As IKEA, the Swedish home furnishing multi-national opens its first store in Hyderabad on August 9, its pauses to re-strategise its India plans to step up investments while also looking at developing smaller format IKEA stores.
The MNC, which had outlined an investment plan of Rs 10,500 crore when it secured FIPB permission for 100 per cent FDI, had mentioned about setting up 25 stores.
Having invested over Rs 4,500 crore in India thus far, including Rs 1,000 crore in Hyderabad centre, and towards acquisition of land parcels in Navi Mumbai, Bengaluru, Gurugram/NCR and towards other investments, it is also considering setting up smaller format stores in metros and non-metro locations. The number is likely to go past 40 stores.
This change in thinking comes after the progress it has made while setting up Hyderabad store and also taking up the construction of the Mumbai store, which is likely to be ready by summer of 2019, and from the market insights.
Jasper Brodin, IKEA Global Chief Executive Officer, said, “Set up 75 years ago, IKEA has come a long way in commissioning its first store in India. India has been very good for IKEA and we have learnt a lot from India over the past three decades from when we have been sourcing.”
“Biggest learning for us is to serve thinnest wallets and the need to make it accessible and affordable to people. The focus therefore has been on making products affordable,” Brodin said.
“We have a long-term commitment to India, which is an important market for us. We will offer inspiring, affordable and convenient home furnishing to our customers,” he said.
Ramesh Abhishek, Union Secretary DIPP, said “IKEA sourcing has gone up past Euro 350 million mark and its expansion in India offers Indian MSMEs an opportunity to expand their business. This store alone has provided 2,500 jobs both directly and indirectly and if their plans are anything to go by, they will provide jobs to about 50,000 people, directly and indirectly.”
“Indian economy is on a rapid growth path and poised to become a $10 trillion economy by 2030. With sustained efforts to improve the ease of doing business, it attracted $222 billion FDI in the last four years,” Abhishek said.
IKEA store here employs 950 people directly and 1,500 indirectly in services and expects to host close to 7 million visitors each year. The company plans to recruit more than 15,000 people in India directly as it opens stores.
Adding to the convenience of the buyers, IKEA is set to offer e-commerce in the country in 2019.
The store, spread over 13 acres, is four lakh sq.ft. and packs more than 7,500 items, of which about 1,000 items are priced below Rs 200. IKEA plans to further step up sourcing from India.