IKEA will do things differently in India after it opens its first store in the nation on Thursday, August 9 as it deals with higher taxes on imported goods and looks to woo cost-conscious shoppers unaccustomed to the company's DIY furniture assembly style.
The 400,000 square feet (37,160 square metre) store in the southern Indian city of Hyderabad will offer 1,000 products including cutlery, stuffed toys, hangers and container boxes priced under Rs 200 cheaper than in most countries.
The company has employed 950 coworkers in its store in Hyderabad directly along with 1500 indirectly in services. It expects to host close to 7 million visitors every year in its store.
IKEA India Country Manager, Peter Betzel said that the Mumbai store is under construction and will open next summer. It will be one of the biggest sourcing markets in furniture. IKEA in India has spent around half of the total approved initial investment of 105 billion rupees so far.
IKEA's debut in India has been a long time coming. The company hit snags a few years ago after the government rejected its request to relax rules on buying goods locally. Meanwhile, competition for IKEA in the country has increased as online furniture startups such as Pepperfry and UrbanLadder have become popular in large cities. The overall furniture market, though, remains largely dominated by unorganized retail and local vendors.
IKEA had initially planned to open 25 stores across the nation by 2025. In June, the company said it was likely to open more stores, possibly some smaller stores in cities to complement their typically larger showrooms in suburbs. The company has bought land in Hyderabad, Bangalore, Mumbai and Gurugram, and is also looking to expand into Surat, Ahmedabad, Kolkata, Chennai and Pune.
A quick check on IKEA's newly launched India website showed popular products looked cheaper than in the United States. For instance, in India, the white variation of the company's best-selling Billy bookcase is cheaper by a fifth than in the United States and the dark-grey Ektorp sofa is priced 30 percent lower.
To satisfy the Indian penchant for ready-made furniture, IKEA has set up a 150 member task force to help customers assemble furniture and is also partnering with UrbanClap, an app that connects people with a variety of service providers, including carpenters. UrbanClap charges customers about 250 rupees ($3.64) for a 30-minute carpentry job. In comparison, TaskRabbit, the services platform acquired by IKEA in 2017, charges U.S. shoppers a minimum of $36 for any installation job. IKEA has so far only said it will charge more than UrbanClap if its in-house assemblers do the job.
With inputs from Reuters
