Swedish furniture retailer Ikea to start operation in Hyderabad soon

The Swedish furniture retailer Ikea has his eyes set on Indian market for quite some time now. Ikea has opened its 400,000 square feet store in Hyderabad which will offer 1,000 products including cutlery, stuffed toys, hangers and container boxes, etc., priced under Rs 200 ($2.91) which is cheaper than in most countries.

The company has to take to a different approach for the Indian market. Ikea deals with higher taxes on imported goods and looks to woo cost-conscious shoppers unaccustomed to the company’s DIY furniture assembly style.

The company is pushing into new territories as its growth has declined in its traditional strongholds, including Europe.

As per regulations, the company will source at least 30% of its raw materials locally within five years of operations in the country.

Sowmya Adiraju, an analyst at research firm Euromonitor International said, ‘IKEA seems to have managed to understand the Indian consumer and price its products accordingly.’

But she also added that the target audience for many IKEA products right now, especially for big-ticket items, seemed to be the wealthier end of middle class. “It would be interesting to see how IKEA does justice to its vision of ‘furniture for all’,” she said.

IKEA has partnered with UrbanClap, which helps customers to assemble furniture that is purchased online.

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According to reports IKEA has so far only said it will charge more than UrbanClap if its in-house assemblers do the job.

IKEA does have a stiff competition in the Indian market with online furniture startups such as Pepperfry and UrbanLadder which have become popular in large cities.

IKEA had initially planned to open 25 stores across India by 2025.

In June, the company said that it was likely to open more stores, possibly some smaller stores in cities to complement their typically larger showrooms in suburbs.

land in Hyderabad, Bangalore, Mumbai, Gurugram, Surat, Ahmedabad, Kolkata, Chennai and Pune have been purchased by the company.

According to Euromonitor, retail sales at IKEA Group’s company-owned stores increased by 4% last year. In comparison, sales in the home-ware and home furnishing stores grew about 9%.