Before the COVID-19 pandemic, Swedish furniture giant IKEA had plans to expand into the Indian market. The global situation has made them adjust their strategy, and they continue to plan to expand into the Indian market, but they will do so in a slightly different way.
In 2013, the multinational received permission from the Indian government to inject Rs. 10500 crore into the economy via the foreign direct investment (FDI) route. The company has signed MoUs with Karnataka, Telangana, Maharashtra, Uttar Pradesh, and Haryana for the purpose of opening retail outlets there. They are also looking for additional opportunities for expansion in other major cities.
What is an omni-channel approach?
This business strategy refers to a multichannel approach to sales where a smooth experience is provided to the customer, whether the customer shops from brick-and-mortar stores or online. IKEA aims to integrate its brick-and-mortar outlets with its online services. With this strategy in mind, they plan to open stores in the major cities of Bengaluru, Delhi, and Mumbai. The company has said that the approach will be a combination of the big IKEA stores, smaller city centre stores, and the online services.
IKEA aims to open 25 stores by 2025 in nine different cities in the country.
Ingka handles the global retail operation of IKEA and has already opened a store in Hyderabad in 2018. With the strategic help of the Ingka group, IKEA has opened 380 stores in 31 countries. They are looking at expansion opportunities in other cities and are of the opinion that their improving logistical capabilities will help them meet the customer requirements effectively. Their target is to reach over 100 million Indians by 2022 which they hope to do through this strategic approach. The pandemic has increased online sales volumes and IKEA believes this medium will be a strong growth driver in the months to come. They have introduced online consultations and planning services for kitchens, office furniture, wardrobes, etc and are looking to take full advantage of the online traffic.
Despite the focus on the online platform, IKEA’s India CEO Peter Betzel maintains that physical stores retain their importance in this line of business. Customers enjoy the physical experience of a shop and like to view the furnishings and get a feel for what they should purchase for their houses. The stores will, of course, comply with distancing and sanitisation requirements to ensure safety for customers and a convenient shopping experience.
After coming to terms with the pandemic and its effects on business, the furniture giant has concluded that a sensible business model would be to integrate the online and offline experiences to enhance the communication experience with consumers.
IKEA already has presence in India, but has yet to fully tap into the ‘one billion’ market and take advantage of the demand. Besides the store in Hyderabad, they have online stores in Mumbai, Hyderabad, and Pune which they opened in 2019. They also have a distribution centre in Pune. They hope setting up shop in the major cities will pave the way for fast expansion in the country.
Written by: Aahan Tulshan
