Covid-19 impact: IKEA to adopt omni-channel approach for expansion in India

The COVID-19 pandemic has slowed down Swedish furniture retailer IKEA's expansion plans in India but the company is adjusting to the new reality while continuing to bet on the country as one of its "very important markets", according to company's India CEO Peter Betzel.

With the changing consumer behaviour due to the health crisis, online business will play a very important role for IKEA, which plans to expand in India with an omni-channel approach.

The pandemic may have slowed us down a bit like it has for everyone, but we are adjusting to the new reality and are on track with our projects. Our Mumbai store as I mentioned will open within the next half year or so, Betzel told PTI.

He further said,"India remains a very important market and we have our plans to enter many cities with an omni-channel approach. Bengaluru, Mumbai, Delhi are among the prioritised cities for Ingka Group for fast expansion."

Ingka handles the global retail operation for IKEA, which has a target to reach 100 million people in India by 2022 through an omni-channel approach.

IKEA, which is planning to open stores in Mumbai, Bengaluru and Delhi/NCR, is now looking to have a omni-channel approach, by integrating its brick and mortar format stores with online stores.

We will establish a strong omni-channel presence in Hyderabad, Mumbai, Bengaluru and Delhi/NCR and are also exploring other opportunities in India, he said adding It will be through a combination of big IKEA stores, smaller city-centre stores, and online platform as a selling channel.

IKEA, which received government approval in 2013 for its Rs 10,500-crore proposal to open retail stores under 100 per cent FDI, has signed MoUs with Karnataka, Telangana, Maharashtra, Uttar Pradesh and Haryana to open retail stores.

The company is planning to open 25 stores by 2025 in nine cities.

Ingka, which handles the global retail operation for IKEA, would open its second store in Mumbai in the next six months after making its first store at Hyderabad operational two years ago.

Our ambition is to expand in more cities in India with an omni-channel approach. Based on our expansion plans, we will also develop logistical capabilities to serve customers more efficiently, said Betzel who is also Chief Sustainability Officer, IKEA India.

Presently, IKEA has one distribution centre in Pune.

During lockdown, IKEA had introduced ''Click and Collect'' contactless and safe shopping in Hyderabad. Now more people are shopping online for all the things they need for their homes.

We expect online sales to be a strong growth driver and IKEA will continue to invest in building more digital, he added.

Besides, IKEA has introduced online consultations/planning services for kitchen, office furniture, wardrobe etc.

It is important to have clear communication in all our channels to our customers as many are depending on online product descriptions, customer testimonials, quality standards, usability, etc. to make a purchase decision. As many potential customers are first time digital users, we want to support them in their online journey, Betzel said.

However, Betzel added that physical meeting places will remain essential hub for home furnishing inspiration, feel, touch, try our range, fun day out, even though in a different manner due to COVID-19.

It is not going to be one or another. It is altogether, he said. IKEA India, part of Ingka Group opened its first retail store in Hyderabad in August 2018, followed by online stores in Mumbai, Hyderabad and Pune in 2019 as part of its multichannel approach.

Ingka Group is a strategic partner in the IKEA franchise system, operating 380 IKEA stores in 31 countries. Ingka Group has three business areas: IKEA Retail, Ingka Investments and Ingka Centres.