IKEA readies for multi-channel delivery in India

In the one year since Swedish retail giant IKEA opened its first Indian store in Hyderabad on August 9, it has had 3.7 million visitors.  That according to Jayesh Ranjan, principal secretary, industries and commerce, government of Telangana, would be close to half of Sweden's population.

IKEA remains committed to expand its large format stores to other locations in India, but is also looking at a multi-channel approach in India, which means a mix of smaller format stores and the e-commerce option. "Our next destination is Navi Mumbai where we will soon start our e-commerce journey enabling us to meet many more customers, followed by Hyderabad and Pune going online," says Peter Betzel, CEO, IKEA India. IKEA also has plans to launch stores in Delhi and Bengaluru. Currently, it has an approval to invest around Rs 10,500 crore in India, a third of which, it has already invested.

The Navi Mumbai  store is expected to be as large as the Hyderabad store at around 400,000 sq ft. There are plans to open two smaller format stores in Mumbai at the moment.

So, how has IKEA fared over the first year? On weekdays, it gets on an average 8,000 footfalls and more than double of that on weekends (going up to 20,000). Considering this would include families (typically a family comprises 3-4 people), the conversions in terms on customers would be around 2,500 per day on weekdays and over 6,000 on weekends. "Every customer either buys something or eats at our restaurant," says the company spokesperson.

So, what do they buy? Betzel does not share revenue numbers but tells Business Today, "We have met our revenue expectations at the end of the first year." Ask him for more details and he confines himself to saying that food (dining) accounts for 7-8 per cent of total sales. Items for children are the biggest in volume sales terms though in value it is about 9 per cent of total sales.

Other than the financial numbers, IKEA was happy to share factoids like:  "One million frozen yoghurts and an equal number of veggie balls were served during the year. And, double that number - about 2 million chicken balls were served." All in all, over 350,000 people signed up for IKEA family membership.

One important point about IKEA relates to gender equality. Out of the 820 co-workers at the Hyderabad store, 41 per cent are women.

Globally, IKEA has 403 stores across 49 countries with sales of Euro 38.3 billion. IKEA has been sourcing from India for over 35 years for global stores. It currently has 60 suppliers in India.