IKEA, the Swedish furniture giant, is shutting down its Ghatkopar store in Mumbai's R City mall due to concerns over its small-format viability, aiming to enhance its Mumbai operations centered at the Worli store. This marks IKEA's first closure in India, reflecting its pursuit of a leaner retail model. Despite the closure, IKEA reaffirms its commitment to Mumbai and Maharashtra, eyeing expansion in Pune and bolstering online presence. The decision coincides with plans for renewed investments in India. Though IKEA India reported substantial sales growth, net losses widened. Globally, IKEA operates in 63 markets, with the Philippines hosting its largest store.
Swedish furniture retailer IKEA is set to discontinue operations at its store in Ghatkopar’s R City mall by the middle of the year and consolidate its Mumbai operations at the Worli store, citing concerns around the viability of its small-format store. This will be the company’s first such closure in a key market such as India. The IKEA R-city store was launched as one of the new-format small stores. The store is spread across 70,000 square feet and was opened in June 2022, offering a limited selection of IKEA goods.
IKEA said in its statement that they have not been able to provide customers the full Ikea experience at the R-City mall store due to limitations of the layout, design and location. This decision is said to be in line with their goal to have a leaner and faster IKEA retail business. The furniture retailer currently employs 100 employees at its R City store and all those employees will be offered other opportunities in Mumbai and its other units.
In Maharashtra, Ikea operates a big-format store in Navi Mumbai apart from the small-format store at Worli. The Navi Mumbai store is spread across 5 lakh sq ft and is IKEA’s largest store in India so far. Going forward, IKEA plans to open a store in Pune and ramp up its online presence across Maharashtra. Mumbai is a key market for the company in India and IKEA has said that it would continue to invest in Mumbai and various other parts of Maharashtra.
In India as a whole, IKEA currently operates three big-format stores in India at Hyderabad, Navi Mumbai and Bengaluru, besides two small stores in Mumbai – Worli and Ghatkopar. It also has plans to open stores in Delhi-NCR, and a shopping centre in Gurugram in the near future. Ikea has also ramped up its online operations by taking it to 62 districts in Maharashtra, Karnataka, Telangana and Andhra Pradesh from six locations earlier. These included Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Surat.
The decision to close the Ghatkopar outlet comes within days of the company’s announcement that it is planning its next round of investment into India after nearly exhausting its Rs 10,500-crore initial investment in the country.
At an overall level, Ikea India reported net sales of Rs 1,768 crore for the fiscal ended August 31, 2023, a 61% year-on-year growth. Net loss, however, widened to over Rs 1,134 crore for the period, according to regulatory filings by the company. Losses stood at Rs 901 crore in the previous year. The company follows a September-August accounting year.
Inter IKEA Systems B.V., trading as IKEA is a Swedish multinational conglomerate, legally headquartered in the Netherlands, that designs and sells ready-to-assemble furniture, kitchen appliances, decoration, home accessories, and various other goods and home services. As of January 2024, there are 471 IKEA stores operating in 63 markets globally. Germany has the most IKEA stores in the world. The biggest IKEA store is at Pasay City, Philippines and Ingka Group is the operator of most of the world’s IKEA stores.
Ingka is also developing malls across the world which are anchored to IKEA stores. It currently has 38 malls in 15 countries. Ingka has introduced co-working brand Hej! Workshop which is fully loaded with IKEA furniture, cafeterias, play areas, etc into their malls.
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