IKEA’s first store in India, which will open in Hyderabad next month, has been a long time coming.
The world’s largest furniture retailer first announced its India plans in 2012 with an initial investment of Rs10,500 crore. After almost six years of policy approval, finalising large parcels of lands, and figuring out local sourcing, IKEA is now pulling out all stops to expand in Asia’s third-largest economy. From a dedicated in-store team for assembling services to creating more localised stores in each state, and adding e-commerce gradually, the furniture retailer is doing things it otherwise would not do in other markets.
“What’s new is that we are entering a market in totality, not just as a store, we are really going all (out) in India,” Patrik Antoni, IKEA’s deputy country manager in India, told Quartz in an interview ahead of the retailer’s store launch.
Here are the edited excerpts:
Is IKEA doing a lot more lately to reach out to the masses in India?
We have a range of 7,500 products and they go in all prices and dimensions and they can cater to everyone’s needs. What we need to do then is to reach out to the many people in this market. We have high awareness levels among people here who have previously travelled abroad and are able to understand IKEA. But then, that’s not our only key target. So there’s a lot of work that needs to be done in creating brand awareness, brand liking, and give a strong reason for our customers to visit the store.
Over time we need to work very hard to make IKEA accessible (one thing is to have the offer that is right in terms of price and range), but how do I make it accessible to people who normally wouldn’t shop in such an environment or those who live very far away? The online rollout will help a lot. We will also be looking at smaller format stores in Mumbai. We will still have the large format stores to create the experience, but if shoppers don’t want to experience so much or if they are ready to travel just a little bit, we will be closer to them.
So you are pulling all levers in India?
We have decided to open in a strong way—for the long-term. In certain other markets, say in Korea, where the first store was very successful, we were like, “Whoops! now we are in a rush to open more stores.” This took us another three to four years to get our second store going.
Here we are not just testing the water, we are going into multiple things at one time. We are doing Hyderabad, Delhi, Mumbai, Bengaluru. We are exploring Pune, Chennai, Kolkata, Surat already. So it’s a play on India’s totality. We feel that a turnover in the online strategy will be an important part too. Because if we open a store in a big city such as Mumbai that’s home to 22 million people, how will a single store be accessible for someone who lives in south Mumbai?
And how localised will the product assortment be here?
We will be relevant to Indians by mixing our 7,500-8,000 products to local needs. So what we have done is through our home visits—we have done over 1,000 of them—we figured unique solutions and problems in your home. Plus we figured out where do you do things in your home and how you do them.
And then our display and combination and solutions will differ, say between Mumbai and Delhi. Because here differences between in Mumbai (where people live in very small apartments) and Gurugram are very big.
You also have invested in the service and assembling element. Is it unique to India?
In India, people don’t have the experience yet to do it (do-it-yourself). So the service side is very important.
On the conceptual level, many markets have been the same. People say, “I would never do it,” but then when they see it, it isn’t so bad. Here, I think it is pushing it to the extreme. So we are preparing ourselves. We have extended areas within the store dedicated to assembling services, we have hired 150 people—we normally don’t do in-house assembling services. We have also tied up with UrbanClap.
Is IKEA likely to add a consulting service for some customers seeking design support?
We will have a service in store—if you want to plan (to do up a room, i.e., mix and match furniture), you can use it.
Are you working on e-commerce already?
Yes, we are working on a lot of back-end things—what happens to the flow of goods, return rules, a lot of different things. It is not so difficult to turn on e-commerce as a platform, but how do you sort it out as a platform behind-the-scenes?
And where will the smaller-sized stores come in as part of the strategy?
Smaller stores have been tested in a lot of global markets. It is about 1,500-2,000 square metres, so it is still very large. We will test those in Mumbai (next year). The main store will cater to a large area, so, distance-wise, two (big) stores will be apart. These stores will also be digitally connected. The idea is not to show all the products (in the smaller store) but to have it as an online insta-base, where you have everything (the entire product range) on your phone. Depending on the size (of the store), we will show you a certain range, but we also give you digital experience.
IKEA’s journey in India over the last five to seven years has finally moved from policy to product. Do you think you are on the right track?
Yes, we see some great trends. The economy is doing well, and most likely it moves in a positive direction—with some bumps on the way. We see people are moving into cities, there is a lot of urbanisation, people need new houses. So there is a lot of demand for homes. Which means, family, friends, festivals, food, get-togethers at home are a big thing in India. In other markets, it is not so much the case. For instance, in China, Japan, Korea, where a lot of this will take place outside the house. This is what we built on.
Then we needed to see what happens with customs duties, land costs, construction costs, logistics costs. Over the last two to three years we have seen that all this does make sense, and we are now on the right track.