Ikea, the world largest furniture retailer, will shut its 72,000-sq-ft store located at R-City Mall in Ghatkopar, Mumbai, by July. This will be the company’s first such closure in a key market such as India.
The announcement of the planned closure was made to the over 100-odd people at the outlet on Thursday morning, FE has learnt. Ikea has also given them the option to move to the Worli or Navi Mumbai stores. Some of them could also be relocated to the online team, which is expanding, sources in the know said.
An Ikea India spokesperson, while confirming the store closure at Ghatkopar, said that the decision was taken in line with its strategic vision of creating a leaner and faster retail business in the country.
“It further allows us to consolidate our Mumbai operations to Ikea Worli, Ikea Navi Mumbai and online presence, while exploring newer opportunities for future growth,” the spokesperson said.
The decision to close the Ghatkopar outlet interestingly comes within days of the company’s announcement that it is planning its next round of investment into India after nearly exhausting its Rs 10,500-crore initial investment in the country.
Sources say that the Ghatkopar store, which is located on the third and fourth floors of R-City Mall, was not able to meet Ikea’s customer experience standards. Sales at the store could not be immediately ascertained, but retail experts say that the company is looking to cut its losses in the country.
At an overall level, Ikea India reported net sales of Rs 1,768 crore for the fiscal ended August 31, 2023, a 61% year-on-year growth. Net loss, however, widened to over Rs 1,134 crore for the period, according to regulatory filings by the company. Losses stood at Rs 901 crore in the previous year. The company follows a September-August accounting year.
Ikea has also ramped up its online operations by taking it to 62 districts in Maharashtra, Karnataka, Telangana and Andhra Pradesh from six locations earlier. These included Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Surat.
The Ikea India spokesperson said that the retailer was focused on building its presence in Maharashtra, with new omni-channels formats in Mumbai, expanding its physical presence in Pune and developing the Navi Mumbai outlet even further into a retail destination.