wider audience and cater to different consumer needs. As major economies start expanding again, Ikea's decision aligns with the broader trend of adapting to market dynamics to sustain growth and profitability in the coming years.
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