- The Swedish retailer IKEA generated revenue of Rs 407 crore in the seven months of FY19 operations in India at its first store in Hyderabad, while initial investments resulted in a loss of Rs 685 crore in FY19.
- In its first year of operations, the world’s largest furniture retailer Ikea sold products worth around Rs 2 crore every day, hitting Rs 400 crore during total revenue from its maiden store launched last August in FY19.
In its first year of operations, the world’s largest furniture retailer Ikea sold products worth around Rs 2 crore every day, hitting Rs 400 crore during total revenue from its maiden store launched in India in last August in FY19. This is a sales record in a market generally considered extremely value-conscious for any brand in the world from just one store-and in its debut year.
The Swedish retailer generated revenue of Rs 407 crore in the seven months of FY19 operations at its first store in India in Hyderabad, while initial investments resulted in a loss of Rs 685 crore in FY19. The retailer, known for its ready-to-assemble products, had incurred a net loss of Rs 368 crore in FY18 on long-term corporate spending, including building infrastructures such as land, distribution centers, personnel costs, and training.
“This (loss) was due to the cost of setting up the store and the distribution centers,” the firm said in its filing with the Firm Registrar. “The Ikea store has been visited by millions of visitors and the store’s turnover is also as expected
Ikea’s revenue numbers are on a par with Urban Ladder’s online rival and nearly twice that of PepperFry, which began operations more than seven years ago. More than three decades ago, the Swedish retailer started sourcing from India and has more than three dozen suppliers for its international sourcing.
About three-fourths of India’s furniture industry is controlled by stand-alone stores and carpenters in the neighborhood, although about half a dozen e-commerce players, including Flipkart and Amazon, have recently entered the market.
On an opening day at Hyderabad’s Hitec City, a technology hub that houses offices of multinationals like Google, Microsoft, Amazon, Deloitte, Accenture, and Dell, an estimated 40,000 people visited Ikea’s big box store.
“On a sales basis per square feet, the numbers are higher than other large-box formats,” said Devangshu Dutta, Chief Executive of Third Eyesight, a consultancy firm.
“But the initial targets may be higher, and steady sales and adjustment of product to local needs can take two-three years.”
Upon recognizing India’s hot and tropical environment, the company had handpicked about 7,500 items from its 10,000 catalog. The restaurant business is also expected to drive higher footfalls in its Indian stores.
To date, the Foreign Investment Promotion Board (FIPB) has approved Ikea’s Rs 10,500-crore investment plan to open 25 stores in the country by 2025— each big enough to accommodate around four soccer fields. To date, it has already received from its global parent about Rs 2,515 crore or a fourth of its commitment.