The Swedish company and world's largest furniture retailer IKEA plans to open around 25 stores in nine cities by 2025. The cities will be Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Pune and Surat. After Hyderabad first in line will be Mumbai. IKEA has already acquired land at Hyderabad and begun construction of its store.
In 2007, IKEA considered opening stores but rules and regulations at that time did not allow foreign retailers to function single-brand stores on their own. Later in 2011, rules were eased and IKEA received government approval to invest 105 billion rupees by opening 25 stores all over India under the 100 per cent foreign direct investment route. IKEA was one of the first companies in India to get approval for setting up 100 per cent FDI in single brand retail.
Juvencio Maeztu, CEO of IKEA said that GST will improve the flow of goods in the country and will increase the efficiency of companies thereby offering lower prices to consumers. IKEA has been sourcing from India for its global stores and currently has 50 suppliers. At present IKEA is sourcing more than 300 million Euros from India and this will double in the upcoming years. The company has been sourcing raw material and finished products from India for over 28 years. It frequently sources textiles, plastics, metal products, rugs, carpets from India.
The company says that establishing factories in India could actually help lower its costs but an unskilled labor force, deprived infrastructure, outdated technology are major obstacles. "We want to be affordable, the price point is very important to us and more local sourcing will give us more opportunity to sell at affordable prices" said IKEA Deputy Country Head Patrik Antoni.
Even at low price points, IKEA will be expected to keep up with the quality and excellence it is famous for across the globe. India is seen playing a vital role in the growth of Swedish company.
March 29, 2017