Six million Ikea shoppers expected to hit up India’s first store

MUMBAI: In a milestone that’s been more than a decade in the making, India’s first Ikea store will open today, bringing inexpensive Nordic-inspired furnishings and food to the world’s fastest-growing middle class.

Ikea expects to welcome as many as six million visitors a year to its 13-acre complex in Hitec City, on the outskirts of Hyderabad, India’s fourth-biggest city. The 400,000 sq ft showroom contains some 7,500 products, of which about 1,000 will sell for less than 200 rupees (US$2.91) apiece. It’s the first of 25 stores Ikea plans to open across the nation by 2025.

Ikea’s launch comes at least 12 years after it started studying India, which is poised to overtake the US to become the world’s second-largest middle-class market by 2022. By then, sales of homewares and home furnish- ings will probably reach US$15.3bil from US$12.9bil last year, according to researcher Euromonitor International.

“Rising incomes and affluence make for an attractive market in India,” said Sowmya Adiraju, a research analyst with Euromonitor in Bengaluru, in an email. “Indian consumers are curious to see what Ikea has to offer and the retailer is well-positioned to meet this demand.”

The world’s biggest furniture retailer invested more than 10 billion rupees on its first foray in India. It’s counting on new customers in industrializing nations bolstering sales growth in the face of brand fatigue and increased competition from online retailers, such as Amazon.com Inc and made.com, in established markets. Ikea added no new outlets last year in Sweden, where domestic sales were flat. “We know that we are bravely stepping into a low-price zone,” Jesper Brodin, Ikea Group’s chief executive officer, told reporters. We are prepared to take some risk in India.”

An Ikea is slated to open in early 2019 in Mumbai, followed by stores in urban Bengaluru and metropolitan Delhi. Chennai, Kolkata, Ahmedabad, Surat and Pune are also targeted for stores. Elsewhere in Asia, it plans to set up shop in the Philippines and Vietnam and open additional stores in Bangkok, Thailand, within the next few years.

“The pace of opening stores in India will intensify,” said Harminder Sahni, founder and managing director of consulting firm Wazir Advisors in Gurugram, near Delhi, adding that the 75-year-old Swedish company spent more than a decade researching the market to ensure its success in India. “Ikea has never failed; it’s never closed a single store in its history.”

Ikea’s competitors in India include Godrej Group’s Godrej Interio, Future Group’s HomeTown, Nilkamal Ltd.’s @Home, and Durian Industries Pvt Ltd’s namesake furniture business, along with “mom-and-pop” proprietors vying for an indoor furniture market predicted to expand about 8.8% annually through 2022, according to Euromonitor.

While India offers faster growth than Singapore, Japan, South Korea and other developed markets in Asia, its market is constrained by high poverty levels, income inequality, and relatively low per-household expenditure on homewares and home furnishings, Euromonitor’s Adiraju said.