MUMBAI: The world’s biggest furniture retailer Ikea sold goods worth about Rs 2 crore every day on an average in its first year of operations, crossing Rs 400 crore in FY19 total revenue from its maiden store opened last August. This is a revenue record for any brand in the country from just one store -and in its debut year - in a market otherwise considered extremely value conscious.In the seven months of FY19 operations at its first store in Hyderabad, the Swedish retailer generated revenue of Rs 407 crore, although initial investments caused 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 expenses, including creating infrastructure such land, distribution centres, staff cost and training.“This (loss) was due to the costs incurred in setting up the store and the distribution centres,” said the company in its filing with the Registrar of Companies. “Millions of visitors have visited the Ikea store and the turnover of the store is also as per the expectations of the company.”72324333 Ikea's revenue numbers are on a par with online rival Urban Ladder, and nearly twice that of PepperFry, which started operations more than seven years ago. The Swedish retailer started sourcing from India more than three decades ago, and has more than three dozen suppliers for its global sourcing.About three-fourths of India’s furniture industry is controlled by standalone stores and neighbourhood carpenters, although about half a dozen ecommerce players, including Flipkart and Amazon, entered the market in the recent past.An estimated 40,000 people visited Ikea’s big box store on the opening day at Hyderabad’s Hitec City, a technology hub that houses offices of multinationals such as Google, Microsoft, Amazon, Deloitte, Accenture, and Dell.“On a per-square-feet sales basis, the numbers are higher than other big-box formats,” said Devangshu Dutta, chief executive at consultancy firm Third Eyesight."But the initial expectations may be higher, and it will take two-three years for steady revenues and adjusting merchandise to local needs.”The retailer had handpicked about 7,500 products from its catalogue of 10,000 after considering India’s warm and tropical weather. It also expects the restaurant business to drive higher footfalls at its stores in India.The Foreign Investment Promotion Board (FIPB) has so far cleared Ikea's Rs 10,500-crore investment proposal to open 25 stores — each large enough to fit about four football fields — in the country by 2025. So far, it has already received about Rs 2,515 crore, or a fourth of its commitment, from its global parent.
from Economic Times https://ift.tt/2P3HPsL
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