Despite widening net loss in FY20, IKEA India investing heavily in omni-channel model, says GlobalData

Furniture retailer 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. Despite incurring net loss, IKEA India is investing heavily in new store openings alongside its digital initiatives for an enhanced omni-channel experience, says GlobalData, a leading data and analytics company.

After the launch of its first India store in Hyderabad in August 2018, which had become an instant success among the shoppers, the retailer has launched its second store in Mumbai in December 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.

Vijay Bhupathiraju, Retail Analyst at GlobalData, comments: “IKEA’s strategy will payoff well in the long-run amid the growing popularity of online furniture shopping in India. 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.”

GlobalData estimates online home sales (including furniture sales) in India to grow at a compound annual growth rate (CAGR) of 18.0% from US$2.3bn (INR170.4bn) in 2020 to US$5.2bn (INR385.3bn) in 2025.

Mr Bhupathiraju concludes: “The growth in the sector will be supported by consumers spending more time at home and the rise in flexible work-from-home culture offered by most employers due to the COVID-19 pandemic. With India witnessing the critical second wave of COVID-19, work-from-home will remain at play for majority of employees in the near future, boosting the demand for home products. 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.”

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