Ikea India launches with Hyderabad megastore

09 August, 2018, 16:24 | Author: Eric Barnett
  • IKEA.

There are now 403 IKEA stores in 49 countries with a sales volume of 38.3 billion euros. But its previous attempt in 2006 at reaching India's burgeoning middle class fell foul of local regulations.

On a day when IKEA announced formal opening of its first India store in information technology hub of HITEC City, a top Telangana government official said the Danube, the home furnishing arm of Danube Group, will be launching its first store in September.

Differences between Hyderabad and the furniture giant's 355 outlets elsewhere will include a 1,000-seater restaurant, which is its biggest worldwide. Pork and beef fare will be replaced by chicken dishes for the non-vegetarian customers. "We've been looking for a sofa, outside they cost 15,000 or 16,000 rupees ($233), but in here I saw one for only 11,000 ($160)".

United States retail giant Walmart is betting big on the rise of India's middle class too.

From utensils, potted plants, chandeliers to beds, cupboards and storage boxes, the IKEA Hyderabad store has a range of 7,500 products, spread across two large floors. The 400,000-square-foot furniture and home decor showroom will house around 7,500 products, created to integrate within an Indian home but reflective of the Swedish furniture retailer's clean, minimal sensibility and aesthetic.

The coming of IKEA is sure to shake up the somnolent furniture market in India, where unorganised players rule the roost, with limited organised players selling their wares. Jesper Brodin, the Global CEO of Ikea, stated, "Ikea was keen on offering affordable products and efforts are on to cater to thinner wallets". The firm also met 1,000 families to try to understand their needs.

It has displayed a prudent, watchful attitude peppered with loads of patience in starting to do business here, and this will surely help the company skip future minefields including a haphazard foreign direct investment (FDI) policy and anger amongst local furniture makers against its arrival.

After Hyderabad, Ikea's second store would be in Mumbai next year, followed by Bengaluru and Delhi-NCR.

But analysts warn that profits won't come quickly or easily to the global furniture company.

Besides retail, IKEA said it will also enter e-commerce segment in India by next year, besides exploring small format stores as part of its India expansion plans. "Profitability will take time".

Some locals in Hyderabad said they would take a look. "Ikea certainly stands more for DIY, and that's something that is interesting for me".

The store will employ more than 900 people, 150 of whom will work on assembling furniture - a break from IKEA's do-it-yourself model.

"It will be a flop, I tell you", he told AFP.

"Ikea has an opportunity to pioneer modern retailing in the home improvement sector", said Ankur Bisen, head of retail and consumer division at Technopak Advisors Pvt., an Indian consulting firm based near New Delhi. "And we're here to give them another option when it comes to their homes".



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