IKEA to set up compact stores for expansion in smaller cities in India

New Delhi: Swedish home furnishings retailer IKEA is taking a "huge shift" in its India growth strategy by deciding to set up compact stores in smaller cities with a view to become more accessible to customers, said a company official.

IKEA, currently in the second phase of its growth in India, plans to expand through a network of small-format stores tailored to specific locations and catchment areas.

These stores could be as compact as 10,000 square feet, making them suitable for neighbourhood shopping malls, IKEA India Country Expansion Manager Pooja Grover told PTI.

Further, she said these small-format stores will help IKEA to expand more quickly, remain agile, and establish a presence in malls and on high streets. She added that IKEA is also exploring partnerships with real estate developers to support this new concept.

Although these stores will have a limited physical display of IKEA’s products, they will be equipped with a digital catalogue that allows customers to explore the brand’s range of around 7,000 products and place orders. Multiple delivery options will be available, including home delivery, pickup at a collection point, or pickup by a third party, she added.

"We are trying to integrate various aspects and offer different kinds of experiences across different formats... From a size point of view, this is a huge benefit for us in India as well, where we will be more accessible to many people," said Grover, adding that "this size option opens up a lot of accessibility" for IKEA.

When asked whether IKEA plans to enter smaller tier II and III cities with its smaller-format stores, she said the company is currently focused on six priority cities: Hyderabad, Bengaluru, Mumbai, Delhi NCR, Chennai, and Pune.

"So, we are focusing on these cities, we are also looking at smaller cities, tier II cities, and we will be finalising our plan shortly, but yes, we will be looking at physical CMPs (Centralised Marketing Platform) at some point in these cities as well," she added.

Regarding the number of upcoming stores, Grover said, "We are working on the overall numbers and plans for the next four to five years. We have recently received direction from the board, along with the necessary approvals." In February, IKEA started online sales in Delhi-NCR and nine other markets ahead of its coming physical stores in Gurugram and Noida. It plans to open physical stores in Chennai and Pune in the next phase after having operational stores in Hyderabad, Mumbai, and Bengaluru and two more coming stores in Delhi-NCR in Gurgaon and Noida.

"We have three standard stores currently in the country, all of which are all large size, they are 40,000 square metre plus stores and we have one city store in Mumbai, which is around 7,500 square metres, and now we have a range of options...," she said.

IKEA has launched its first Plan & Order Point (PaOP) in Bengaluru, covering 740 square metres. This new format acts as a dedicated customer interaction hub, offering personalised consultations, expert home design guidance, flexible planning assistance, and installation services -- bringing IKEA’s expertise closer to customers.

Here, customers can choose their preferred level of service, whether it’s a DIY approach, expert-guided planning, or complete end-to-end design and installation, with access to IKEA’s full home furnishing range of over 7,000 products.

IKEA CEO Susanne Pulverer told PTI in February that the company is now aiming for profitable growth in the coming year. It is also in discussions with the government to secure approval for the next round of foreign direct investment (FDI).

In 2013, the government had approved IKEA’s FDI proposal worth Rs 10,500 crore to establish 10 stores along with allied infrastructure over a period of 10 years.

However, Ingka Centres, a part of Ingka Group that operates IKEA retail, is investing one billion euros to set up two centres in Gurgaon and Noida under the Lykli brand.