IKEA OPENS FIRST INDIAN OUTLET IN HYDERABAD
Swedish retailer opens Hyderabad store with prices far cheaper than in US
IKEA will do things differently in India after it opens its first store in the nation today, as it deals with higher taxes on imported goods and looks to woo cost-conscious shoppers unaccustomed to the company’s doit-yourself (DIY) furniture assembly style.
The Swedish furniture retailer is pushing into new countries in South America and Asia as growth slows in its traditional strongholds, including Europe.
It is betting on India with its growing middle-class, likely aiming to avoid a repeat of the high pricing that initially hit sales in China and Australia.
The company, which has flagged import duties in India as a big challenge as it tries to keep prices low, has to source at least 30 per cent of its raw materials locally within five years of operations in the country as per Indian regulation. IKEA already sources about a fifth of its global supplies from India.
Nevertheless, IKEA still needed to tweak its playbook.
The 37,160 square metre store, here, will offer 1,000 products, including cutlery, stuffed toys, hangers and container boxes priced under 200 rupees (RM12) — cheaper than in most countries.
A check on IKEA’s newly launched India website showed popular products looked cheaper than in the United States. For instance, the white variation of the best-selling Billy bookcase is cheaper by a fifth than in the US, and the dark-grey Ektorp sofa is priced 30 per cent lower.
“IKEA seems to have managed to understand the Indian consumer and price its products accordingly,” said Sowmya Adiraju, an analyst at research firm Euromonitor International.
But she added that the target audience for many IKEA products right now, especially for bigticket items, seemed to be the wealthier end of middle-class.
“It would be interesting to see how IKEA does justice to its vision of ‘furniture for all’,” she said.
To satisfy the Indian penchant for ready-made furniture, IKEA has set up a 150-member task force to help customers assemble furniture and is also partnering with UrbanClap, an app that connects people with service providers, including carpenters.
UrbanClap charges customers about 250 rupees for a 30-minute carpentry job. In comparison, TaskRabbit, the services platform acquired by IKEA last year, charges US shoppers a minimum of US$36 (RM147) for any installation job.
Competition for IKEA in the country has increased as online furniture start-ups, such as Pepperfry and UrbanLadder, have become popular in large cities. The overall furniture market, though, remains dominated by unorganised retail and local vendors.
IKEA had initially planned to open 25 stores across the nation by 2025. The company has bought land in Hyderabad, Bangalore, Mumbai and Gurugram, and is also looking to expand into Surat, Ahmedabad, Kolkata, Chennai and Pune.