The biggest furniture retailer in the world, IKEA is all set to debut in India in Hyderabad on July 10th. The company is set to offer an exclusive do it yourself assembly model in addition to local delicacies like biryani and samosa to make the four lakh square feet store lucrative for the customers. The identity of IKEA will remain the same but they will offer products that meet the needs of the consumers. Indians lie firm mattresses and IKEA will include the same in its mattress offering. They are also developing a mattress with a coconut layer since it is ideal for the summer. The Swedish company will add such customization in items from cutlery to showroom layout.
The furniture market in the country is dominated by unorganized retail and local vendors and consumers enjoy the comfort of made to order furniture delivered to their doorsteps. India has a culture of do-it-for-me and IKEA will have to look into the assembly and delivery needs of the consumers in order to woo Indians. The DIY furniture of IKEA is well known across the globe but it can become overwhelming at times for the shoppers to assemble intricate units. IKEA is setting up a team of 150 members to help assemble the furniture and is partnering with UrbanClap that connects people for services ranging from carpenters ton tutors. Their in house assembly team will be more expensive than the services of UrbanClap. In order to suit the local palate, IKEA has changed its menu. To cater to Hindu sensitivities, it will not sell its beef meatballs in the country but will serve veggie balls and chicken while offering biryani, veggie hotdogs and samosas to the shoppers.
IKEA plans to keep the low price points by offering 1000 products that are priced under Rs. 200. It is keen to avoid the mistakes made in China and Australia by offering higher pricing which discouraged potential customers. IKEA also plans to gradually ramp up local sourcing but it will be a challenge to keep the prices low due to the taxes. The import duties are high and there is nothing that can be done with regard to the same. The company has entered India when its growth has slowed in some of the established markets. It is also developing its digital offering and smaller city centre store formats. The retail sales in 2017 for IKEA group’s company owned stores grew by 4 percent. As compared to that, the sales in India’s home and furnishing stores grew by 9 percent.
IKEA has already invested $670 million in India but is expected to face stiff competition from the slew of online furniture startups like UrbanLadder, Pepperfry and FabFurnish. The company had initially expected to invest $1.56 billion in order to set up 25 traditional stores by 2025 and was looking to spend more than originally planned. It has purchased land in Bengaluru, Hyderabad, Gurugram and Mumbai. It is also planning to expand in Kolkata, Surat, Chennai, Pune and Ahmedabad.
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