As the world-renowned furniture retailer, Ikea looks to enter the Indian market, it has planned to cut its product prices. The retailer mentioned that it would be cutting the product prices in India as part of its strategy. This would enable Ikea to reach more than 200 million customers through what is aimed at being a more affordable portfolio. The company plans to reduce the prices further by reworking its sourcing to be more efficient, come up with better transportation solutions and in some instances, it might also need to take a slight blow to its profit margins.
The marketing and expansion manager for Ikea, Per Hornell, said that that the company was looking to reduce the prices as mentioned. Hornell was also quoted as saying that the home furnishing category for the company had the opportunity to take a larger share of consumers prices. He attributed the reason to the reduced prices as a way to sell more. He said that the company is trying to make sure that the price becomes as low as possible. The lower the prices that the company achieves, the more it will sell. He went on to add that Ikea is working intensively to make sure that the furniture part becomes even more affordable, according to a report by Economic Times.
To start off this journey, Ikea is looking down the barrel of a 20 per cent price reduction for nearly four dozen of its products. The Ingka Group, which is the parent company of Ikea, is looking at a target market in Mumbai, Delhi-National Capital Region (NCR) and Bengaluru. The group aims to open around six to eight stores in these locations, with different formats, over the next few years, reported Economic Times. The first Ikea city-centre store in India will be in Mumbai, in the form of a small-format store, which is sixth of the big-box format that it usually maintains.
Last year in December of 2020, Ikea had opened a store in Navi Mumbai, which was a large-format store. However, with the new market penetration strategy on the roll, Mumbai residents will no longer need to go to Navi Mumbai to visit an Ikea. Now, residents in Mumbai can enjoy the city centre store that is coming to Kamala Mills in Worli, towards the end of the year. Ikea will be opening another four to five stores in the city in 2022 and 2023. The second store is set to open next year, while two more are set to open in 2023, reported CNBC-TV18.
This new small-format store approach is part of the larger strategy by the company to give a larger number of customers access to its stores and products across India. The company plans to invest around Rs 6,000 crore which will also create around 6,000 new jobs directly and indirectly according to reports.
Ikea has seen significant growth in India, even with the pandemic raging on. Hornell had said that the store established last year had seen over four lakh visitors since December and over 24 million people had visited the store online since 2019. According to Hornell, the cooking and eating, home and study as well as the home décor categories saw the most growth in the last eight months since the store opened in Navi Mumbai. This new expansion plan that Ikea has in place can also be viewed as an omnichannel expansion with a focus on furniture retail. Since 2019, the company has expanded its online presence in the cities of Mumbai, Pune, Hyderabad, Ahmedabad, Surat, Vadodra and Bengaluru.
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