Ikea's Expansion Plans: Targeting Delhi-NCR with New Formats and Larger Online Presence

Ikea is gearing up for its next phase of growth in India, focusing on Delhi-NCR. The retailer plans to open both small-format stores and bolster its online presence. Despite challenges like expensive land and high interest rates, Ikea aims to leverage local sourcing to improve margins and continue its phased expansion across the country.

Global furniture retailer Ikea is preparing for the next wave of investments in its key market, India, as it enters a new growth phase, said Ikea India CEO Susanne Pulverer.

Ikea plans to introduce small-format stores with retail spaces between 30,000 and 70,000 square feet in markets near its existing large-format stores. This expansion aims to enhance its online presence and facilitate customer access.

"We've completed phase one, with investments in three markets and four stores. We've gathered valuable insights from our Indian consumers, and we're now moving into the next phase of investment and expansion in India," Pulverer told PTI.

Ikea's immediate focus is on Delhi-NCR, where it will commence online sales in early 2025 before opening its first physical store in Gurugram by 2026.

Currently, Ikea operates large stores in Hyderabad, Navi Mumbai, and Bengaluru, complemented by two smaller city centers in Mumbai, one of which has since closed.

As for future stores, Pulverer stated, "We are in the final stages of planning." The high cost of land and interest rates in India pose challenges, but Ikea remains committed to finding cost-effective solutions, including local sourcing to boost gross margins.

In 2013, the government greenlit Ikea's Rs 10,500 crore FDI proposal to establish 10 stores over 10 years. Pulverer emphasized that expansion will proceed gradually, initially focusing on six markets: Hyderabad, Mumbai, Bengaluru, Delhi, Chennai, and Pune, along with adjacent cities like Chandigarh.

Ingka Centres, part of the Ingka Group operating Ikea retail, is also laying the foundation for its second facility in Noida under the Lykli brand, with a €607 million investment set to be completed by 2028.

Regarding further expansion, Ingka Centres Global Expansion & Development Director Sebastian Hylving stated, "India is a market with enormous potential. Wherever Ikea goes, we'll evaluate opportunities to follow." Ikea India's revenue reached Rs 1,768 crore in FY23.

(With inputs from agencies.)