A recent study by India As a Marketplace: A Case Study of IKEA by Ritika Goel says - "India’s organized furniture industry is expected to grow 20% per annum over the next few years and is projected to cross $32 billion by 2019. Online home décor market in India is projected to grow at a CAGR of 50.42% in revenue and the luxury furniture market is expected to garner $27.01 billion".
So, what went wrong with IKEA?
IKEA has posted 12% loss even when the revenue surged by over 77%. This indicates the high operational costs, lower profit margins, inefficient cost handling scenarios furthermore, the throttling regulations placed by the Indian government on foreign retailers did not allow IKEA to open stores profitably.
Walmart and Ikea are currently in a market acquisition mode in India to establish a dominant position and may sacrifice profit in the short term,” said Devangshu Dutta, chief executive of consulting firm Third Eyesight.
“But in the long term, these companies will definitely chase profit in India. Also, the market environment has been tough last fiscal due to increased competition despite a BounceBack post-Covid,” he said.
The company's revenue comes from multiple sources, including platform fees collected from sellers and services such as posting and streaming ads. Marketplace services revenue remained largely flat at Rs 2,823 crore, while advertising revenue grew 50% to Rs 2,083 crore. The Indian company is the largest contributor to parent Walmart's advertising revenue globally. Revenue from logistics services grew 57% to Rs 3,848 crore.
Are we going to see another meltdown of big foreign brands in India or is it the "Jio Ploy" meant for Indian consumers.
Good one Kunal 😊