Ikea aims to launch experience centres in Hyderabad

Ikea experience stores could double up as pick-up points or home delivery centres as the Swedish MNC looks at a multi-channel presence across web and mobile apps to target Indian consumers

Photo: Bloomberg
Photo: Bloomberg

Swedish furniture maker Ikea will open multiple “experience centres” in Hyderabad in early 2017 to display its products before it opens its first big store in the city later in the year.

These centres, where visitors can touch, feel and experience Ikea, will also help build brand awareness, a company official said.

“We will start experience points early next year in Hyderabad,” Patrik Antoni, deputy country manager at Ikea India Pvt. Ltd, said on Tuesday, adding that the firm will begin an advertising and publicity campaign next year. Awareness of the Ikea brand is currently low in India, and more so in Hyderabad, where Ikea’s first Indian store is coming up, he conceded.

Also Read: Ikea targets India, China expansion to meet sales growth aim

The company said awareness about the brand is only among people who have travelled abroad, making up 3-4% of the population in cities like Mumbai and Delhi.

Over time, these stores may also serve as pickup points or home-delivery centres. Ikea is also looking to attract customers through web and mobile apps. “Opening experience centres within the city will help Ikea to get people to visit its large store which will be away from the city centres as people get familiar with its merchandise and offerings, compelling them to make the trip,” said Anil Talreja, partner at consulting firm Deloitte Haskins and Sells.

Stores of large furniture retailers like Nilkamal Ltd’s @home, Shoppers Stop Ltd’s HomeStop and Future Retail Ltd’s HomeTown are about 30,000 sq. ft in size, while Ikea’s flagship store will be about 13 times as big at 400,000 sq. ft.

Ikea was one of the first large global retailers to apply and get permission to open wholly owned stores after India allowed 100% foreign direct investment in single-brand retail in September 2012, along with riders which included a 30% local sourcing norm.

Antoni said Ikea is a year ahead of the target for meeting the local sourcing requirement and will be able to comply with the norm by 2021, four years after it opens its first store. Rules allow for five years after opening the first store.

To be relevant and affordable, the company wants to increase the share of made-in-India goods like furniture, mattresses, handicrafts and textiles to 50% of what it sells here eventually, said Antoni, without giving any time frame. This will be similar to what it does in other markets. For instance, in Europe, 60% of sales come from goods manufactured within the continent. In China, too, 60% of sales come from goods manufactured in that country.

In India, the company is also looking at increasing its global sourcing capabilities.

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