Swedish home furnishings chain IKEA, which will open the doors of its first store in Bengaluru to shoppers on Wednesday, plans to invest Rs 3,000 crore in Karnataka and employ around 10,000 people in the state by 2030.
Spread over 12.2 acres, the 4,60,000-square feet store at Nagasandra features over 7,000 furnishing products (27% of which are made in India), a large supervised children’s play area dubbed ‘Småland’, and a 1,000-seater restaurant and bistro featuring Swedish and Indian cuisine, making it the retailer’s largest store in India.
The large-format store, which was originally supposed to open in the summer of 2020, is connected to the Nagasandra Metro Station. The pandemic delayed its opening and made Ingka Group-owned IKEA first launch its ecommerce delivery channel in the city last year.
DH’s Reshab Shaw sat down with Susanne Pulverer, the chief executive of IKEA India, and Erik Jan Middelhoven, the home furnishing and design manager for the market, to understand the challenges and opportunities tied to India. Edited excerpts.
What is your read of consumer demand in India right now?
CEO: Certain segments that are really essential to people, like the bedroom to have a good sleep, have been prioritised by many. We can also see (demand for products tied to) workspaces or places to study as people have been working from home.
How much of your revenue comes from India right now? Where do you see that in five years?
CEO: We see it as a growth market. India is in the beginning stages of this journey. So, the share is relatively smaller if we look at the total revenue of IKEA’s parent INGKA. We have decided to invest for the long term.
What are some of the recent trends in home furnishings?
Design Manager: The pandemic has changed a lot of dynamics. It asks for an increased sense of privacy for you to create your own corner. For example, your kids have to have a dedicated corner where they can concentrate on their studies, and adults (are) working in a hybrid environment. So, we see people investing in a lot of home-cum-office solutions.
Ikea had said last year that it would hike prices by an average of 9% globally in 2022. Have you been able to pass on the costs to customers?
CEO: Everyone has experienced price increases and the disturbance of raw material (supply) and transportation. We are not immune to that. So, we are trying to absorb that, we are trying to save costs and we are also adjusting prices, wherever it is possible.
India is more of a do-it-for-me market than a do-it-yourself one. How will you crack it?
Design Manager: It’s very comparable to China and Thailand. So we understood that India and Asia are very service-driven markets. Our complete DNA and pricing structure at IKEA don’t factor in all these additional services. We are transparent and we offer these at a small cost as there is no such thing as free. Yes, it’s a bit of a challenge because we are known as a do-it-yourself brand. You don’t have to, we have many services like home delivery, assembly, installation, you-name-it, but it all comes at a cost.
What is your outlook for transport and raw material costs this year?
CEO: Hard to say, we need to be very agile in business these days. We’ve learned a lot about how conditions can change and everything is connected, so it has dependencies. So, if an event is happening somewhere, the impact can be felt in other geographies. We are trying our best to protect our prices and be affordable.