Swedish retailer Ikea entered India and set up its first store in the southern city of Hyderabad. It has received an overwhelming response from the Indian public as witnessed by the figure of ₹407 crore turnover for the first year of operations, 2018-19. The store was opened in August 2018 and thus this figure represents the sales revenue for just seven months. Analysts say this is the highest sales figure reported by a retail outlet having a single store in the first year of operation.
Ikea has received the approval to make an investment of ₹10,500 crore in setting up its large-format furniture retail outlets in India from the Foreign Investment Promotion Board (FIPB). The Indian outfit of the Swedish company has so far received ₹2,515 crore. The total investment envisages opening up of 25 stores in India, each as large as four football fields. Ikea has a standard format for its stores which includes a cafeteria as well.
The Hyderabad Ikea store showcases 7,500 products (out of around 10,000 that figure in its global catalogue). The company has possibly omitted products that may not find buyers in India. The location of the store in the Hitec City area of Hyderabad suits it as some of the top multinational companies have their offices in that area and most employees of these companies live close by.
Ikea, as an organised retailer of furniture has to vie with new entrants in the Indian market like Urban Ladder and PepperFry. The Indian furniture market is still to evolve, especially in the DIY category that Ikea specialises in. A majority of Indian furniture buyers look to the localised furniture brands in each city and though on the decline, there are still carpenters engaged in making bespoke furniture.
Ikea is not new to the Indian market per se since it has been sourcing products from India for the last over 30 years.
Experts feel there may be a novelty factor associated with Ikea’s first ever store in the country.
The Indian operations are still to turn profitable as well, largely due to the initial costs of creating the infrastructure and staff training etc.