Change in Strategy: Ikea to now open more smaller stores in India

New Delhi: In a change in its India strategy, Ikea may now open more smaller stores in the country – in the range of about 50,000 sq ft compared to its warehouse sized average 400,000 sq ft outlets – in the coming years amid a changing consumer behaviour that is increasingly shifting towards online shopping and omni-channel retailing, people familiar with Ikea plans said. This is a departure from Ikea’s original 2013 India plans when the government cleared the Swedish retailer’s application to invest Rs 10,500 crore to open 25 of its sprawling giant-sized outlets. “What has not changed is our commitment towards India. We will be doing more than the Rs 10,500 crore as we will keep investing,” Juvencio Maeztu, Ingka Group’s deputy CEO said in a telephonic interview on Wednesday. “The focus now is not only growing the big Ikea stores but also adding smaller Ikea stores and digital investments and fulfilment. So at the end of the day it will be the same long-term investment commitment and the portfolio will be richer.” Maeztu said Ikea will open two smaller stores in Mumbai next year, followed by such outlets in Delhi NCR and Bengaluru in coming years. Ikea declined to comments on whether it plans to open more smaller version outlets in India. Ikea has rolled out its smaller High Street store concept in Paris, Tokyo and Shanghai among other cities in a bid to offer better accessibility to consumers in city centres as the younger generations are increasingly becoming wary to travel distances to reach retail stores and also due to their affinity to conveniences and online shopping. However, Maeztu did not specify how many smaller outlets the world’s largest furniture and home products retailer is planning to open in Delhi NCR and Bengaluru. A top executive of a mall developer in Delhi said Ikea has been scouting for spaces for three such smaller stores in malls in the NCR and those smaller stores are expected to come before Ikea’s trademark warehouse sized outlet in Gurgaon where the Swedish giant had purchased 10 acre land in 2017. “The advantage of an Ikea store is in the future it will be both to meet the customers and to offer solutions but also it will be a good distribution centre to do home deliveries from the store. So the digital and fulfilment aspect is very important,” Maeztu said. “We are making Ikea more accessible also in the city by not only having the big Ikea stores – that we will keep opening – but also on top of that to open smaller stores inside the cities.” Ikea is planning to open a large 500,000 sq ft outlet in Navi Mumbai either later this year or early next year, the second India outlet for the furniture and home products retailer in the country after debuting in Hyderabad in 2018. Maeztu said Ikea would be investing around Rs 6,000 crore in its initiatives in Maharashtra that includes a large outlet, two smaller version stores and on its omni-channel infrastructure and would hire about 6,000 staff in the state in coming years. Maeztu said Ikea’s Hyderabad store is already on track not only to meet India’s 30% local sourcing norm - a requirement for single brand retailers opting for more than 51% overseas capital - but would also exceed the mandatory sourcing condition before the stipulated five year’s timeframe. Maeztu said Ikea will open a brick-and-mortar store before selling online in any city they go to. “For us the core is omni-channel and omni-channel needs offline (store) and for us it is very important to anchor our presence with an Ikea store,” he said. “So we are not in a hurry of opening online until we can secure a good physical experience as well.” Ikea is also planning to construct a shopping mall known as Ingka Centre in Gurgaon that will be home to other retailers and brands aside from an Ikea store. “In Gurgaon we bought a land and initially (had planned) for an Ikea store. We are now exploring not only to do an Ikea store but also to do an integrated, what we call a meeting place which is more of a shopping centre. It is a combination of many activities.” 66102146

from Economic Times https://ift.tt/3m87Uq6