The leading Swedish home furnishings brand, launched its first India store in Hyderabad last month. The brand, established in 1943, has been associated with India for over 30 years. It started out with sourcing products from here for its global stores. At the Hyderabad launch, Jesper Brodin, CEO, IKEA Group, said, “We have a long-term commitment to India, which is an important market for us. We are ready to meet and understand the needs, frustrations and dreams in the everyday lives of our customers in India.”
Currently, there are 403 IKEA stores in 49 countries, with sales volume of 38.3 billion euros. Now with the Hyderabad facility in place, IKEA plans to open more retail stores in various cities across the country. Peter Betzel, CEO, IKEA India, speaks to Guardian 20 about venturing into the Indian market and other expansion plans.
On finally coming to India and the market prospects here, Betzel says, “India is an important market for IKEA and we are committed to stay here for a very long time. We discovered that IKEA and India have a common meeting point when it comes to food, family, friends and festivals. We want to make Indians fall in love with their homes all over again and for this, we will offer products and home furnishing solutions that are affordable and well designed with great value for money. With the Indian economy progressing at a rapid pace, we now have a younger India that has moved to newer cities and looking for new homes and affordable living. We want to provide them with solutions that don’t create a dent in their wallets and at the same time inspire them to make their homes brighter and bring them a little closer to the vision of their dream home.”
He tells us that the next city to get an IKEA store will be Mumbai, in 2019. Bangalore and Gurugram will follow. In the next phase, they will focus on Ahmedabad, Surat, Pune, Chennai and Kolkata. They are still in process of finding large locations at suitable prices and are working closely with various state governments. Currently, they have collaborated with over 55 Indian suppliers and are looking at expanding their network to be able to cater to more customers.
IKEA’s flagship store in the heart of Hyderabad’s tech hub, HITEC City, is 4,00,000 sq. ft. large and is spread over 13 acres. It is currently offering 7,500 affordable, quality home furnishing products, all under one roof. The store will remain open 365 days a year.
Not only products, their store in Hyderabad also plans to provide ideas, inspiration and solutions by exhibiting their home decor products at the store. Besides different room sets based on different parts of the home, like bedroom, kitchen, children’s room and living room. Their market hall includes home kitchen utensils and accessories, textiles, rugs, lighting, decoration, stationery and even live plants.
On why Hyderabad was chosen as the first city to have an IKEA store, Betzel informs us that Telangana is one of their first identified priority markets besides Delhi-NCR, Maharashtra, and Karnataka and have been able to move with speed with the support of the Telengana government and officials.
The store houses a 1,000-seater restaurant, IKEA’s largest restaurant—a café with coffee, bakery products, frozen yogurt and many more for purchase. There’s also a play area for kids, named Småland. Keeping Indian sensibilities in mind, half of the restaurant’s menu features Swedish specialities like salmon, chicken and vegetarian meatballs, while the other half comprises local delicacies
like daal makhni.
IKEA’s foray into the Indian market has created immense employment opportunities. The store in Hyderabad employs 950 workers directly and 1,500 indirectly in services. What’s commendable is that they have a commitment to hire 50% women co-workers at all levels in India including forklift drivers and assembling co-workers.
The brand did an expansive research before inaugurating their first store in India. Their market study included more than 1,000 home visits in Mumbai, Hyderabad, Bengaluru and Delhi. The goal was to understand home life in India and know more about the needs and aspirations of the consumers. “IKEA’s intent is to develop products that cater to the customer’s everyday needs through its functionality, form, and with an emphasis on its price effectiveness, quality and sustainability. Especially for India, which is an intense low-cost competition market, we have consciously chosen to enter at lower price points. Out of the 7,500 products in the store, 1,000 will be below Rs 200,” says Betzel.
IKEA’s researchers, studying the the Indian market, realised that DIY as a concept is still new here. To address this concern, IKEA plans to offer assembly, delivery, and kitchen installation services to ensure customers have a smooth shopping experience.
IKEA has taken specific measures to establish themselves as a unique and trusted brand for both customers and workers in India. They have localised some of their products to appeal to the masses better—like products of local relevance such as masala boxes, pressure cookers, tawas, idli makers etc. They have also introduced coir mattresses made from coconut fibre for summers. Moreover, there are exclusive “Made in India” products like Ursprungling floor cushion, Indira bed spread and Marius stool.
Betzel tells us about the many challenges that were involved in bringing the store into existence in India. From finding a large location at an affordable price and getting the necessary governmental clearances for starting the operation, to getting the pricing right for Indian consumers by adopting lower price points—there were many challenges in the way. The efforts are directed towards striking the right balance between quality and price.
“There is something at an industry level that we request the government to address at the soonest possible—grant industry status to the retail sector. It will help scale organised retail in India significantly and will create many more jobs and foreign direct investment. Industry status will provide easy access to competitive capital, streamline labour policies and reduce the compliance burden which just takes a lot of time and money, and adds to the cost of business. Savings here will eventually be invested in creating more jobs and passing benefits to consumers,” he says.
Many sustainable raw materials that are available in India, like bamboo, jute and other fibres—which are also being explored by IKEA. The brand is in talks with partners and governments on how to grow sustainable bamboo, wood etc., that can help the industry to flourish even more.
IKEA is constantly reinventing itself to be the multichannel retailer of choice and stay relevant in the new digital environment. With the Mumbai launch slated for next year, the brand intends to come closer to their customers nationwide. “A fast-growing GDP, massive infrastructure and structural reforms, more and more Indians coming into the formal economy, 500 million Indians are expected to be online and are consuming more and more, and an increased trend to move to the cities and live in smaller spaces, all make it a great time to be here. The pace of digitalisation in India is one of the fastest and favourable to create a stronger future together,” concludes Betzel.