scorecardIkea will make its Mumbai debut ‘very shortly’, says India chief as the first store in Hyderabad turns a year old
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Ikea will make its Mumbai debut ‘very shortly’, says India chief as the first store in Hyderabad turns a year old

Ikea will make its Mumbai debut ‘very shortly’, says India chief as the first store in Hyderabad turns a year old
Business3 min read
Ikea has spent five years in India, and its flagship store in Hyderabad is turning a year old. Now, it’s time for its debut in the country’s financial capital, Mumbai, according to Peter Betzel, the Swedish furniture retailer’s Managing Director in India. An announcement is expected within the next few days, according to another source.

“While the Navi Mumbai store is getting ready, our focus now is to launch e-commerce in Mumbai very shortly, to be able to meet the many Mumbaikars sooner,” Betzel told Business Insider in an exclusive interview. This is the first time the global retailer is entering a market without a physical store.

That would pit the company directly in competition with the likes of Amazon, Flipkart, and Urban Ladder, who have spent years and billions in building a customer base in India. But Betzel is more sanguine than many others would be. “With more players, the whole category will grow even more. There is place for everyone,” he said.

The furniture market in India is expected to be worth $17 billion in the next three years but the big shops, malls and snazzy online retailers with discounts and offers sell less than two in every ten pieces of furniture bought in India. The trend is changing, especially in urban areas, and there is enough headroom for growth for the organised segment.

Touch points

Going online first is not the only thing different about Ikea’s entry into Mumbai. The iconic stores of gargantuan size, roughly half a million square feet each, will be absent at least to start with. “The smaller stores can be 50,000 sq. ft - 150,000 sq. ft., large depending on what locations we are able to find,” he said.

While Betzel didn’t elaborate on the rationale, the smaller stores may make sense in a crowded place like Mumbai where real estate is available at an exorbitant premium and travel can be cumbersome even for interested customers.

Even in New York, Ikea has a ‘planning studio’ in the upscale Manhattan area and not the standard blue-box store. It seems to have a similar plan for Mumbai too. “In addition to ecommerce and the Navi store, IKEA will also open smaller city center stores. This will make us more accessible and bring us closer to where customers are,” Betzel said.

Ikea calls these smaller stores ‘touch points’ for the customer to get an experience before making the purchase. “Currently the decision is to open two city center stores in different parts of Mumbai. There could be more online and offline touchpoints in the future based on the learnings from the market,” Ikea’s top boss in India explained.

Been there, done that

Similar formats have been tried by other online furniture retailers in India like Pepperfry and Urban Ladder. Pepperfry had launched its first offline studio in 2014. Since then, they have expanded to 65 studios across 28 cities. In fact, in every city that Pepperfry has launched a studio, the sales had doubled, according to the management.

“While we don’t sell directly through our offline studios, they contribute significantly to our sales. Close to 40% of our overall turnover comes from the online bookings made at these studios,” Mihir Kulkarni, Vice President and Head of Omnichannel expansion, Pepperfry told Business Insider in an earlier interview.

The race is hotting up

While both Pepperfry and Urban Ladder may have a headstart, they are going up against a giant in Ikea. The two startups put together have received investments worth less than $300 million in the last six years. On the other hand, “Ikea has committed to invest 1.5 billion euros ($1.68 billion) so far. Three Indian cities are in the fast speed expansion markets namely Mumbai, Bengaluru and Delhi/NCR. Our focus on India will only increase in the future,” according to Betzel.

Even Flipkart, India’s largest online retailer, now owned by Walmart, is looking to set up experience centres. It unveiled an 1,800 square feet outlet in Bengaluru on July 29.

With the likes of Walmart and Ikea throwing in their hat, running against smaller but more agile and homegrown players like Pepperfry and Urban Ladder, furniture retail in India is certainly set for exciting times.

I visited Ikea's new Manhattan location - and it was like nothing else I've seen from the retailer