After over a decade of planning and two years of construction, the first IKEA store in India will open on Thursday. IKEA is planning to open 25 stores across the country before 2025. The first one will be located on the outskirts of Hyderabad, the fourth largest city in India. IKEA studied the country for over 12 years before opening 13-acre store in Hitec City near Hyderabad.
IKEA is facing brand fatigue in established countries and is now counting on industrializing countries like India to raise its sales growth. India has the fastest growing middle class in the world and by 2022 is supposed to be have the second biggest middle class. IKEA expects to open a store in Mumbai by early next year with stores in Bengaluru, Delhi, Chennai, Kolkata, Ahmedabad, Surat and Pune to follow.
IKEA also plans to expand to other countries in Asia including the Philippines, Vietnam and Thailand within a few years.
IKEA’s website in India has products priced lower than those same products in the U.S., an Ektorp sofa, for example, is 30% cheaper in India. Additionally, around 1,000 of the 7,500 products sold in IKEA will be priced at less than 200 rupees (USD 2.91). The restaurant in IKEA will feature 1,000 seats and biryani for 99 rupees. They are expecting 6 Million visitors annually. Pepperfry and UrbanLadder are two startups in India that will be competing with IKEA for furniture shoppers. They both offer free delivery and assembly on site. Also, India has a large vendor market that dominates furniture sales. India lacks a DIY culture which IKEA acknowledged by partnering up with UrbanClap to provide the option of paid delivery and assembly to customers.
IKEA will employ 950 people for the store in Hyderabad and plans to have over 15,000 employees in India by 2025. Half of those employees are slated to be female. The Company must also source a minimum of 30% of its materials locally by 2023 which is not a problem as they already source about 20% of their supplies from around the world from India. Chief Executive Officer, Jesper Brodin, said they expect India to become one of IKEA’s largest source supply countries among China, Poland and Italy.