After it opens in Hyderabad next month, IKEA will arrive in Mumbai, India’s financial capital, sometime in 2019.
But the Swedish furniture retailer has some unusual plans for the 20 million residents of Mumbai and its neighbourhood. Not only will it build a signature big-box store on the city’s outskirts, IKEA will also debut its small stores there and launch an e-commerce service for what it believes is one of its most important markets in the country.
Together, these will make IKEA’s Mumbai outing its “first multi-channel, multi-format destination for India,” a company spokesperson told Quartz.
This is in contrast to the usual strategy followed by the company. Typically, it enters a market with a large store, and launches e-commerce much later. However, with purchasing patterns now alternating between physical stores and online, IKEA is shifting gears.
“That (Mumbai) will be a super exciting market for IKEA because we have never entered a market like that before,” Patrik Antoni, IKEA’s deputy country manager in India told Quartz. ”(Mumbai) has a dense population. Therefore the need for a different solution is (present) there.”
Mumbai is India’s largest city and among the world’s most populated. It is home to the country’s largest population of millionaires with a total wealth of $820 billion. However, it is also the world’s second-most densely populated urban centre with a burgeoning middle class. That makes housing and space a big challenge.
The retail giant began constructing its 4,30,000 square feet store in Turbhe, Navi Mumbai, in May 2017. This IKEA store will serve residents of eight different municipal corporations under the Mumbai metropolitan region, including Thane, Kalyan-Dombivili, and, Navi Mumbai, besides Mumbai itself.
IKEA also plans to launch small-format stores—typically sized between 1,500 and 2,000 square feet—in Mumbai to give shoppers a look and feel of the larger store. Such stores will be digitally connected, offering shoppers an option to place online orders. The company is yet to announce the location of such an outlet.
“There is no land available, you cannot build stores around the city, unlike Delhi, where you can open stores on the outskirts and people can access it,” Antoni added, explaining the need to launch multiple-retail formats in the city.
It’s an approach that analysts agree with. “Mumbai is a large city with a big access problem,” said Aditya Sachdeva, director for retail at real estate consulting firm Knight Frank India. “They cannot serve certain suburbs of Mumbai with just a Navi Mumbai store. There’s traffic and the distances are too long.”
Locations apart, Mumbai’s IKEA stores will also be curated for local needs. The city’s small apartments where residents make the most of cramped spaces—for instance, a single room often doubles up for multiple purposes like sleeping, dining, and even dressing—will serve as an inspiration for the store layout, Antoni said.
And as it expands to more Indian cities, IKEA might replicate its strategy of having smaller stores. In all, the company has outlined a plan to set up to 25 outlets across India over the next decade.