IKEA to go online next year, to open its first India store in Hyderabad

Swedish home furniture giant Ikea will be launching online sales in this country when it opens its second India retail store in Mumbai next year.

The company’s first India store — a 400,000-sq ft facility of four floors in addition to two floors of parking in Hyderabad’s IT hub — is getting final touches.

It is set for a formal opening on July 19, almost six years after the firm announced a Rs 105-billion foreign direct investment in the country. The firm has invested Rs 10 billion in its Hyderabad facility.

During a preview of this store on Wednesday, Ikea’s India Chief Executive Officer Peter Betzel told the media that India was going to be a unique experience as the firm would look beyond large-format stores.

He said the company also expected the online pie in India to be bigger than the 6-7 per cent share it has been getting through online sales in a dozen countries so far.

“To buy a sofa you have to first sit on it. Touch and feel is very important for a customer to buy. But as online buying in every product area is growing, it will be so in furniture segment too. We will enter this channel next year when we open our store in Mumbai,” Betzel said.

Besides the large-format stores, which would come up in peripheral areas of large cities, and the online foray, the company would also look to set up small experiential stores of 10,000-50,000 sq ft in cities, depending on the business experience they are going to have in India.

Apart from bringing 7,500 products that, according to Betzel, would affordable for customers of every income level, the company is also bringing a new set of practices and culture to the Indian retail space. For instance, all the 1,000 co-workers in the Hyderabad store would have a five-day week, even though the store would run seven days a week from 9.30 in the morning till 11 in the night. Also, the minimum wage would be double the amount prescribed by the Indian government.

Though the company home delivers products on a ‘do-it-yourself’ condition, it has set up a team to assemble furniture at customers’ homes for a price.

Responding to a question on target customers, Betzel said Ikea does not focus on a particular income group as the company was here for a long-term and sought to grow along with the growth of household incomes.

Ikea’s first India store has a 20 per cent local content value. The firm plans to increase the value of local outsourcing to 50 per cent eventually, according to Ikea.