IKEA India invests in store openings and digital initiatives

The growing popularity of online furniture shopping will offer a boost for the retailer.

Despite incurring a net loss in FY 2019-20, furniture retailer IKEA India is investing heavily in new store openings alongside its digital initiatives for an enhanced omni-channel experience, which is expected to pay off in the long run, according to a report from GlobalData.

After the launch of its first India store in Hyderabad in 2018, the retailer has launched its second store in Mumbai in 2020. In addition, the retailer announced plans to launch two additional city center stores in Mumbai to cater to the high demand in the city.

IKEA is also investing in online systems to reach 100 million Indian customers by 2022. The retailer already launched its online stores in three major Indian cities Mumbai, Hyderabad and Pune, the report noted.

The growing popularity of online furniture shopping in India bodes well for IKEA and its strategy, said GlobalData’s retail analyst Vijay Bhupathiraju.

“For instance, several specialist retailers including Pepperfry and Urban Ladder entered the Indian online furniture market. Furthermore, big ticket online marketplaces in India including Flipkart and Amazon have also considerably increased their home product offering to leverage the growing demand,” Bhupathiraju said.

India’s online home sales, including furniture sales, is estimated to grow at a compound annual growth rate (CAGR) of 18% from $2.3b (INR170.4b) in 2020 to $5.2b (INR385.3b) in 2025, the report stated.

“IKEA’s diverse DIY product offerings will bode well with the urban Indian population, who are experimental and inclined towards trying-out new ways to decorate their homes,” Bhupathiraju added.

IKEA India reported a net loss of INR7,201m (US$97.2m) in FY2019-20 compared to INR6,854m (US$92.5m) in FY2018-19.