Anticipates 40 lakh footfalls at its Hyderabad store. 10% would be from other cities.
Swedish home furnishing giant IKEA that will open its first ever Indian retail store here on 9 August, is expecting substantial amount of sales from other parts of the country, that includes, Mumbai, Delhi and Bangalore. IKEA will open its stores in Mumbai around April 2019 and Delhi in 2020, followed by 46 stores in other cities in coming years.
As per an original schedule, the store was to open on 19 July, but IKEA changed the date due to growing customer demand, as it needed some more time to cope with logistics.
“Surprisingly, we are getting many enquiries from public in Mumbai, Delhi and Bangalore for our products and we expect a decent portion of sales from these and other cities from next week on,” an executive of IKEA told The Sunday Guardian on Wednesday when the Swedish multinational company’s India CEO Peter Betzel offered a sneak peek to the media here.
For all practical purposes, IKEA is treating this Hyderabad store as its national store and that is one of the reasons why the world’s largest furniture retailer has set up its world’s biggest restaurant with 1,000-seating capacity. Their other restaurants are of around 500 seats. The store, located at the swanky IT corridor of Madhapur and Jubilee Hills in the city, will be launched by Telangana IT minister K.T. Rama Rao.
IKEA executives are gearing up for big demand from customers from local as well as outside cities. It has become a trend of late that many upper middle-class customers visit China, Singapore and Malaysia for their furnishing needs. Many apartment builders and villa owners have been waiting for IKEA store to open in Hyderabad.
IKEA’s Hyderabad store has another first—that the company offers home deliver as well as fitting—a deviation from its original concept of Do-It Yourself. All other Indian stores, too, will have this facility. IKEA is employing a team of 150 for home assembling of furniture. This home assembling is in tune with Indian customer preferences, said Betzel.
Founded in 1943, the Swedish multinational that emerged as the world’s largest furnishing retailer in 2008, has set some principles for its Indian operations. Sourcing around 20% of the material and parts for its products from within the country in the first year and take it to 50% over the next five years and ensuring 50% of female employees (the firm calls them co-workers) are some of them.
Betzel tried to erase the impression that IKEA stores only expensive material. He said that the store at Hyderabad, spread over 4,00,000 sq ft, will display around 1,000 products of the total 7,500 products which cost less than Rs 200. A senior executive of IKEA also told this newspaper that the retail giant would not be making any profits on its Indian operations in the first few years.
IKEA anticipates around 40 lakh footfalls at its Hyderabad store of which around 10% would be from other cities, especially neighbouring Andhra Pradesh and Tamil Nadu. The company will be investing around Rs 10,500 crore in India in the next six years, by 2024, and the Hyderabad store brings in an investment of around Rs 1,050 crore with 1,000 direct staff and another 1,500 indirect employees.
IKEA has online sales in other countries, including the US, and its Indian network, too, will begin it from next year after its Mumbai store opens. Betzel sees India as a growing market with changing tastes of home furnishings. An IKEA survey found that Indian customers prefer modern designs with classic touch.
IKEA’s Indian CEO allayed apprehensions from local furniture retailers that their businesses would be affected by the Swedish giant’s entry into the Indian market. On the contrary, he expects that the increased consumer awareness on home furnishings would lead to enhanced market base and trigger greater demand for a variety of products.