Ikea to open in India after years of delays

Ikea will, from next month, be selling chicken biryani and metal spice tins alongside its Billy bookcases and Brimnes beds, as the Swedish-founded company opens its first store in India after a decade of delays.

The world’s largest furniture company is looking to transform shopping habits in the world’s second-most populous nation, opening a vast store in the southern city of Hyderabad.

After struggling for years with the country’s complex foreign investment rules and then with Indian building standards, Ikea will be ready to open the store next month, according to its deputy country manager, Patrik Antoni.

Antoni told : “We do not have an official date yet, but we are going to open at some point in July — we are planning for the next five or six weeks.”

Ikea’s first store promises to be unlike any other in India. It will be the size of a shopping centre, employ 850 people and include a restaurant that can seat 1,000 — the biggest restaurant the company runs and one of the largest in India.

The long-awaited opening is the culmination of more than a decade of lobbying as Ikea pushed New Delhi to relax its strict controls over foreign investment, which would have prevented the company from having full control over the business.

Ikea first applied to open a store in 2006, but was frustrated for years in its attempts to persuade New Delhi to ease rules forbidding foreign companies from operating retail stores without a local partner.

Three years later it abandoned its plans, only to reconsider when the Indian government finally allowed 100% foreign ownership of “single-brand” retail outlets. Other foreign companies that want to sell more than one brand in their stores remain barred from full ownership.

Last month Walmart announced a $16bn deal to take over Indian online retailer Flipkart, in an attempt to establish a footprint in the country without having to open physical shops.

Ikea has already spent about $750m in India, acquiring the land and permissions to build four stores, of which Hyderabad will be the first followed by ones in Bangalore, Mumbai and New Delhi.

It plans to spend roughly the same again in the next few years as it looks to boost global sales growth, which slowed to 2% in 2017 compared with an average of 7% annually in the previous five years.

Antoni said India presented a unique opportunity because its economy was growing quickly and its young workforce was increasingly moving to urban areas.

But India also promises to be one of Ikea’s most testing markets, where consumers are unaccustomed to spending much money on furniture and where most shopping is done at small, family-owned stores.

“The market space for home furnishing is not there today,” admitted Antoni. “But all the indicators show this will be a great market.”

The company is making several changes to its usual model in India, with its staff having made about 1,000 visits to people’s homes in an attempt to better understand family and household life.

As a result it will sell many products, including mugs, crockery and soft furnishings, at less than Rs200 ($3); it will provide proportionally more staff than in other countries to assemble customers’ furniture; and it will offer samosas and biryani in its restaurant alongside chicken meatballs.

But in other respects, Ikea is staying true to its traditional blueprint, focusing first on huge physical stores before moving online and adhering to the same sourcing standards it uses elsewhere.

Antoni noted that keeping to European-style requirements on materials such as sustainable wood would make it difficult to meet an Indian government demand that it source 30% of its products locally within five years.

He added that building a supply chain that made better-quality products would help boost the country’s stagnant exports. “If India wants to be good at exporting stuff, we need to have the same base conditions on its products,” he said.

(Source: www.ft.com)

Be the first to comment

Leave a Reply

Your email address will not be published.