Industrial Economist (IE): The Indian home furnishing market is unique and also largely unorganised. Being an organised player, where do you see the opportunity?
Patrik Antoni (PA): For IKEA, opportunities are many. We see big potential in all the mega trends such as demography, population, economic development and migration into cities. We believe in Indian opportunity. The unorganised part will remain for a long time. We see ourselves as a complement to the home furnishing market which is growing. New homes are coming everywhere. People are seeing their homes differently, wanting to show their personality. It is modern way of shopping, like you shop for other things, you can shop for furnitures. The clothing industry had gone through the same development. You can still go and get your things done, but you go to a store to buy it. We will co-exist with all forms of furnishing, with the market growing so fast.
IE: Will you make customised products for India?
PA: We do a lot of research and home visits to understand Indian homes. Out of 15,000 global products, we selected 6500 for India. We create India-specific solutions rather than India-specific products. For example, Mumbai stores look different from Hyderabad stores due to varying flat sizes and space availability. We put together products, which are locally relevant to customers. We are planning to set up a product development centre.
Bhavana Jaiswal (BJ): We do have some products specifically made for India. Pressure cookers, kadai and frying pans, which are part of India range, are not available in other places. Our bed textiles have lot of India-inspired motifs. The ones used in other countries are pretty much plain coloured. But, in India, we prefer a lot of shades. We also have festive collections like Aromatic, designed around Diwali, and GOKVÄLLÅ, which is also used in the Middle East.
IE: Who are your target group?
PA: Our target group is basically everybody. At the moment, we are focusing more on certain markets and segments. Our six big markets are Delhi, Mumbai, Bengaluru, Hyderabad, Chennai and Pune, where we are going to do most of the efforts. Then, we will be going to tier-two cities with e-commerce and services. We divide the market into different segments based on needs.
BJ: We are focusing on segments like someone who has grown in their career, starting their career and people well settled with kids.
IE: Chennai is known as a conservative and price-sensitive market. How do you plan to approach it?
PA: We believe we offer the best value for money at all price levels. Chennai is known to be traditional, but it is also rapidly modernising. We will learn a lot once we start. We will find our target group in Chennai with all new apartments and houses coming up.
BJ: In Chennai, we are starting with online deliveries. By leveraging information from this, we will plan the strategy for Chennai, which will likely involve different store formats, focusing on specific ranges and addressing unique needs.
IE: Is real estate a challenge for large-format stores, both in terms of cost and availability of quality space in bigger cities?
PA: Yes, it’s a challenge. With our omnichannel approach, large stores have lost a bit of importance. They demand a lot of people coming to them. It is still an attraction, but we also want to be closer to where people live. We use a mix of formats: online and the app as the base, large stores for inspiration, smaller-format stores closer to customers, and online services for everyday needs.
IE: What are your plans for expansion this year?
PA: A year ago, our new faster growth period begun with the Delhi store opening. We are opening the Pune store in March and the Goa online store next. A few more will come up this year. We hope to expand, if everything works as it should and the government continues to support ease of doing business. We are on course to be profitable by end of FY28.
IE: What potential do you see for India in the global market?
PA: We would like to see India become a home furnishing hub, competing with countries like China, Indonesia and Vietnam. India has great potential, but we need to work with the industry and authorities to create the right foundations from raw materials to machinery, incentives and skill-building.
IE: How many employees do you have in IKEA India?
PA: In retail, we currently have about 3000 employees and expect to reach 6000 by 2030. In the supply chain, we cover roughly 150,000 people, including 100,000 cotton farmers.
IE: How are you using AI in your operations?
BJ: We use AI in our IKEA Creative app. It allows users to scan their living room, remove existing furniture, and visualise how IKEA products would look and fit. Users can then shop directly from there. AI is also used extensively in the back end for optimising demand, forecasting and driving automation for co-worker operations.
PA: We recently acquired an Indian startup called Locus, based in Bengaluru, which provides AI-powered last-mile delivery solutions that will be rolled out globally.