Ikea targets China, India expansion to meet sales growth aim

Ikea Group laid out plans to accelerate its expansion in China and open its first store in India as the world’s largest furniture retailer seeks to boost sales by almost 50 percent over the next four years.
In China, where the company opened its first store almost two decades ago, sustained growth will enable an accelerated pace of expansion, Chief Executive Officer Peter Agnefjaell said in a telephone interview yesterday. Ikea plans to open its first outlet in India next year and aims to have 25 there by 2025, he said.
The retailer has a goal for revenue of 50 billion euros (USD56 billion) by 2020. Sales in the 12 months through August rose 7.1 percent to 34.2 billion euros, it said yesterday. The expansion in China and India, the world’s two most populous countries, may help the company achieve the target as sales growth stalls in Russia amid an economic slowdown.
Ikea will accelerate the pace of its Chinese expansion to four-to-five stores a year from the three it opened in the past year, Agnefjaell said. It has 21 stores in China.
In India, the company has started construction of its first store in Hyderabad, has bought land in Mumbai and is also looking at cities such as Delhi and Bangalore.
“India is one of the biggest growth markets we see going forward,” Agnefjaell said. “But it of course hinges on a continued good economic development.”
India’s gross domestic product rose 7.1 percent in the second quarter, though that was the slowest pace of growth in more than a year.
Ikea’s total store numbers in the 2017 financial year will be about the same or slightly higher than in the past year, Agnefjaell said. The retailer also plans to roll out e-commerce to all its markets in coming years, up from 14 currently, he said. The CEO reiterated a target of e-commerce accounting for 10 percent of total sales by 2020.
In the 12 months through August, Ikea opened 12 new stores and 19 collection points, where customers can see a limited part of the range and get pre-ordered items. It had 783 million visits to its 340 stores, which cover 28 countries.
China remained one of the closely held company’s fastest-growing markets, together with Australia, Canada and Poland, while Germany continued to be its largest country, closely followed by the U.S.
Excluding currency shifts, sales advanced 7.9 percent. Same-store sales grew 4.8 percent. Niklas Magnusson, Anna Molin, Bloomberg