Ikea plans to buy land to build four stores in Karnataka2 min read . Updated: 05 Feb 2016, 03:10 AM IST
The four stores will be opened in Bengaluru and each will cost Rs500 crore, said Juvencio Maeztu, chief executive officer of Ikea India
Ikea, the world’s largest furniture retailer, plans to purchase land to build four stores in Karnataka, entailing a total investment of ₹ 2,000 crore.
The four stores will be opened in Bengaluru, the state capital, and each will cost ₹ 500 crore, said Juvencio Maeztu, chief executive officer of Ikea India.
K. Ratna Prabha, the additional secretary with the state’s industries department, confirmed on the sidelines of the Karnataka Investor Summit under way in Bengaluru that the Swedish retailer had expressed interest in buying land.
Each Ikea store in Bengaluru will generate 500 local jobs and the company will reserve 50% of them for women, said Maeztu.
An Ikea store requires seven to eight acres and takes about 12-18 months to build from scratch.
Each store will also provide indirect employment to 1,500 people, taking the total number of job opportunities to 2,000.
Ikea has been sourcing products from India for close to 30 years; it has 48 Indian suppliers. Currently, Ikea sources €300 million worth of goods from India and expects to double this by 2020.
Maetzu said he had met about 200 potential suppliers in Mumbai, Bengaluru and Hyderabad over the last year.
The company will also expand its “Next Generation" initiative, wherein it works with social entrepreneurs to engage women artisans to make handmade products for Ikea, he said.
The firm has five suppliers in Karnataka making textiles, furniture, bamboo products, he said.
Since the government approved its entry into India in 2013, Ikea has been scouting for land across states to deploy its planned investments of ₹ 12,500 crore to open 25 stores in the country.
Karnataka will be the fourth state—after Telangana, Uttar Pradesh and Maharashtra—where the retailer has engaged in talks with the government on opening its furniture stores. It is also in talks with government officials in Delhi and Haryana.
Retail experts say Ikea is moving swiftly towards building an ecosystem in India.
“You must remember that furniture retailing in India is fairly unorganized, so for Ikea the task is to really develop the infrastructure and the supply chain from scratch. They are doing a fairly good job at it," said Ankur Bisen, consumer and retail analyst at Technopak Advisors.
Maetzu said the construction of its store in Hyderabad was underway and the opening of the outlet is due in 2017.
Single-brand foreign retailers with direct investment in the market have also been allowed to sell products on the Internet.
Maetzu said that the physical stores are a priority for the company now.
“Yes, we are allowed to do e-commerce, we will have e-commerce in India as well. But the main channel will be the stores," he added.