Furniture major IKEA lacing a ‘desi’ touch to its global business model

Swedish furniture major IKEA is fine tuning its India strategy, bringing on board local people, training them, providing a deft desi touch to it’s tried and tested global business model.

As IKEA gears up to open its ₹600-crore first India store at Hyderabad next year, it is putting together a Skill Building Programme to groom the youth and provide insights into the IKEA business touch. About 50 per cent trained will be women, as the company believes, women have the power to change the life of people around them and also constitute 50 per cent of the population.

Juvencio Maeztu, Chief Executive Officer, IKEA India, says: “We are a long term-oriented company. It takes time for us to begin as we want to start right from the backend operations. If you consider 100 years in a business cycle, two years is very small as it takes time to secure clearances, develop and launch a new store.”

The Hyderabad store, which is well located in the bustling Cyberabad area, will have four lakh sq ft facility and provide employment to 2,000.

Of them, 500 will be in store and 1,500 others, engaged in housekeeping and security. “We expect India will make IKEA a better company,” Juvencio said.

During a recent meeting, the IKEA executive told BusinessLine , “We have design teams and partners working on new projects. While work on the physical store construction is on schedule, we will launch the skill training programme by June. By the time the store gets launched, we will have well trained people to oversee the store operations.”

He said, “While it is necessary that at least 30 per cent is locally sourced, it takes time to finalise the right supplier. We have recently chosen a mattress maker from Telangana for IKEA India and for supplies to other markets.”

As IKEA scouts for more locations to set up stores, its teams are busy seeking to zero in on land for new facility in Delhi NCR, Bengaluru and Mumbai.

“We hope to close at least one deal within six months and may be more too,” he said. IKEA managed to zero in on one more land parcel in Mumbai late last month. The long term objective of IKEA is to set up 25 stores by 2025 across nine cities.

All regulatory and mandatory approvals are in place and the focus is to build a long term sourcing solution as per mandatory local sourcing norms.

The initial focus will be on retail expansion. IKEA sources about €300 million worth products from India, mainly textiles, plastics and metals, and is keen to expand to new areas, including ceramics and bamboo furniture.

In the pipeline are plans to make particle board using coconut fibre which goes unused, he explained.

Like its stores located at major cities globally, IKEA intends to set up solar panels on rooftop for power generation, and have water and waste management systems, focussing on sustainable management.